So now that GM really does stand for Government Motors, we must ask what the future holds for General Motors and what hope it may have for regaining it’s greatness. Now, in all fairness, the government does claim that there is no intent to maintain control any longer than is necessary. But let’s say, just for argument’s sake, that they deem it’s “necessary” indefinitely.
To do that, let’s take a look at an entire industry that Uncle Sam nationalized, the passenger rail service. Today, it’s better known as Amtrak.
In 1971, Amtrak was organized as a national passenger rail service due to the falling profits that were threatening to drive the industry out of business. Today, we have a perfect model of inefficiency that result in a governmental bureaucracy.
Instead of offering consumers a product designed to compete, either with faster service or cheaper service, Amtrak successfully offers neither. On a trip from Albany, GA to Manhattan, KS; I checked out Amtrak because I figured it would be cheaper than air travel and quicker than bus travel. What surprised me was that it was actually neither. It would cost more than taking a flight from Atlanta (which was also the departure point for the train), and with a lay over in St. Louis of almost 24 hours, it would have actually taken longer than a Grayhound ride.
Government subsidizing of the industry has created a model where profit isn’t necessarily desired, and therefore there is no incentive to offer better services. In the case of GM, this is inevitable so long as the government is a primary stock holder. As losses mount due to the UAW’s mandated bloating of salaries, the government will turn to Congress to help keep GM afloat while not encouraging GM to create cars that people really want to own.
Sure, it’s entirely possible that GM will come out of bankruptcy leaner and meaner and ready to truly compete and the government will get out of there quickly. Perhaps this is just my skeptical nature that leads me to believe it won’t happen the way Uncle Sam has laid it out. I hope I’m wrong, but I just don’t see it happening.
Perhaps it’s time to buy stock in Ford.
