“What’s good for General Motors is good for the country,” is the quote Engine Charlie is most remembered for. Around 1953, that moniker was forever pinned to the colorful president of General Motors, for reasons noted below. Until recently he was supposed to have died over 40 years ago.
But apparently he’s still living, at least judging by the Obama campaign and their absurd slogan “GM lives. Bin Laden is dead. That’s all, folks!”
Sorry, folks, that isn’t all at all! First, GM is still on life support, and it may still be after the election. Will that be the time to pull the plug? Timing is critical to President Obama’s re-election strategy. Kind of like cajoling defense contractors to not issue the required warnings of pending layoffs (sequestration) until after the election. And then offering the unheard of (maybe unheard of because it’s illegal?) use of government legal counsel when the companies get sued.
So how did all this GM business start?
When I was an undergraduate in economics at Miami University, the business school hired a new dean, Delmas Cawthorne. Cawthorne was an economist who had resigned his position as president of the Kansas City Federal Reserve Bank to become dean at Miami. In his speaking and manners, Delmas personified the expression “country smarts.” Besides his administrative duties, he taught one course in one of his specialties—stock markets.
I had the good fortune of enrolling in his stock-market course. All this balderdash about auto bailouts reminded me of something Delmas said. In summary: How can the Dow (the 30 stocks that comprise the Dow Jones Industrial Average, or DJIA, representing a cross section of American industry) represent “the market”? (“The market” means the thousands of publicly traded stocks.) How can GM even pretend to represent how the entire economy (Main Street rather than Wall Street) is doing? How can GM stock have the audacity to represent the Dow and, by extension, the economy?
Delmas explained that the Dow is a cross section of American industry (remember that, unlike today, in the ’60s when I was in college most American manufacturing was actually manufacturing in America) and that because GM stock was owned by so many individuals and funds and had so much stock outstanding, and GM’s suppliers and dealerships employed tens of thousands of people all over this nation, and most of those employees have families, GM was truly the single company that represented the American economy. And by inference its stock took on unusual importance. Delmas had already explained that “stock markets are discounting mechanisms,” meaning today’s stock prices represent future expectations. He concluded with the measured words: “So if GM finishes up for the day, smile. It means that on balance investors think there is, however small, something good in GM’s near future.”
That was, as noted, in the ’60s. Enormous changes have occurred in the interceding two generations. A lot, possibly a majority, of American manufacturing isn’t manufactured in America. GM has been through being competitive for some years now and is also through surviving on the basis of sheer size. Wal-Mart manufactures nothing! It is a retailer that has more sales, more employees, more dependent companies, more employees with families, etc. Wal-Mart is in the Dow. GM got booted out in 2009 because it couldn’t survive outside the government’s womb. So, why the hell are taxpayers keeping a brain-dead private company on life support?
But reputations, like myths, don’t live in real time. GM is not nearly as important to the U.S. economy as it was in the ’60s. Delmas wouldn’t have kept GM in the Dow nearly as long as Dow Jones did. He would briefly bemoan the loss of American manufacturing and then say Wal-Mart is now the company with the single greatest reach into the U.S. economy. He would not have favored this bailout.
What about Engine Charlie? GM’s president was supposed to be GM’s next chairman and CEO. Instead, Eisenhower tapped him to be Secretary of Defense, and that was the end of Engine Charlie’s business career.
As for that famous quote: Well, the Detroit Free Press, which knows something about the auto industry, reported right after Engine Charlie’s Senate confirmation hearings (which in those days were closed-door and no unofficial recording devices) that he said: “What's good for General Motors is good for the country.” A few days later, after much hullaballoo was being made of such arrogance, the committee made its transcript public.
Engine Charlie was asked about any potential conflict of interest due to all his GM stock and GM being a government contractor. He replied:
"I cannot conceive of one (conflict of interest) because for years I thought what was good for our country was good for General Motors and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country."
The Free Press quote stuck, Engine Charlie lived with it for the rest of his life, and the country still lives with it.
Engine Charlie’s real name was Charles Erwin Wilson. However, at that time there was another key Charles Wilson in the world of Corporate America. Charles E. Wilson was the CEO of General Electric (GE) and later Truman’s head of the Office of Defense Mobilization. That Charlie Wilson was nicknamed Electric Charlie. Another Charles Wilson at that time was Miami University’s provost, nicknamed Provost Charlie.
During the auto bailout hearings, a joke going around was: What’s the difference between GM and Jurassic Park? One is a dinosaur theme park and the other is a Steven Spielberg movie.
Yes, Engine Charlie and the GM he knew and loved are dead, both for some years now. No amount of electioneering is going to reverse that. It’s a crime against taxpayers to squander over $30,000* per worker for votes. GM needs to either dissolve itself or marry a wealthy partner. Perhaps it will be allowed to keep its maiden name.
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* Please see the math footnote in my Oct. 2, 2012, article “Obama Bushwhacked on auto bailout.” http://www.allvoices.com/contributed-new
Maybe the total of all those $30K per worker should be subtracted from distributions by the Federal Elections Commission to Obama.