{"id":435,"date":"2025-02-04T13:25:16","date_gmt":"2025-02-04T13:25:16","guid":{"rendered":"https:\/\/www.sterlingcooper.info\/blog\/?p=435"},"modified":"2025-02-04T13:25:16","modified_gmt":"2025-02-04T13:25:16","slug":"obamas-marxist-legacy-killed-gm","status":"publish","type":"post","link":"https:\/\/www.sterlingcooper.info\/blog\/obamas-marxist-legacy-killed-gm\/","title":{"rendered":"OBAMA’S MARXIST LEGACY KILLED GM…"},"content":{"rendered":"

How Socialism Works in America: Remembering Obama\u2019s GM Boondoggle<\/h1>\n
\n

In 2009, the Obama administration bailed out General Motors (GM) with American taxpayer dollars, prompting Venezuela’s socialist dictator Hugo Chavez to quip<\/a>, \u201cObama has just nationalized nothing more and nothing less than General Motors.\u00a0 Comrade Obama! Fidel [Castro], careful or we are going to end up to his right.\u201d<\/p>\n

The mainstream media buried this unflattering story to the best of their ability.<\/p>\n

What they did report breathlessly, however, was Obama\u2019s assurance<\/a> that he had \u201cno interest\u201d in nationalizing or \u201crunning GM.\u201d<\/p>\n

This was an example of media gaslighting the public before we began calling it that.\u00a0 Many Americans knew what we were witnessing back then as well as Hugo Chavez, and that it was thinly-veiled socialism in action.<\/p>\n

Obama was unquestionably lying about his government not having an interest in the production and sales directives of GM, and more on this in a moment.\u00a0 But he was certainly uninterested in any of the company\u2019s previous shareholders\u2019 financial interest in GM.<\/p>\n

Unfortunately for those shareholders who owned millions of outstanding shares of GM before this government takeovover, \u201crestructuring<\/a>,\u201d all the nearly-worthless common and preferred stock was made immediately and totally worthless, and new GM stock was issued and largely purchased by the government with taxpayer dollars.<\/p>\n

It was known as the \u201cNew GM,\u201d or as critics called it, \u201cGovernment Motors.\u201d\u00a0 Washington would own roughly 60-percent of this new government-funded automobile startup, Canada would own another 11 percent, and, adding insult to injury for stockholders, the United Auto Workers (UAW) union would own nearly 20 percent of the new company.<\/p>\n

This would be the same UAW that was arguably the greatest driver of the conditions leading to GM\u2019s bankruptcy, which, in conjunction with the corrupt Democrat party machine in Detroit and Washington, negotiated insanely impractical wage, benefit, and pension contracts that crushed GM\u2019s ability to be competitive against its non-unionized competition.<\/p>\n

According<\/a> to Elon Musk, who knows a thing or two about the auto industry, the UAW \u201cdrove GM and Chrysler into bankruptcy and lost 200,000 jobs for people they were supposed to protect \u2026 UAW destroyed the once-great US auto industry & everyone knows it.\u201d [sic]<\/p>\n

One of the most notorious of the UAW\u2019s requirements for employers like GM was the necessity of a \u201cjobs bank<\/a>,\u201d where the company is required to pay laid-off workers nearly full wages to do nothing at all.<\/p>\n

One would be hard pressed to find a better analogy to portray the relationship between the professed ideas of socialist central planners and the real-world outcomes of those ideas.<\/p>\n

The idea was that the government requiring a company to pay former workers nearly full pay for doing nothing at all would reduce the number of layoffs.\u00a0 In reality, such price controls and government regulation reduced efficiency and created an unquestionable loss of integrity in a free-market-driven business model that necessitates \u2013 you guessed it \u2013 increased government intervention to \u201csave\u201d it.<\/p>\n

That\u2019s how then-Vice President Joe Biden often characterized what happened to GM in the 2012 presidential campaign, anyway.\u00a0 Crediting his boss, he routinely<\/a> said, \u201cbin Laden is dead and General Motors is alive.\u201d<\/p>\n

But what did the government actually do with the GM bailout, besides make a multi-billion-dollar terrible investment on taxpayers\u2019 behalf to get a political win and a campaign slogan for Democrats?<\/p>\n

Obama may not have ever run Government Motors by crunching the numbers or helping to drive productivity.\u00a0 But he did hire Brian Deese, an almost-grad from Yale Law who had \u201cnever set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the auto industry,\u201d says<\/a> the New York Times.<\/p>\n

Most would recognize that putting an almost-lawyer in charge of a car manufacturing company is an idea so stupid that it could only be the result of government involvement.\u00a0 I\u2019m reminded of the scene in the HBO series Chernobyl, where a nuclear physicist investigating the cause of the reactor explosion reminds a skeptical Soviet apparatchik that before he was the Deputy Secretary of Belarus, his real-world experience lay in working at a shoe factory.<\/p>\n

\u201cTo the workers of the world,\u201d he mirthfully says as he raises a small glass of vodka, after reminding her that everything\u2019s fine, and that he\u2019s the one in charge.<\/p>\n

But Obama also assured the American people that the federal government wouldn\u2019t be asserting its majority shareholder rights over the \u201cNew GM,\u201d except in \u201cthe most fundamental of corporate decisions.\u201d\u00a0 He certainly seemed to have interests about the types of products that GM would make in the future, though.<\/p>\n

