Let GM Declare Bankruptcy

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[Genesis Of The Financial Meltdown]

Globalization has placed the silver bullet into the heart of General Motors.

This is the inevitable result for a company that promoted illiteracy and innumeracy- a tragedy that was compounded by the United Auto Workers union (UAW).

Perhaps the failure was not entirely due to GM’s management. Perhaps the Detroit Public School System encouraged this rapid deterioration of GM, an American icon, by not insisting that its students be better prepared for life.

Where else but in America could one obtain employment at a company such as GM that would pay you $28 per hour without having taken a course in either geometry or basic statistics-let alone calculus. Or that employment would not be predicated upon being required to read at an eighth grade level.

It was Lee Iacocca, who set forth the decline of the America car manufacturer, when he dared the Japanese auto manufacturers to manufacture in the United States. But Iacocca did not foresee that the plants of the Japanese car manufacturers would not be unionized and therefore could hire whomever they wished. In this case, the capitalist did indeed manufacture the rope with which he hung himself.

And of course the Japanese car transplants do not have the legacy costs of the Big Three (actually the Bankrupt Three). But more importantly, the Japanese car transplants are not hindered by union regulations and the labor costs of the Japanese transplants amount to only 70% of the labor costs of GM.

When I was young in the 1950s my father's car—and it was either a Buick of a Chevrolet—never broke down. In the 1970s my father's cars were a Lincoln and a Chevy station wagon and they always broke down. Manufacturing standards were horrific.

My father's good friend, Bob, always purchased an Oldsmobile and it too broke down with regularity. But there was something even worse. One day Bob's daughter decided to borrow his car. She went to the garage and drove away with Bob's car. Or so she thought.

Yes; she opened the door with the car key. Yes; she placed the key in the ignition. Yes; the car started. Yes; she drove away. But the car was not Bob's. Unknowingly, this college graduate had become a car thief.

She only realized this when she turned on the radio and the music station was unfamiliar to her. She then looked in the glove compartment and read the registration. This was in 1973 when the quality of American cars had started to deteriorate.

Ever since that time, the quality of American cars has deteriorated- and the salaries of the auto workers have increased. My father, who owned a small manufacturing business, had to waste so much time bringing his cars to be fixed that he purchased a Japanese car- a hard decision for a union member.

GM has had 35 years to clean up its manufacturing act. Instead GM has sought Congressional assistance in fending off the Japanese; at first by quotas on Japanese imports and then by manipulating federally mandated mileage standards for cars.

Let GM declare bankruptcy. GM has already accepted $13.4 billion from the federal government with nothing to show for this sum. The Pension Benefit Guarantee Corporation shall guarantee most of the pension money due to GM's retirees. Putting more money into GM is like gambling against Meyer Lansky- it is money down the cesspool.


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