Monday, May 17, 2010

What's Good for GM Is Bad for Jim Renacci

For Jim Renacci's rant against the GM bailout to make sense, he needs the bailout to fail. If the bailout, and the subsequent bankruptcy, restructuring, layoffs, elimination of models, and yes, terminating dealer franchises works, then it sounds like he's just whining about his personal ox getting gored.

What's more, he's running on his experience as a businessman. He says experience creating jobs with the businesses he has run and can translate that experience into better economic policies. Apply that to the presser about the closing and the argument seems to be -- indeed must be -- that if he had been in Congress GM would neither need to go bankrupt nor would it need to close dealerships. And for the second to work, he needs to show that closing dealerships has prevented GM from bouncing back.

He could arguably say that the point of the bailout shouldn't only be GM's survival, but the health of the economy as a whole, including all the franchisees. That would be an interesting argument, but also a progressive Democratic one. It's essentially an argument that a company should think about the social costs of it's downsizing strategy, much like when progressives point to studies showing that mass layoffs can hurt a company's long term health.

Such an argument is not consistent with the free market, laissez faire, CEO knows best philosophy of governance that undergirds all of his campaign rhetoric. He can make that argument, but he would have to switch parties first.

Meanwhile, if his fit over losing his dealership is only about him losing a dealership, his whole argument about austerity and personal responsibility. If he can't personally take the medicine he prescribes for the economy, surely he can't provide the leadership we need in trying times.

So, if the bailout succeeds, he was wrong about GMs restructuring. And if he's wrong about GMs restructuring it undermines the entire argument for his candidacy. Got it? Great. Now check this out:
    General Motors' promise was this: by cutting its North American brands in half and shedding employees, dealers and creditors, it could break even with 18-percent share of a 10-million unit annual U.S. light vehicle market. In its second full quarter as post-bankruptcy New GM, (having even fired the man who made that promise as CEO, Fritz Henderson) has turned a profit.

    * * *
    What does all this mean? It means the bankruptcy did what was intended. It shrunk GM to a manageable size and made it an automaker more likely to survive in a market crowded with keen Asian, European and domestic competitors. GM needed to shed brands, models, dealerships, white- and blue-collar employees, production capacity and debt to be viable and help save U.S.-based manufacturing. Liddell expects GM to remain profitable, although it's too early to predict an overall profit for 2010. If GM can pull that off, an IPO that "buys out" a portion of the government's "investment" (large enough to reduce our ownership to a minority position, I hope) should happen by early next year.
Would you buy a used free market ideology from this man?