Must Read: "Ghosts Of The Old GM"
If you read one thing today, read “Ghosts Of The Old GM” by Paul Clemens in today’s NY Times. At a time of increasing triumphalism over the “success” of the Auto Bailout, Clemens unflinchingly reminds us of the terrible price we’ve paid to bring America’s auto industry back to halting life. From deserted plants, to the world of “surplus industry service providers” (yes, taking apart industry is an industry), Clemens chases down the the truth with tenacity:
For General Motors, divided into its “Old” and “New” halves, there’s an inescapable paradox: the only possible route to future profitability is to create, through plant closings, monuments to past unprofitability. Old G.M. may have gone away for the purposes of the stock offering, but it didn’t go away in what might rightfully be called actuality.
I understand why Old G.M. has faded to the background, but my problem with the current news foreground is this: I can’t consistently remember what I.P.O. even stands for. And, while I know that they exist, I wonder, do I.P.O.’s actually exist? How would I recognize an I.P.O. if I bumped into one?
I do know what closed auto plants look like, though, and I bump into plenty of them on my daily drives through Detroit. Depending on the day, I’ll pass by the old Continental plant, the old Budd plant, the old Packard plant and the old Fisher Body plant, among others.
The author of Made In Detroit and the soon-to-be-released Punching Out: One Year in a Closing Auto Plant closes with a gut punch that echoes from the factory to the White House.
Across the nation, as in Detroit, there is an economic disconnect, a split between what the economic numbers say and how things feel on the ground. The economy is growing, but the unemployment rate hasn’t budged. The recession officially ended in June 2009, but more jobs have been lost than have been added since that “ending.”
Handling this disconnect requires political acuity. It brings to mind something Philip Roth once said about those who have little feel for literature and the texture of lived experience it provides and so “theorize” it. Mr. Roth imagined a scene of a father giving his son this advice while attending a baseball game: “Now, what I want you to do is watch the scoreboard. Stop watching the field. Just watch what happens when the numbers change on the scoreboard. Isn’t that great?” Then Mr. Roth asks: “Is that politicizing the baseball game? Is that theorizing the baseball game? No, it’s having not the foggiest idea in the world what baseball is.”
It’ll be fun, for a day or two, to look at the scoreboard, and to see what G.M.’s shares are going for: $26? $29? $33? $35? The numbers on the exchange will change; it’ll be great, and a welcome, temporary relief from the numbers, still difficult to comprehend, of jobs lost and plants closed. Soon enough, though, we’ll have to go back to watching what’s actually happening on the field, where there’s still a blowout in progress, with the home team way behind, and no one, seemingly, with the foggiest idea what to do about it.
More by Edward Niedermeyer
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Pass the hankies . . . Lets begin with the ending -- the Roth metaphor of the baseball game. Of course, if you just looked at the scoreboard, you wouldn't understand the game. But, if you were, say, from China and looked at what was happening on the field, would you understand the game? For those North American TTAC people, have you ever watched a cricket match? The first time I ever saw one was when I was travelling in England in 1971 and saw one on British television in a pub. I confessed to one of my friendly fellow-drinkers that I found the whole thing totally baffling. They reassured me that, despite being English, they did,too. My point here is that an understanding of baseball requires more than simply watching the game, it requires an understanding of the rules of the game, the strategies involved and, at the most basic level, simple physics. Likewise, looking at the hulks of closed factories, or of crews dismantling those factories is equally unlikely to bring the observer to any kind of meaningful "understanding" any more than being out in a thunderstorm brings a particular understanding of the weather. It brings and understanding of the experience of it . . . and, to the extent that the complaint is that, for economists, B-school professors, various Washington, DC types, all of this is an abstraction, that is a fair complaint. But it doesn't bring understanding. If one wants understanding, then perhaps one should study, in detail, the exodus of manufacturing from California -- or the Rust Belt -- some of which has gone to other parts of the country. If I was face to face with this author, I would ask him about automobile factories in Tennessee, South Carolina, and Alabama, none which existed when the closed plants he sentimentalizes were operating. Why did those plants "move"? The reality is that what he is seeing is the detritus of the old GM-Chrysler-Ford oligopoly that had its heyday in the 1950s. By the time World War 2 broke out, the consolidation of the US auto industry was just about complete . . . and the war finished the job. The remaining 3 companies, as would be true in any similar situation, realized they had pricing power and they used it. Politically, they understand that they had to share the wealth with their workers, so they did. Their potential overseas competitors -- in Japan, Germany, Italy, France and Great Britain were, in varying degrees devastated by the war and were operating in economies that were also devastated by the war, in a way that the US economy was not. So, for 15 -20 years, the Big 3 were in Fat City. Now they're not, and like most former monopoly, or oligopoly businesses, (see, e.g. AT&T) they have had a very difficult time adapting to a competitive environment. So, I would not make US automakers or US steel makers the proxies for US manufacturers in general. They have their own special set of handicaps and problems. Other US manufacturers -- who never enjoyed being part of an oligopoly or a monopoly -- are in much better shape, e.g. Caterpillar, Deere. Certainly, there are US policies that discourage manufacturing: environmental regulations, labor laws, policies that increase the cost of energy. Likewise, postwar policies that allowed the US market to support the rehabilitation of the industrial base of nations defeated in World War 2 -- Germany and Japan, in particular -- have outlived their usefulness and probably aren't even beneficial to those countries' economies, in the long run (viz, Japan). And the prospect of China following in Germany, Japan and even Korea's footsteps is a real problem, if only because of the much greater scale of what China is doing and the inability of the US economy to absorb imports on that volume is becoming very obvious. But, as with the fact that you have to understand the rules and physics, not just watch the game, in order to understand baseball, if you want to understand what's happening to US manufacturing, you have to do a lot more than drive by old auto plants. . . or even work in them.
haha, this whole operation is a scam upon the public. i saw it coming, called it, and now it's happening.