Would GM Get a Party Secretary, Chinese Style?
Wendy Liu
April 27, 2009
I may not know very well the significance behind the 50-some-year-old saying: "What´s good for General Motors is good for the country". I also do not quite follow the complex discussions over GM´s probable bankruptcy. But I have no doubt about what I have seen in GM in the past few months of this ongoing bailout saga: trappings of a China-type SOE, or state-owned-enterprise.
Too big to fail?
Last October, with its stocks falling to its lowest level in 58 years, GM was on the brink of collapse. But it was obviously deemed too big to fail by the US government, then under President Bush. So in December, GM received $13.4 billion emergency loans from the Troubled Asset Relief Program (TARP), taxpayers´ money. And of course two months later, GM was running out of cash again and asked for an additioanl loan of $16.6 billion from the government, now under President Obama.
So the $13.4 billion didn´t help? It made me wonder if anyone at GM or Congress remembered how once upon a time American politicians and businessmen alike rediculed the Chinese government for giving loans (or bad loans) to China´s bloated and unprofitable companies and suggested "let them go bankcrupt," never mind that in those days all Chinese companies, including banks, were SOEs in the first place and that there was not even a bankcruptcy law in the country, not to say millions of Chinese workers and their families depended on those companies.
President firing a CEO?
Then on March 29, Rick Wagoner, the GM CEO since 2000, resigned at the request of… was I not mistaken… President Barack Obama?
The Wall Street Journal put together a panel of six experts for its Top A page to weigh in on whether Wagoner should have been dismissed that way. Three of them said yes, citing the government now being automakers´ most important creditor and Wagoner´s own failures, etc., and three said no, reasoning that such decisions should have been left to the board of directors, etc. None of them, however, seemed to have noticed the irony that President Obama firing Wagoner was not unlike Chinese President Hu Jintao firing the CEO of a state-owned-enterprise in China, if Hu has ever done so. But Obama may have outdone Hu.
Car salesman in chief?
Not only did he fire the GM CEO, President Obama also became America´s car salesman in chief, as Washington Post´s Dana Milbank put it, or even used-car salesman in chief as some bloggers quipped on the Internet.
With the new White House "Warranty Commitment Program," President Obama on March 30 promised Americans services, repairs, tax deductions and even credit if they bought a GM or Chrysler car, assuring them that starting that day Uncle Sam would be behind their warranties.
Talk about government running business… in China!
Well, I guess the English saying is wise to suggest that unless one has walked a mile in another person´s shoes, one would not understand someone else´ situation.
A party secretary for GM?
China´s economy was nearly 100% public-owned before the reforms that began in the late 1980s. Not only did the Chinese government run business and everything else, the Chinese Commmunist Party also had a party secretary in every company and organization, from factories to schools.
That was of course beyond comprehension by any American living in a mostly private economy. Now, however, with the series of bailout and nationalization by Uncle Sam of some of the biggest private businesses in America, one may finally see why the Chinese government was that heavily involved in China´s economy.
But how things change! Thanks to the massive and painful privatization of the Chinese economy, China´s public sector has shrunk to a mere 30 percent or so of its economy. While there are still communist party branches in China´s SOEs, the Chinese government has over the last two decades steadily got out of the business of running business. On the contrary, the US government has recently, and dramatically, been getting in the business of running business.
With all this and the not so funny mockery on the web of GM as now Government Motors, don´t blame me for wondering: if Uncle Sam becomes a major owner of a restructured GM by converting its $13.4 billion loan to stocks, why wouldn´t President Obama send a man, or woman, to GM. It won´t be a communist party secretary for sure. But it could very well be a Democratic party secretary.
Too big to fail?
Last October, with its stocks falling to its lowest level in 58 years, GM was on the brink of collapse. But it was obviously deemed too big to fail by the US government, then under President Bush. So in December, GM received $13.4 billion emergency loans from the Troubled Asset Relief Program (TARP), taxpayers´ money. And of course two months later, GM was running out of cash again and asked for an additioanl loan of $16.6 billion from the government, now under President Obama.
So the $13.4 billion didn´t help? It made me wonder if anyone at GM or Congress remembered how once upon a time American politicians and businessmen alike rediculed the Chinese government for giving loans (or bad loans) to China´s bloated and unprofitable companies and suggested "let them go bankcrupt," never mind that in those days all Chinese companies, including banks, were SOEs in the first place and that there was not even a bankcruptcy law in the country, not to say millions of Chinese workers and their families depended on those companies.
President firing a CEO?
Then on March 29, Rick Wagoner, the GM CEO since 2000, resigned at the request of… was I not mistaken… President Barack Obama?
The Wall Street Journal put together a panel of six experts for its Top A page to weigh in on whether Wagoner should have been dismissed that way. Three of them said yes, citing the government now being automakers´ most important creditor and Wagoner´s own failures, etc., and three said no, reasoning that such decisions should have been left to the board of directors, etc. None of them, however, seemed to have noticed the irony that President Obama firing Wagoner was not unlike Chinese President Hu Jintao firing the CEO of a state-owned-enterprise in China, if Hu has ever done so. But Obama may have outdone Hu.
Car salesman in chief?
Not only did he fire the GM CEO, President Obama also became America´s car salesman in chief, as Washington Post´s Dana Milbank put it, or even used-car salesman in chief as some bloggers quipped on the Internet.
With the new White House "Warranty Commitment Program," President Obama on March 30 promised Americans services, repairs, tax deductions and even credit if they bought a GM or Chrysler car, assuring them that starting that day Uncle Sam would be behind their warranties.
Talk about government running business… in China!
Well, I guess the English saying is wise to suggest that unless one has walked a mile in another person´s shoes, one would not understand someone else´ situation.
A party secretary for GM?
China´s economy was nearly 100% public-owned before the reforms that began in the late 1980s. Not only did the Chinese government run business and everything else, the Chinese Commmunist Party also had a party secretary in every company and organization, from factories to schools.
That was of course beyond comprehension by any American living in a mostly private economy. Now, however, with the series of bailout and nationalization by Uncle Sam of some of the biggest private businesses in America, one may finally see why the Chinese government was that heavily involved in China´s economy.
But how things change! Thanks to the massive and painful privatization of the Chinese economy, China´s public sector has shrunk to a mere 30 percent or so of its economy. While there are still communist party branches in China´s SOEs, the Chinese government has over the last two decades steadily got out of the business of running business. On the contrary, the US government has recently, and dramatically, been getting in the business of running business.
With all this and the not so funny mockery on the web of GM as now Government Motors, don´t blame me for wondering: if Uncle Sam becomes a major owner of a restructured GM by converting its $13.4 billion loan to stocks, why wouldn´t President Obama send a man, or woman, to GM. It won´t be a communist party secretary for sure. But it could very well be a Democratic party secretary.
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