One of the great pathologies of the news biz is that there’s a structural incentive to overstate absolutely everything. Thus, Politico asserts that “Even as it gets set to announce the bankruptcy of General Motors Monday, the Obama administration is struggling to set parameters on how it will act after taking a 60 percent stake in the new company that emerges — and now that it has become the owner of a significant swath of Corporate America.” Conor Clarke points out that the government is, in fact, the owner of merely a trivial fraction of corporate America:
At any rate, Jon Cohn makes the case for the administration’s efforts and is fairly persuasive.
I wonder, however, about the international relations aspects of some of this. General Motors is now going to be majority owned by the US government with a substantial additional fraction owned by the Canadian government. There’s a fair amount of precedent for state-owned corporations (mostly from Europe, and most of it not very promising) but I’m not really familiar with much in the way of that sort of international joint venture. What’s more, no other country seems any more inclined to allow its car industry to go under than we are. But it’s hard to compete against rival firms that are getting government subsidies. Consequently, once you shift from a “nobody subsidized” equilibrium into an “everyone subsidized” equilibrium, it seems to me that it may be difficult to switch back. In principle, this is a solvable international coordination problem, but international coordination can be hard to pull off.
Meanwhile, it seems that the man now running the auto industry is Brian Deese who got his start right here at CAP/AF working for Gene Sperling.
Previous in TP Yglesias
By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.