|Robert E. Brooks |
Late in January, General Motors Corp. withdrew a $14.4-billion federal loan application it had made to the Advanced Technology Vehicles Manufacturing Loan Program — an initiative by the U.S. Dept. of Energy to direct up to $25 billion to U.S. automakers, to help them retool domestic plants to produce vehicles and components that will improve fuel economy. Withdrawing the request was a good move — and it ought to provoke Ford Motor Co. (which has received $5.9 billion from the initiative), Nissan North America ($1.4 billion), Fisker Automotive ($528.7 million), and Tesla Motors ($465 million) to distance themselves from this and similarly convenient but corrupting sources of capital, too.
The ATMVP program dates to another time, when government and business partnerships seemed constructive, not conspiratorial. The feds were keen to have automakers adopt cleaner fuel technologies, and the automakers were happy to take federal money to fund the development. The burden of government oversight was tolerable as long as the companies were profitable. And consumers showed little concern, because efforts like these were so ordinary.
Now that investors and car buyers are wise to these “partnerships,” GM needs to undo its reputation as “Government Motors,” and its statement on this matter makes that clear: “This decision is based on our confidence in GM’s overall progress and strong, global business performance,” said Chris Liddell, GM vice chairman and CFO. “Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet.”
GM then recapped that its bankruptcy reorganization is complete, it has raised over $23 billion with a stock offering (the government still holds 33%, down from 61%), and it earned $4.2 billion in net income for common shareholders. GM also wanted listeners to know it has invested about $3.4 billion in U.S. operations, establishing or retaining nearly 11,000 jobs.
“Jobs” is an important detail here. GM is anxious for shareholders and car buyers to know that it is contributing to the economy in the way that seems least self-serving: providing employment. And that’s true. But, it’s also true that less than two years ago GM submitted to a government takeover, depending largely on the explanation that this would save jobs.
As for the government, saving and creating jobs was its justification for a massive increase in federal spending. Hundreds of billions were dished out according to an obsolete economic theory — favoring large employers with large capital-spending initiatives. After nearly two years and an historic federal deficit the U.S. unemployment rate is still 9.0% (a figure much disputed as being unreliably optimistic.) Businesses and government alike treat “jobs” as an abstraction. They know they can’t do much to change the totals, so they signal their good intentions.
Big business and big government may snipe at each other or quarrel over tactics, but they share an understanding that each can accomplish its goals (profits, power) by coordinating their efforts. In the process, they undermine free-market competition, though as long as shareholders and consumers (and voters) don’t suspect anything then they risk very little.
But, their common lip service to the cause of job creation shows they know it is more than an abstraction, even if they cannot do much about it. Businesses create, or discontinue, jobs according to need. This is reconfirmed whenever manufacturers and analysts cite “productivity” as evidence of economic performance: if hiring or releasing workers will make a company more profitable — will enhance productivity — it will do that. Government stipends and incentives will not change that calculation very much, or for very long.
We live in an era when maintaining low employment is a competitive advantage for companies, but it’s a liability for the government and business alike as long as individuals’ value their independence and prosperity. Government officials can resolve this dilemma by shifting their emphasis from “high employment” to high growth, and then staying out of the way.