Ralph Nader Now Worth More than GM - and Other Wonders of the Auto Crisis!

Is Capitalism the Most "Ironic" Economic System?

by Mitch Rofsky, BWC President

Wonder #1: On November 9th, a Credit Suisse analyst declared that General Motors was worthless. This was an amazing statement. It was just over 40 years ago that General Motors tried to set Ralph Nader up for extortion and was exposed in a Congressional hearing. Nader was an ordinary citizen who had written Unsafe at Any Speed, an expose on how the auto industry had ignored consumer safety. General Motors was considered the most powerful company in the world.

GM is supposedly worthless while Nader and/or his groups have assets exceeding $1 million. Nader dismissed the analysis and it's not clear how much of that money is under Nader's personal control as opposed to groups that he manages.

But apparently it wouldn't take all of his assets for Nader to pursue the most notable takeover in modern history. Despite that bank analyst, Nader doesn't have the resources to purchase GM. But what if Nader got together with his friend Warren Buffett? Or with Bill Gates? Or Steve Jobs? Or other deep pockets? First, a pre-packaged bankruptcy that would give the new ownership room to maneuver without being tied to GM's past. Then a takeover by some of the most innovative entrepreneurs in America. (Besides, it would give Nader something else to do when the next Presidential race arrives.)

Nader has the "ability" to purchase GM? Meanwhile, Bernard Madoff takes advantage of some of the richest, most sophisticated investors in the country. Incidents like these raise another question: is capitalism attractive to a post-modern generation because it is more "ironic" than the alternatives?

Wonder #2. How has there not been one mention of health care costs during the consideration of aiding the auto industry? (If I missed one, please email me with the details.)

As the U.S. is virtually the only western industrialized country without universal health insurance, our auto industry is at a competitive disadvantage on every car manufactured here that faces a car built abroad. This can amount to over $1,000/vehicle. Shouldn't the auto industry be leading the fight for national health insurance? They would be joined with thousands of businesses that either face unfair competition or believe that health care should not be dependent on one's employment. Where are the auto industry leaders--and the Democratic legislators for whom universal health care is a priority?

Wonder #3. What does this crisis say about executive management salaries? Prior to announcing that they would take $1.00 in salary this year, the execs or their predecessors took home big numbers, while driving their companies into the ground. Rick Wagoner of GM earned over $13 million in 2006, while the President of Toyota is reported to earn much less, perhaps less than $1 million.

This is even more a wonder given that auto worker salaries have become an issue in the bailout, while white collar salaries are virtually ignored.

Wonder #4. Recently, Americans have purchased more trucks than cars. A wonder in itself, perhaps less so when the companies make so much money on their trucks and large cars that they are happy to push these vehicles as hard as they can. Ford, GM, and Chrysler were happy to let the foreign companies take the lead with cars while over 60% of their sales were in trucks.

Then, when gas prices rise (some would say "get real"), trucks aren't quite so attractive. The entire auto industry has been built on the fact that oil is subsidized because the pollution and other externalities associated with carbon-based fuel are ignored. If we don't change this policy to reflect the real price of gasoline price, will the auto companies go back to their old ways?

Wonder #5. More on this in the next Kicking Asphalt: China has just announced the first plug-in hybrid cars. So...Japan creates the hybrid technology and China the plug-in technology. But design and technology are supposed to enable the U.S. to succeed in a free trade world. Oh, the auto industry isn't succeeding? Uh, oh...

Mitch represented Public Citizen's Congress Watch in the 1979 Chrysler Bailout

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