Sunday, July 26, 2009

More Meddling in Government Motors

Examples already abound of how members of Congress intend to micromanage business decisions inside the new, government-owned General Motors -- a level of meddling that guarantees the company will remain of permanent ward of the state.

But it won't be long before governors are getting into the act, judging from this editorial in The Missoulian, which lionizes Montana Gov. Brian Schweitzer for tossing a tantrum over GM's decision to import raw materials, rather than get them from a mine in Montana. Schweitzer has enlisted Montana's congressional delegation in the crusade, aimed at forcing GM to adopt a mine-America-first policy, even if that drives up the costs (and drives down the competitiveness) of GM products.

A bankruptcy judge is allowing GM to break its contract with Montana's Stillwater Mine, and procure the materials, more affordably, from suppliers in South Africa and Russia. But that hasn't quelled the political storm.

The first question to ask isn't why GM wants to break the contract, but why GM can procure these materials cheaper from countries half way around the world than they can be procured from a mine in Montana. Should GM be forced to "buy American" raw materials, and pay more for them -- further driving up the cost of its already unpopular products -- in order to prop up an American mine that can't compete with foreigners (and can't survive, apparently, without its GM contract)? Can you successfully run a multinational corporation, operating in a global economy, according to the mercantilist dictates of American oligarchs?

Members of Congress seem to think so. Montana politicians seem to think so. Editorial writers in Montana seem to think so. And President Barack Obama seems powerless to call a halt to all the political meddling, despite his pledge, given at the time of the taxpayer takeover, that Washington would let GM operate strictly as a business.

It's an impossible situation. The only way GM is ever going to free itself from the clutches of the federal government is to change its wasteful ways of doing business, trim overhead, and take the painful steps necessary to improve its competitiveness and turn a profit again. But that can't happen as long as politicians believe they have the right to meddle in GM's day-to-day business decisions, on everything from which dealerships should close to where the company gets raw materials.

The Soviet model doesn't work. But the Soviet model is what we've adopted under Barack Obama, with a disastrous modification. Instead of the central committee giving the orders, and guiding industrial policy, we have hundreds of politicians aspiring to be car czar. Each is grabbing for the steering wheel, as "Government Motors" careens toward disaster. And no one seems capable of imposing the discipline necessary to avoid the crash just ahead.

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