GM’s vulture capitalism
General Motors received financial salvation from taxpayers less than a decade ago in the form of a “bailout” that saved the company from both a recession and its own bad management decisions.
Moreover, the largest U.S. auto manufacturer has benefitted repeatedly from state tax abatements and special incentives, along with federal subsidies for various product and ecological choices.
GM even was granted the demolition of Poletown, Michigan to build its Hamtramck plant after bulldozing 1,400 homes and churches, and banks and schools, a plant that is now being abandoned.
More recently, General Motors has benefitted from ginormous tax cuts intended to spur its growth of manufacturing in the U.S. and boost wages and benefits for its U.S. workers.
This week, General Motors gave America its response to the generosity of taxpayers, and for government tax cuts, by reducing its U.S. workforce by 15,000 and closing five auto manufacturing plants in the U.S. and Canada and one South Korean plant. Reductions clearly focused upon U.S. manufacturing, not foreign plants.
This is just the latest example of a unique form of capitalism the U.S. has nurtured, Vulture Capitalism. It is capitalism, as it sounds, wholly intended for corporate survival and success for shareholders at the expense of workers, managers, communities and country. Vulture Capitalism is focused upon short term decision-making, investor returns, and top management wealth growth.
This is what America wanted, what the country legislated, and what it deserves for worshipping capitalism above all else.
But it did not have to be this way, and it does not have to remain this way going forward.
General Motors made its decisions based upon several objective factors: Tariffs that increased the cost of steel; slow-selling car plants less profitable than other plants; Rising interest rates that could slow sales; An economy that may by softening; And a desire to increase profits to shareholders short-term.
2018 third quarter profits were a robust $3.2 Billion.
The essence of Vulture Capitalism is not that survival is at issue, it is that no amount of profit at any cost is ever to be denied, for any motive second to profit maximization comes in last and cannot be justified.
There are other, better, ways to utilize capitalism in a free market democracy.
The German model worked better during the Great Recession and works better today for German workers and the highly profitable German automakers. During the Great Recession. German government, manufacturers, and worker unions elected to respond to reduced product demand not by firings and layoffs like the U.S., but by a concept called “short-time”.
In short-time workers hours are reduced while their expertise is retained. The government makes up the difference in lost wages, paying out less in benefits than if the same workers were unemployed, thus saving taxpayer money and allowing companies to retain experienced labor.
The concept worked, limiting unemployment and keeping skilled workers in place until the economy improved.
In Germany, work councils are legislated and create teams of workers to interact with management and the community. These council’s function to create more democracy in the workplace and to engage labor in decision-making alongside shareholders and the community.
How well does this work? In 2010, Germany produced 5.5 million cars while the US produced 2.7 million cars. The average auto worker in Germany was paid $67.14 per hour, while U.S .auto workers earned $33.77 per hour. German automakers remained highly profitable.
How did the overall German economy work? In 2017, Germany had an economic surplus even with over a million refugees needing benefits.
Vulture Capitalism gave the U.S. General Motors, “all profit, all the time,” motives and decisions.
We deserve better.
Jim Crawford is a retired educator, political enthusiast and award-winning columnist living here in the Tri-State.