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Grants and bailouts here. Rates and taxes there. Now the genetically modified plants are gone



" I I can not believe that our president would allow this to happen, "is a complaint this week from an AP reporter to complain to a General Motors worker in Lordstown, Ohio. American factories and leaving thousands of workers.

Of course, the presidents take into account only the jobs created. They do not actually create them. But this decision serves as a reminder not only to President Trump, but also to his two predecessors. First, you can not subsidize your path to sustainable jobs in the manufacturing sector, as former presidents George W. Bush and Barack Obama tried when they bailed out the national auto industry.

Obama's specific hope was that the Chevrolet Cruze would be the "car of the future," as he said in 2010. He also promised to buy a Chevrolet Volt after leaving office. It has not yet done so and we must hurry because the two cars are now stopped, as well as the models Chevy Impala, Buick LaCrosse and Cadillac CT6 and XTS manufactured in the four factories.

The other lesson applies mainly to Trump: just as you can not subsidize your access to prosperity, you can not tax your access, in this case, with tariffs on imports.

Trump had specifically promised last summer, during his visit to the Lordstown factory, that previously lost jobs were "coming back", based on his false belief in efficiency. protectionism. Instead, GM lost about $ 1 billion of its tariff on steel only. The company did not specifically criticize this tariff for being the cause of future layoffs, but just to do the math. A billion dollars (and more) is real money for a company that is now planning to reduce its capital investment by $ 1.5 billion a year.

It's not all about the rates. Part of GM's decision is based on tracking the incentives created by the government to their logical conclusion. For every crossover vehicle that GM manages to sell instead of a sedan, the business not only loses less money, but also more easily meets the park 's fuel – saving standards in the light commercial vehicle category.

Of course, it is a cynical advantage that would not be necessary without the intervention of the government, but that is life in the 21st century.

Consumer choice is another reason for GM's decision. All workers and consumers suffer in the long run when companies engage in money-losing behavior. US consumers voted for the light commercial vehicle (SUV) category, which beat car sales last month with a ratio of 2 to one. Americans buying cars prefer foreign brands (most of them in the US) at an even higher rate. It is therefore wise that GM focuses on its strengths and that in the long run it will create more jobs and sell more vehicles.

GM's announcement contains even more silver liners. It would be much worse if society reacted to a slowdown or an implosion of society. By eliminating an unwanted product line and losing money while the times are still good, the company optimizes the chances of finding jobs for many of the 6,000 blue collar workers involved (including those in the US). Ontario) in their sector and even in their business. This decision will make GM stronger so that the next slowdown is less catastrophic. This is not thinking so that the company sank in the precipice in 2009.

Trump has already set the stage for a thriving US auto industry by offering the more reasonable fuel economy standards outlined by his administration this summer. He should keep pushing for this change. But if he really wants to get those workers back to work quickly and get GM to install new product lines in their idle plants, he should start by repealing his tariffs on misguided metals that are hurting the national auto industry.

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