Government Motors....oops I mean General Motors

The last number of months has seen that cornerstone of American capitalism, General Motors spiral downward and almost disappear as a corporation. Without the financial backing of the US, Canadian and Ontario governments, the company that was too big to fail would have failed. Not long ago our neighbours to the south used to say "What is Good for GM is good for America". That was when American designed cars ruled the road.

Now GM has gone through bankruptcy and a new General Motors has been created from its best assets with its other so-called assets part of a "Motors Liquidation Company". A friend forwarded me an interesting article from the New York Times about the restructuring of GM.

GM is now a public company, owned by the 3 governments and by the United Auto Workers. The plan is for governments to slowly exit the company over the next 5 years or so. In the meantime, there are some in Canada who are calling for increased transparency from this publicly backed company. I guess all Canadian citizens are now shareholders of GM and that those of us who live in Ontario are doubly lucky as we are also shareholders. Should we expect that GM adhere to the same rules on transparency and accountability that other government funded enterprises (eg: LCBO, Lottery Corp) must follow? This is an interesting question but there are substantial differences between a "government enterprise" and the financial backing that governments have given GM. The biggest is that the government enterprises will remain in the public sphere for policy and regulatory reasons (control of the sale of alcohol or games of chance), whereas governments' foray into the automobile sector is only (hopefully) temporary to salvage important manufacturing jobs and research & development capacity.

Another thought that comes to mind is whether those who have espoused the proposition that "government is the problem" (enunciated famously by Ronald Reagan) have changed their minds as now it seems that "government is the solution" to the financial crisis - just look at the various bank and brokerage house bailouts by government as well as the GM and Chrysler supports plus all the stimulus spending that governments around the world are engaged in. I wait to see what they say!