Just prior to nationaliz\u2026 I mean, \u201crestructuring\u201d GM, he told<\/a> the press at the signing of a Presidential Memorandum on Fuel Efficiency Standards, that \u201cover the next five years, we expect fuel efficiency standards in cars and light trucks to reach an average of 35.5 miles per gallon.\u201d\u00a0 He would use the government to \u201chave a single standard in place,\u201d which would create a \u201cclear incentive to develop more efficient vehicles.\u201d<\/p>\n

Only 11 cars manufactured at that time met that standard, and yet on that day, he signed a memorandum directing the EPA\u2019s Lisa Jackson to invent new fuel efficiency standards for medium- and heavy-duty trucks along with the previously-prescribed government standards for cars and light trucks.<\/p>\n

That certainly doesn\u2019t sound like someone who was only interested in the \u201cmost fundamental of corporate decisions\u201d to make GM a profitable company.\u00a0 It sounds very much like someone with a political agenda to force production and distribution of a very specific product that the American public didn\u2019t want, and who was interested in using the power of the federal government as a cudgel to force a desired political outcome, absent the consent of either producers or consumers.<\/p>\n

In the end, shareholders of an estimated 556 million outstanding shares of GM stock lost all their investment in an iconic American company that, in 2007, had a share price of above $40 and a market capitalization of over $22 billion.\u00a0 Bad for shareholders of GM.<\/p>\n

Then, after Democratic politicians at both the federal and local levels, in conjunction with corrupt union leadership, had thoroughly gutted the company by making it as inefficient and uncompetitive as possible via price controls and various other protectionist schemes, the United States Treasury swooped in and cancelled all shares held by previous investors, and swiftly invested roughly $50 billion in taxpayer money (previously allocated TARP money, along with substantial debt) to fundamentally transform the industry into what the Obama and his apparatchiks imagined the automobile company of the future should be.<\/p>\n

The end result?\u00a0 Officially, the Treasury reports that the investment was a $11.2 billion loss<\/a> for American taxpayers. Bad for all of us, I guess.<\/p>\n

But it worked out well for GM workers, right?<\/p>\n

Not exactly<\/a>.\u00a0 The number of GM factory workers was reduced from 90K to roughly 69K, and production facilities reduced from 47 to 31. In addition, the labor union signed new employment contracts, lowering management wages by nearly half, from $78 to $45 (those are hourly wages, 15 years ago, mind you), bringing these labor costs into alignment with other U.S. based, non-union auto manufacturing plants, like Toyota, Edwin Feulner at the Heritage Foundation writes<\/a>.<\/p>\n

This brings us to the most vital point of all.\u00a0 Toyota exists as free-market competition to GM, and its priority is to be competitive in the marketplace.\u00a0 Toyota manufactures and distributes much of its product in the United States, and it should be noted that it did not require a federal bailout of $50B in taxpayer capital to remain on life support as it downsized its workforce and production as GM did.\u00a0 And taxpayers didn\u2019t suffer an $11.2B loss as a result of Toyota\u2019s business practices, either.<\/p>\n

In 1975, market capitalization for Toyota was $5.1 billion.\u00a0 GM\u2019s market capitalization was more than twice that amount.<\/p>\n

By 1985, Toyota had overtaken GM by roughly $3 billion, with nearly $15.5 billion in market capitalization.<\/p>\n

On May 29, 2009, GM was trading at $0.75.\u00a0 This was the final day of trading before declaring bankruptcy and being appropria\u2026 ahem, \u201crestructured\u201d by the federal government.\u00a0 Toyota, on that same day, was trading at over $45 a share with a market capitalization of over $70 billion.<\/p>\n

Today, Toyota directly employs 136K Americans.\u00a0 It is in our country\u2019s best interest that business-minded people at Toyota have more power in the auto industry than Barack Obama and the corrupt UAW.<\/p>\n

To be clear, this is not about Toyota, and this is certainly not a criticism of GM\u2019s current management or its current employees.\u00a0 This is simply a matter of history and practical observation about appropriate incentives in a free market.<\/p>\n

We should be creating incentives to make it attractive for domestic and foreign investors companies to produce and sell products in America, and to employ Americans as our collective success is cultivated.\u00a0 And while I\u2019m not crazy about Trump\u2019s insistence that tariffs are some sort of magical economic panacea, Donald Trump does, at least, seem to understand this instinctively and conveys the message well.<\/p>\n

\u201cMy message to every business in the world is very simple,\u201d he says<\/a>.\u00a0 \u201cCome make your product in America and we will give you among the lowest taxes of any nation on Earth.\u201d<\/p>\n

That, at least, is a very welcome signal for America\u2019s future when compared to his predecessor, Comrade Obama.
\n <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

How Socialism Works in America: Remembering Obama\u2019s GM Boondoggle In 2009, the Obama administration bailed out General Motors (GM) with American taxpayer dollars, prompting Venezuela’s socialist dictator Hugo Chavez to quip, \u201cObama has just nationalized nothing more and nothing less than General Motors.\u00a0 Comrade Obama! Fidel [Castro], careful or we are going to end up […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-435","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/comments?post=435"}],"version-history":[{"count":1,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/435\/revisions"}],"predecessor-version":[{"id":436,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/435\/revisions\/436"}],"wp:attachment":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/media?parent=435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/categories?post=435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/tags?post=435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}