Friedman on GM

Thomas L. Friedman offers his prescription for what's ailing General Motors, and it's not just a bunch of bailout money to let them continue their awful "business as usual" business model. Foreign automakers have been eating GM's lunch for years. In terms of design and performance, its offerings have lagged. The popularity of its SUVs kept it alive in the late-1990s and early-2000s, but only fortified its key weaknesses. Terrible fuel economy didn't matter as long as gas prices stayed affordable and/or incomes remained high. But then 2008 brought the perfect storm of unprecedented gas prices, collapsing consumer confidence, the deflation of real estate values, and a spike in unemployment, putting a fine point on the long blade of stagnating real wages since the 1980s.

The words "socialist" and "socialism" got thrown around a lot in this year's presidential campaign, but I didn't hear anyone bothering to define it (look it up: you'll see "state control of the instruments of production" is the defining element, not the redistribution of wealth). Theoretically socialism can be done well. Capitalism, I might point out, also works best in theory. Our problem currently is a political class in both parties that is free-market capitalist on the way up and knee-jerk socialist on the way down: habitually enabling a number of abuses on the front end, and sticking the taxpaying public with the bill after the party's over.

GM represents the worst kind of capitalism (where a decaying producer's shortsighted profits and political influence shield it from market consequences) and a potentially disastrous form of socialism (where government funds underwrite its continued underperformance). Freidman argues persuasively that any bailout money supplied to GM should come with conditions to force this behemoth mired in the last century's business-thinking to catch up with the times. If we're going to engage in socialism, I'd like to see the state make an effort to do it well. That is, when it writes a check, attaching conditions to protect its investment, like any savvy businessman would do.