Car Guys vs. Bean Counters - Bob Lutz [106]
But we’ll never know for sure.
14
And in Conclusion . . .
IN A SENSE, THE DECLINE, FAILURE, AND REBIRTH OF GENERAL MOTORS is simply a metaphor for what is happening to the whole United States. The days of absolute industrial and economic dominance that we took for granted and assumed would go on forever are over. They have been over for some time; we just didn’t notice it. They were over the day the Asian producers cleaned out our home electronics industry, camera industry, small-appliance industry, and many others.They were truly over when Japan, Korea, and others demonstrated they could produce and ship vehicles as good as ours or better. “Superior technology,” that old fallback, was no longer a reliable U. S.-only weapon, as technology transfer is quasiinstantaneous in today’s world, where everyone can know everything. The minute we concluded that industrial products made elsewhere could be imported and sold at prices well below what it took to make them here, we began to lose our industrial preeminence. Following the dictates of classical economics, we followed the money, and in the quest for greater profitability (after all, the purpose of business), the nation soon imported everything and paid for it with IOUs called “Treasury bills.”
Sure, it worked for a while: nonindustrial activity, financial markets, the odd “bubble” here and there, like the ephemeral “dot-com boom” and the later “subprime lending housing boom,” masked the underlying problem that, internationally speaking, we were not competitive. “What a great world,” I liked to say. “We pay each other high salaries, wages, and benefits, and then we go to Wal-Mart and buy a nineteen-dollar CD player from China.”
To me, it was evident (although a lot of economists disagreed) that it was not sustainable. A country can no more consume beyond what it produces in value-added goods than an individual family can spend more than it makes. The trouble with that rule is that, at both the macro and micro level, it can be violated with impunity simply by “maxing out the credit cards.” Then, after a lag, the real disaster sets in.
Whether it’s residential foreclosures, military cutbacks, renegotiated wages, benefit cutbacks, budget shortfalls in many states, countries, and communities on the verge of bankruptcy and unable to pay their employees or retirees, school systems going under from the burden of excessively rich contracts and ridiculous teacher “tenure” negotiated by the teachers’ unions, the signs are everywhere that the days of “What the hell, we can afford it! After all, we’re the richest nation on the planet!” are over. Everyone was slow to recognize it, because it crept up on us. But now it’s here, and one of the reasons an almost trillion-dollar stimulus is not “stimulating” as much as hoped is that the natural objects of stimulation, namely manufacturing jobs, are largely elsewhere: China, India, Indonesia,Vietnam, you name it.
As a country, we need to go through this painful collective Chapter 11–like experience. For a time, we need to put the “American Dream” of ever-more, ever-bigger, ever-richer on hold as we grapple with the reality that we are, on balance, far less competitive than we need to be. We need lower salaries, less obscene bonuses (especially those derived from toying with financial instruments, or “smoke-and-mirrors value,” as opposed to real value added). Worker wages and benefits should not rise; if anything, future workers may need to enter the industrial workforce for less compensation than their fathers did.
The reality that the USA has been charging prosperity to the credit card and the realization that it’s high time to “get real” needs to sink in everywhere.
I sense the “adjustment” taking place. With a devalued dollar and more competitive wages, it’s a time for insourcing