Minus $16 Billion

That’s the net worth of the once great General Motors if you count their contractual pension obligations going forward (and why wouldn’t you?). Recently, out of a real business necessity, they’re pursuing cash flow at the expense of profits to the tune of about $1,200 cost (borrowed) each time they sell a vehicle.

Know what? I really don’t care if GM–or any other once-great American company, for that matter–goes under. Sell it off for scrap, for all I care. Do you know what else? The prospect of tens of thousands of GM employees and retirees losing their pensions and medical benefits fills me with a strange sense of satisfaction. Oh, not because I don’t want them to prosper. I do. I want everyone to prosper beyond their wildest dreams–but only in a manner that reflects reality and the natural order of things. It’s kind of like Lottery stories: they hold no interest with me whatsoever; and when I hear that some former winner is broke, again, I’m neither surprised nor saddened.

GM stockholders, directors, officers, and employees have been ignoring reality for decades. Employees got pitched a deal that for monthly dues to a union organization, they could make GM pay them more than the worth of their production. Everyone bit, of course. What do they know?

I guess my problem is that I really don’t want to point my finger, laugh, and mock the employees for what I said would happen from the moment I began to understand business dynamics and economics. Downing a whiskey a bit earlier, I reflected that my feeling in this regard was akin to watching a child burn his fingers on a hot stove he’d been admonished not to touch over and over. Be honest. Do you not feel some satisfaction when that child, screaming in pain and horror, is afforded such an important lesson at so low a cost? And how efficient. You could admonish "hot: don’t touch" for a decade and it won’t begin to contain the influence of that micro-second touch.

But children also have a good and reasonable excuse: they’re children; ignorant in most things.

While GM employees don’t have that excuse, I find it hard to lay too much blame at their doorstep. I lay it squarely at the doorstep of a generations-worth of worthless, spineless, unprincipled, quarter-end-bottom-line directors and executives who refused to stand up to the theft that was being perpetuated by the union, backed by the federal government. If anyone had the wherewithal to pull an Atlas Shrugged, they did. Now it’s too late.

The UAW, the whole labor-union
movement, and the left-“liberal” intellectual establishment, which is
their father and mother, are responsible for foisting on the public and
on the average working man and woman a fantasy land of imaginary Demons
(big business and the rich) and of saintly Good Fairies (politicians,
government officials, and union leaders). In this fantasy-land, the
Good Fairies supposedly have the power to wring unlimited free benefits
from the Demons.

Without the UAW and its
fantasy-land mentality, autoworkers would have been motivated to save
out of wages actually paid to them, and to provide for their future by
means of by and large reasonable investments of those savings—
investments with some measure of diversification. Instead, like small
children, lured by the prospect of free candy from a stranger, they
have been led to a very bad end. They thought they would receive
endless free golden eggs from a goose they were doing everything
possible to maim and finally kill, and now they’re about to learn that
the eggs just aren’t there.

very sad to watch an innocent human being suffer. It’s dreadful to
contemplate anyone’s life being ruined. It’s dreadful to contemplate
even an imbecile’s falling off a cliff or down a well. But the union
members, their union leaders, the politicians who catered to them, the
journalists, the writers, and the professors who provided the
intellectual and cultural environment in which this calamity could take
place—none of them were imbeciles. They all could have and should have
known better.

What is happening is cruel justice,
imposed by a reality that willfully ignorant people thought they could
choose to ignore as long as it suited them: the reality that prosperity
comes from the making of goods, not the making of work; that it comes
from the doing of work, not from the shirking of it; that it comes from
machines and methods of production that save labor, not the combating
of those machines and methods; that it comes from the earning and
reinvestment of profits not from seizure of those profits for the
benefit of idlers, who do all they can to prevent the profits from
being earned in the first place.

That’s just a small taste. Go read George Reisman’s complete article.

(via Beck)

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  1. A.B. Dada on April 25, 2006 at 01:59

    I agree with you — I could care less about GM or the entire steel industry.

    Remember this:

    For years, our central government subsidizes and paternalized the entire steel and auto industry. They stole money from non-steel industry workers keep the steel industry growing in cost. In a free market, you know you're succeeding when you make more product for less money (look at computers!).

    Instead of doing that, American cars became more expensive. A Japanese Toyota Corolla was around $12,000 in 1996. Today it is around $14,500. An American pickup truck was around $14,000 in 1996. The same model is $25,000 today. Sick.

    Now instead of the average steel worker learning a new trade (or becoming an expert in the steel trade internationally), they stayed in a job that was doomed to fail eventually. They could have shifted into plastics in the 60s, communications in the 70s, technology in the 80s, the web in the 90s. Instead they stayed in their lucrative, taxpayer financed job.

    They've been protected for decades on the backs of our parents. Time to put that industry to bed, just as we did the gas lamp industry and the horse shoers, too.

  2. Leon on April 25, 2006 at 13:42

    Wow! -16 billion! How the great have fallen.

