What’s Good for General Motors

By Gus Tyler

Published April 28, 2006, issue of May 19, 2006.

During the roaring years of the post-World War II boom, when the American economy was running at super-speed to meet the needs of a crippled Europe and Japan as well as those of the folks at home, the president of General Motors Corporation, the nation’s largest, declared that what was “good for General Motors” was “good for the country.”

The word “general” had a certain magical appeal in those days. Several celebrated generals recently had won America’s heart by winning the war. One of them, George C. Marshall, became Harry Truman’s secretary of state and devised the Marshall Plan, spending American taxpayer money to get Europe back on its feet so it could start to buy things again.

Even more beloved was Dwight D. Eisenhower, the commander of the war in Europe. He came home and became president of Columbia University. A group of liberal Democrats, unhappy with Truman, organized something called the Draft Eisenhower movement.

Ike decided instead to run as a Republican in 1952, and he was elected president. He promptly named General Motors Corporation’s CEO, Charles Erwin Wilson, as his secretary of defense. It was during Wilson’s Senate confirmation hearings that he uttered his famous words about what was good for the country.

In fact, he was right. General Motors was driving the economy and offering good pay, the equivalent of about $50,000 a year in wages and benefits to ordinary factory workers.

It’s no secret that things don’t work that way anymore. GM, battered by competition from Japan, Europe and elsewhere, can’t sell cars the way it used to. With less money coming in, it can’t keep paying workers to make cars. It is now aiming to reduce its work force by offering “buyouts,” cash incentives to go away.

This strategy is accompanied by another move called “banks.” Workers report to work as usual; they are paid as usual. But they don’t make cars. They may do anything they wish during work hours, except turn out GM cars.

Obviously, GM has been hit by overproduction, which is the flip side of the coin called “underconsumption.” Too many cars, not enough buyers. Over time, the declining market share of GM and of other American automakers leads to a decline in the auto work force. That means fewer working Americans able to buy cars, cutting sales further.

If what is good for GM is good for the country, then what’s bad for GM must be bad for the country — and, indeed, for the world economy. The increasingly top-heavy misdistribution of income means fewer people able to buy products. But you can’t have a market economy without a mass market.



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