Thinking Out Loud

June 4, 2009

Economics Without Consequences

Truth or ConsequencesA couple of days ago I wrote about General Motors and suggested that if the government is stepping in to take over the operations of GM to save it from bankruptcy, surely it sets a precedent for other iconic companies. A comment posted wondered why the U.S. government didn’t do what it did with Bell, where it broke the company up into several Baby Bells. I also mentioned WalMart in passing.

What if something did happen to WalMart? Would the government simply let it die? Not if GM is any indication. But what if GM, and WalMart, and Mircosoft, and Coca Cola, and Major League Baseball, and Starbucks, and MacDonalds; what if they all were teetering on the edge and the government was having to step in to save them all? And what do you call it when the government owns a sizable portion of the industry taking place? Not capitalism, that’s for sure.

The problem is — as I stated already — we want to live in a world without consequences. The next generation to take over the world of business and commerce had its earliest interaction with the world of consequences around the topic of sex. Don’t want disease or pregnancy? Just use a condom. Already pregnant? Just have an abortion. In debt over your head? Declare bankruptcy. Don’t like your spouse? Get a divorce. Don’t like your job? Just quit, you can always go on welfare. Did something less than honest? Just get a good lawyer.

A world without consequences. But what if everything we ever did could come back to haunt us? Apparently this isn’t a new thought for me. Here’s what I posted on this blog exactly one year ago.

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The part of the world where I live has finally got around to banning the use of cosmetic pesticides and herbicides on commercial and residential lawns. Unfortunately, it doesn’t take effect until the current season of chemicalization ends. Anyway, you’d think that as an environmentalist I would be thrilled, but I’m not for two reasons.

First, there’s the phone call I got tonight from a telemarketer telling me what a terrible thing the government did, and hoping that I will join the people who are getting as much chemical spraying done in this, the final season.

Second, and more important, I think it could take twenty years before the true impact is known. This stuff is not filtered out in our drinking water (as it’s fully dissolved) and there are obviously going to be some — hopefully not many — long-term effects that are going to show up in today’s children; aside from the short-term effects (such as environmentally triggered asthma) that we’re already seeing.

Even if you never sprayed your own lawn, if you ever hung your sheets outside to dry, some experts say you possibly absorbed the same amount of toxic chemicals through your skin as you slept as though you had sprayed your own lawn.

What I’m wondering is, if twenty years down the road, the people who perpetrated these crimes against our air and water might be tried for their actions in a manner that some were tried for war crimes years after the war. I mean, who’s to say that as the “green” agenda moves forward, the things that were done in the last fifty years by the weed spray companies and their allies are not regarded as truly criminal? And would such an action be limited to those who actually applied the products, or could the aforementioned telemarketers be found as complicit in their actions?

I hope it doesn’t come to that. But if it does, I hope the guilty are appropriately punished. Because they did not act in ignorance… they knew the truth all along.

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Well, that was a year ago.   Consequences.   They’ll catch up to ya.   What did Jesus say about sowing and reaping?

June 2, 2009

General Motors: Not in Deepest Sympathy

General_MotorsWe were an hour from home in Toronto picking up a large order from a Christian book distributor when the car simply failed to do anything at all when the ignition key was inserted.    After consulting a local dealer by phone, we were told that the ignition system had ‘locked up,’ but to keep trying, which we did, eventually producing success.   We drove the car to that dealer where they told us — for free — what needed to happen at our local dealership when we got home so that we wouldn’t be stuck again.

We booked the car in the next day to the closest General Motors franchise.   They were less than pleased that the Toronto dealership had “diagnosed” the problem.   There is a fee for that now, which is usually a minimum of a half-hour at normal shop rates.   Because the Toronto people had already “diagnosed” the problem, they had to fix it locally without being able to render the extra charge.

An hour later, the car was returned to me, but as soon as I started it, something was wrong.   The CD/radio was not displaying anything.   No FM station frequencies, no CD track numbers, and most importantly, no time of day, a feature I have come to depend on in a car.

Their argument?   How do we know it was working when you brought the car in?    A nice Catch-22 style stalemate.    However, I was not to be trifled with on this.   So they agreed that they would put the car back into a service bay and then determine if they could fix the radio.

But none of their service guys would open the hood.   In order for them to be paid, there has to be chargeable work being done on the car, which then goes on their timecard.    This type of goodwill investigation was not part of the shop service schedule.    Again, I was not about to be messed around, so some kinder, gentler mechanic pulled the radio and did some checking.

In the end, they couldn’t fix it.   An independent, local mechanic found a compatible CD/Radio at a wrecker, and $250 worth of parts and labour later, I had a working clock and music system.    The local representative for General Motors of Canada said they didn’t break it, they weren’t going to fix it, and they weren’t going to pay for it.

That was many, many years ago.   I have never set foot in a GM dealership since, and I currently have no intention of ever owning another GM vehicle.

…At this point, you may be wondering where this fits into the Christian theme of this blog, or the idea of grace in general.   “I’ve always enjoyed this blog;” you’re saying, “But today you seem pretty angry.”

It doesn’t fit.   Being a Christ follower means that I probably restrained myself from other forms of protest.  It also means that while I harbour nothing against the the individual service manager and his mechanics,  I can disagree violently with the ‘system’ that they represent on the basis of the Biblical concept of justice.    (I would extend the argument and suggest that I’m not sure that any Christian can carry on employment in a workplace that has unfair trade policies.)   It means that, in terms of that car, I am “forgetting what lies behind.”

gm_10bil_moreSo how do I process the news of this week concerning General Motors?  I know a number of people who are GM employees, who have enjoyed a unique, special, privileged opportunity to work with wages and benefits others can’t begin to imagine.   It bothers me to think those same employees possibly wouldn’t pick up a tool to check a vehicle that arrived in a service bay working and is now not working, but in fact, we’re dealing essentially with the same company.   The parent company establishes the rules. I know these people socially, but in their workplace, they would have had to tow the company line.  The end of that unique opportunity for those employees is a consequence of the company’s overall attitude.

I don’t want to see people unemployed, but those employees had a great ride, and are now dealing with the impossibility of the economics they enjoyed.   There were a number of flaws in the GM model, not just as I experienced in the service bay, but in sales, marketing, product development and of course compensation paid to its staff.

No matter how iconic a company is, if the model isn’t working, eventually, the chickens will come home to roost.  Do you bail out Coca Cola or Kelloggs or — perish the thought — WalMart because they are American icons?  At a certain point you have to let the company die, or else nobody has learned anything.   You end up with — and this is where traces of morality enter — economics without consequences.     Companies can take all kinds of risks even if the model won’t hold together in a tough economy because, when the dam breaks, the government will be there with a rescue and bailout.

Sorry.  If you offer that to GM, you have to offer it to everyone.   On Monday, June 1st, 2009, the governments of the United States and Canada should have simply let General Motors die and then let market forces rebuild an new auto industry from scratch.

No, there’s not a lot of grace in that.   But there is a lot of justice, even though it would have hurt.    As of now the taxpayers of both nations own ‘stock’ in a monster-sized company which may or may not succeed long term.   This had better be the greatest comeback story on record, but I fear history will record it differently than that.

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