  3. Christopher Trottier on April 26, 2006 at 10:05

    They really haven't produced a product that's been noteworthy for years. If I was GM, I would spin off all their divisions immediately.

  4. Kyle Bennett on April 27, 2006 at 06:44

    It is not the unions fault they designed cars people don't want to buy.

    Yes, it is. Have you ever worked in a union shop, of any kind? I have, and I know firsthand what that does to innovation, flexibility, and efficiency. It precludes management from making many of the decisions they need to.

    But you're right in one sense, it was management decisions that allowed the union cancer into their businesses, so, as always, the buck stops there.

  5. sugardaddy on April 26, 2006 at 19:37

    when workers wear jackets
    advertising their union vice the company that employs them it is a tell to their loyalties. UAW, NEA, Teamsters, etc are not the people who pay you and to whom you owe your loyalties.
    the job belongs to the company, not you or your union.

  6. Dr. John on April 27, 2006 at 06:24

    The sad thing is that the over paid managers will leave rich . They allowed it to happen while taking millions from the company and they won't even lose when it goes down. Lets not just blame unions when there is more than enough blame to go around. It is not the unions fault they designed cars people don't want to buy. I loved the Pontiac Montana and would have kept nuying new ones forever but some expert decided to make it only in extended versions which don't fit in my garage. That's a mamagement decession not a union one.

  7. Kyle Bennett on April 27, 2006 at 14:38


    "As good as" by what standard? Apparently not the standard of value for price (regardless of whether or not the percieved value of Japanese cars is 'artificially' inflated by advertising). I like a lot of GM cars, too, but you can't make any out-of-context evaluation of 'better' or 'as good as'. It's simply not valid, except to an individual buyer and his needs and means.

    It's true that the union infection is universal among carmakers doing business in the US, but it is also not uniform. For instance, I doubt Toyota pays thousands of workers a full salary to literally do nothing.

    Whether or not unions are the deciding factor in GM's status as a corporate zombie is arguable, but there is no doubt that both GM and Toyota are far, far worse off than they would have been without them, and very likely that GM is worse off to a greater extent than Toyota is worse off.

  8. Lute Nikoley on April 27, 2006 at 12:10

    Most of you havn't a clue as to what you are talking about, maybe it's because you drive "Corollars, Priuses and Camry's,etc.," some of which are fine cars. Even though I am a Ford owner (2002 Explorer & 2006 Ford F-250 SD Turbo Diesel)which are great vehicles. GM also has some excellent vehicles. The Hummer, Tahoe, Yukon, Cadillacs, Pontiacs and Buicks are every bit as good as any Japanese product on the market. They have simply outmarketed the U.S. competition. Remember this, most Japanese automobiles you buy in this country, are manyfactured in this country by Union workers.

  9. Mickey on April 27, 2006 at 05:19

    What a shame.

  10. Kyle Bennett on April 28, 2006 at 06:30

    By my standard of course. It is an opinion, and it's totally mine.

    That's fine, and I'm not arguing with your opinion, I'm saying it's irrelevant to your conclusion that US automakers were 'out advertised', and to the argument about the reasons for GM's troules.

    All you America haters

    Where the HELL did that come from?

  11. Lute Nikoley on April 27, 2006 at 23:37

    By my standard of course. It is an opinion, and it's totally mine. Whether you agree with me or not makes absolutely no difference to me whatsoever. For example, in 1987 I purchased a brand new Ford Taurus, drove it for about 12 years and gave it away to my nephew with 230K miles on it. The only major repair I had was with the trans. at 165K. Not bad for a friggin car built by an American Co. I also had a 1995 Ford Explorer, put 140K on it sold it to my son, who put another 120K on it without any major repairs. Then it gave up the ghost by catching on fire under the hood.

    I also had a 1996 Chev. Tahoe 4×4 which I recently soldwith 123K on it. I think U.S. built cars are getting a bad rap, my opinion, of course and who gives arats ass, hah. All you America haters ought to try living under a Nazi or Communist regime like I have, and, I believe all of you would sing a different tune.

  12. Richard Nikoley on April 28, 2006 at 07:50

    "All you America haters ought to try living under a Nazi or Communist regime like I have, and, I believe all of you would sing a different tune."

    Why? Ought African slaves have tried starvation and disease in their native lands to understand how "good" they had it over here? Perhaps they ought to have pondered how much worse it would have been being Christians fed to lions to the joy and cheers of Roman spectators.

    The point of the article is the theft perpetrated by labor unions against businesses. It can apply anywhere, not just America. Moreover, the National Labor Relations Act of 1935 makes it impossible for big companies to simply dump unions–as they rightfully ought to be able to do–and let the market decide.

    That's the point, not that GM cars are as good as Toyota, or that Toyota manages to make money and GM doesn't, in spite of being union organized. According to this, they aren't under the union:

    I don't speak for "America haters" but I know it's quite possible to love America–as in the ideals, not the landmass–and to loath and despise everything about this government from top to bottom.

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