US Ownership of GM is a Huge Mistake

Tuesday, June 9th, 2009

The US government should not be running GM. While the government can be capable of managing large programs effectively, running an auto company is not among them.

This is a good intention gone bad. While keeping General Motors afloat is a worthy goal, the plan won’t get us there.

You’ve got to ask yourself what’s really changed as a result of the bankruptcy. Same leaders at GM, but with one huge change: government guys now sit in the executive suite. This doesn’t give me confidence. While GM has made some good decisions and developed some successful products in recent years, overall, they were in a death spiral. And this descent occurred while people who actually knew something about cars ran the company. Put bureaucrats in charge who have no experience running an auto company, and who may have a social agenda of wanting to get more fuel efficient cars on the roads, you get a recipe for a company that will not be able to respond quickly to the needs of the marketplace. GM has never been nimble, and governments (by design) are less-than-nimble. Strike one. And you can’t build cars based on an environmental philosophy with the hope that people will buy what you are selling. Sadly, that doesn’t work. (Once gas prices started dropping last year, consumers had a renewed interest in bigger cars.) Governments should set standards and companies should decide how to best sell what they’ve got to sell given those standards. You can’t very well mix the two. Strike two.

As Yogi Berra said, “It ain’t over ’til it’s over.” Let’s hope that wiser heads prevail before strike three is called.

Tell me I’m wrong about all this, because I would love to be wrong on this one.