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gEneral Motors' plans to close factories in Ohio and Canada, as well as to cut as many as 14,000 jobs, have hit every single affected GM worker, their union leaders, partially supported communities by the factories and highly visible politicians who will be held accountable for the outcome, whether they deserve it or not.
President Trump particularly criticized GM's plan. He evoked a version of his anger even less filtered than the one we usually hear, when he spoke to Mary Barra, GM's CEO, of the far-reaching decision.
Trump recounted, "I told them," You play with the wrong person. "" After all, Trump had promised Ohio workers during the election campaign that he was elected, he would bring back jobs in their community and that they should hang on to their homes because better things would happen.
Meanwhile, Barra said the difficult decision was necessary, and said, "This is what we are doing to transform society." She also pointed out that the products made in the affected factories were no longer viable on the market.
It can be argued that Barra was trying to increase shareholder value. However, as a highly visible public corporation with almost endless intertwined ties to the United States and other governments, GM is not in a position to discreetly take and apply what we might call a decision to maximize profits.
In other words, the firm's stakeholders are vast and infinite. After being rescued by the federal government ten years ago, reinforced by restrictions on Japanese imports, weighed down by certain regulations and lifted by others, and heavily taxed lightly, the company n & # 39; 39 is not a pure example of American free enterprise. In fact, large companies as examples of economic purity are as rare as the teeth of hens.
Nevertheless, it is unreasonable to expect GM or another company to play the losing game longer than the circumstances would dictate simply because of a recent corporate tax cut. Nor should we expect that a company saved from bankruptcy by a public action, which fulfilled the conditions of this action, will be called later to pay for being saved. Business is always business.
It is still true that GM and all other companies must seek to survive in a competitive political economy where private companies, public entities and countless special interest groups struggle to find a place in the world. . Barra, justifying his decision, and Trump, in opposing it, have a logical basis for their positions.
If GM is to employ more American workers, it must find a way to produce the products that people will buy and make a profit by doing so. If Trump, his supporters and taxpayers want to succeed in their efforts, they must also create an institutional environment conducive to the prosperity of businesses and taxpayers.
In short, General Motors and President Trump inevitably find themselves in a bureaucratic and highly regulated gulf where only the most talented political economy practitioners survive and prosper. Those who aspire to simpler days should seek to reduce the well-being of businesses and the entanglements of our government.
Apart from that, we will see a lot of disputes like this one.
Bruce Yandle is a contributor to Washington Examiner's Beltway Confidential blog. He is a distinguished member of the Mercatus Center of George Mason University and Dean Emeritus of the College of Business & Behavioral Science at Clemson University. He developed the political model "Bootleggers and Baptists".
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