Lots and lots and lots of talk these days about “shared sacrifice”. But, somehow all the sacrifice seems to be on those in the middle class or below.
Comic by Mike Thompson – Detroit Free Press
But there’s an example of TRUE shared sacrifice right in front of us today. And it worked.
It’s the bailout and subsequent recovery of General Motors.
When the Obama administration made the decision to extend loans to General Motors to save their company, they imposed significant constraints on them. They replaced their leadership, they went into bankruptcy and they made cuts and adjustments from the top of the company down to the very bottom.
The signs it was actually going to work came last spring when they paid back all the loans to the new GM early and with interest.
Then, this past fall, they had a larger than expected initial public offering and all signs pointed to the federal government recouping its entire investment by the end of this year or nest. General Motors even said “thank you” to the American taxpayers.
And, this week, we learned that General Motors made a profit in 2010, their first annual profit in six years.
So, who sacrificed in this?
Well, certainly the taxpayers sacrificed. While we’ll get most or maybe even all of our money back, it was still taxpayers who had to provide the loans.
The unions, as usual, were forced to take further concessions. This is pretty typical in any economic downturn and this one was no exception. The good news is that (a), their company still exists now and is in the black and (b) GM union employees are getting sizable profit-sharing bonuses in 2011, over $4000, money that will go right back into the economy, furthering our nation’s economic recovery.
The shareholders of the original GM lost their shirts, for the most part. While this is unfortunate for retirees counting on that money, shared sacrifice is just that: shared. And, I’m going to be frank, I think it’s high time shareholders are held accountable for their “leadership” (or at least ownership) of the company. So many times they reap short term profits and escape before the company they just sucked dry dies on the vine. This time, they paid a price for not hiring good managers and that, to me, seems appropriate. Maybe people will pay a little closer attention to those proxy statements and maybe even take a more active role in demanding that their companies are preparing adequately to compete on the world stage into the future.
Employees of businesses and industries associated with the automotive industry took a hit, as well, and it was a big one in some cases. The company I work for, like so many in Michigan, has over half its business related to vehicle manufacture in some way or another. While we weathered the storm fairly well, we still had to downsize, letting people go, and those that remained worked harder for less money, no bonuses and no raises. Many other companies went under completely.
The state of Michigan, in particular, got hit hard. Our unemployment rate is one of the highest in the country and our home foreclosure rate is, as well. The rustbelt states, in general, paid a heavy price for the economic downturn in general and the near-collapse of the automotive industry, in particular.
I would even argue that the Obama administration has paid a bit of a political price for their actions. Although it is proving to be one of the absolute smartest things they have done since President Obama took office, they were criticized brutally from both the left and the right and that takes a political toll, at least in the short term.
Taxpayers. Union members. Shareholders. Automotive suppliers and their employees. Rustbelt states. The Obama administration. Pretty much everyone took part of the hit.
And, now, we’re witnesses GM rising from the ashes to become a stronger, leaner, more profitable company. Who could have predicted a decade ago that GM would be producing an electric car after they destroyed the first one they pioneered?
Shared sacrifice CAN work. But what the Republicans in this country think of as shared sacrifice is anything but shared. And for their wealthy benefactors, it’s anything but a sacrifice.
I’m just sayin’…
