Considering the various other moves that have been made since last October, what the government is planning to do with General Motors seems like a reasonable choice out of the set of viable options. That said, I’ve been uncomfortable with this policy trajectory from the beginning precisely because this outcome seemed like a best-case scenario for an auto bailout endgame and it’s not a very good endgame. Recall that as of November, in theory government assistance was just a “bridge loan” that was going to be repaid and all was going to be well. Now the government’s going to own a large dysfunctional auto company.
I mostly share Kevin Drum’s concerns about this. But to put the problem more broadly, the issue is simply that the government, in its capacity as GM owner, has too many divided loyalties. It would be nice to think that Government Motors will protect the environment, protect the financial interests of taxpayers, protect the interests of GM’s workforce, and protect the interests of GM’s business partners all simultaneously but in the real world these objectives are clearly in tension. Trying to resolve these questions is going to be a mess.
I think it’s entirely appropriate to be spending money to help people working in the auto industry and, more generally, people living in the “Greater Michigan” zone where the decline of auto manufacturing jobs is causing huge problems. But there’s little reason to believe that propping up GM in this manner is the best way of getting assistance bang for the taxpayer buck.