Man, it's sweet to be a corporation like GM in America.
Only in this country would a corporation's executives have the nerve to close factories and relocate them to Mexico to exploit cheap labor, systematically work to suppress public mass transit and fuel-efficient vehicles, shelter its revenues from taxation in multiple offshore havens, and still crawl to the government weeping and crying when it needs money.
Not only that, but the government will hand GM another bailout check with taxpayer money without asking for anything in return, effectively socializing the investment's risk whilst privatizing the profit...again.
And if there is no profit -- if GM continues to bleed money because it failed to come up with a compelling business model for the new millennium -- the taxpayers are simply out of luck. That likelihood is summarized in a one-sentence mid-story throwaway in the New York Times: "Whether that investment will ever be recovered is still an open question." Oh, okay. No big deal. At least another enormous investment into a corporation that appears to be hemorrhaging from every orifice will protect American jobs...right?
The company will also have to shed 21,000 union workers and close 12 to 20 factories, steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor.
Forty percent of the company's 6,000 dealers will close, the workers' union will be forced to finance half of its $20 billion health care fund with stock of uncertain value in the restructured G.M., and bondholders, including many retirees, will be forced to take stock worth 10 cents for every dollar they lent the company.
Corporations like GM get to throw out their union contracts when they file for bankruptcy, effectively providing them with significantly more protection than the average American receives while filing for bankruptcy. If an abusive corporation tries to skip town without paying your pension, the Pension Benefit Guarantee Corp. (PBGC), foots the bill. The PBGC was established by Congress in 1974 to insure corporate pensions, but only covers employees up to $45,000 a year (most workers receive far less). According to the Communication Workers of America union website, "[s]o many corporations have rushed into bankruptcy that now the PBGC is running its own deficit of $23.3 billion."
According to the Times, Lawrence Summers explains that President Obama had to decide between "a laissez-faire, uncontrolled bankruptcy, which would have had an enormous cost," or a "controlled process," in which the goal was to make sure that the auto companies not only restructured, but were not overburdened with debt. Overburdened with debt? Isn't that the definition of bankruptcy? The government doesn't rush in to save Sally when she files for bankruptcy. A trustee seizes Sally's assets and divides them between her creditors unless Sally committed fraud (like hiding her money in tax havens). Then she's in real trouble. Why do corporations get special treatment that isn't afforded to average Americans?
If the American people weren't already keenly aware that the idea of a free market doesn't really exist, this latest statement from Summers should really persuade them. The whole concept of Milton Friedman's unregulated Capitalism rests on the idea that laissez-faire economics is the only fair way to let good businesses thrive and bad businesses fail. Government interference in the form of bailout and the restructuring of monopolies is "bad for business." Suddenly, laissez-faire is blasé. It's last year, so over.
Lawrence is essentially arguing for Corporate Socialism. We need strong regulation (but only during the bailout process)! We need to share the wealth (but only with taxpayer money and only if corporations benefit)!
What an awesome deal! If only taxpayers got the same offer.
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