In reality, GM gets very few direct subsidies. Prior to the tax cut, the biggest gift GM got from the government was a bailout in 2009 of more than $50 billion.
But neither last year’s tax cut nor the 2009 bailout required GM to create or preserve jobs in America.
GM’s typical American worker earns a fraction of that. The bargaining clout of the United Auto Workers has been weakened not only by automation but also by the ease with which GM can get cheaper labor abroad.
In 2010, when GM emerged from the bailout and went public again, it even boasted to Wall Street that it was making 43 percent of its cars in places where labor cost less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
So this year, when the costs of producing many of its cars in Ohio and Detroit got too high (due in part to Trump’s tariffs on foreign steel) GM simply decided to shift more production to Mexico in order to boost profits.
In light of GM’s decision, Trump is also demanding that GM close one of its plants in China.
But this raises a second reality of shareholder-first global capitalism that’s apparently been lost on Trump: GM doesn’t make many cars in China for export to the United States. Almost all of the cars it makes in China are for sale there.
In fact, GM is now making and selling more cars in China than it does in the United States. “China is playing a key role in the company’s strategy,” says GM CEO Mary Barra.
Even as Trump has escalated his trade war with China, GM has invested in state-of-the-art electrification, autonomous vehicles and ride-sharing technologies there.
Which brings us to a third fallacy behind Trump’s “America first” economic nationalism. Trump accuses China of stealing technology from American businesses. But big American corporations like GM are eager to invest in China regardless.
In shareholder-first global capitalism, technology doesn’t belong to any nation. It goes wherever the profits are.
American corporations exist to advance the interests of their shareholders, who aren’t prepared to sacrifice profits for more and better jobs for Americans.
If Trump were serious about his aims, he’d try to reduce the chokehold of Wall Street investors on American corporations while strengthening the hand of American labor unions.
Don’t hold your breath.
Writes for Tribune Content Agency.