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According to the news, General Motors will run out of operating cash before December 31, 2008. GM says it will go bankrupt without governmental help. What is going on?

For many years conservatives have claimed that they know the best strategy for our nation. In their theory, businesses compete against each other and the more efficient ones survive. The best environment is capitalism and a free market where companies set their own rules and happily do their best to compete by being better than their competition. Everyone wins. Business becomes more efficient and the consumer gets a more reliable product. Labor improves productivity and in that way increases their wealth. Somehow it is not working.

General Motors could be a major case study in how not to compete. During the 50′s and 60′s General Motors was very successful at marketing vehicles in this country. I remember when, if your wanted a good car you looked at Chevy or Pontiac. Oldsmobile and Buick provided more luxury and Cadillac was the symbol of high class. On the other hand, Datsun (Nissan), Toyota, and Honda offered small cars that just didn’t appeal to most Americans. How things have changed.

While Toyota and Honda were working hard to develop a higher quality vehicle to compete in the United States, GM was pushing trucks and the SUV. Both camps were successful. Toyota and Honda marketed automobiles that were more efficient and maintained their value longer than GM or Ford. GM and Ford marketed great SUVs and didn’t seem very interested in competing for the sedan market.

Of course in the 70s we had, thanks to OPEC, an oil shortage with long lines at gas stations. The country resolved to become more energy efficient and become less dependent upon the oil countries. Toyota and Honda pushed fuel efficient cars. GM and Ford pushed trucks and SUVs.

Why did GM and Ford avoid the call? When we search, today, for automobiles that provide the best MPGs we see the high quality cars from Toyota and Honda. Couldn’t the planners at Ford and GM see the “handwriting on the wall?”

The American automobile industry has been in trouble for years. Profits have been dwindling at Ford and GM. Production has been decreasing at GM for years. Much of their strategy during their economic downturn has been to close plants and lay off workers. Even during the recent increase in gas prices that shocked people at the pump, GM showed no leadership. Our American companies didn’t seem interested in changing their strategy.

Now, with our economic crisis, GM wants help from the government. Many companies are asking for federal government help. Bank’s and investment companies, numerous technical corporations, and manufacturers are beginning to line up for their “welfare” checks. In a sense this is poetic justice. Companies that haven’t worried much about out sourcing labor, cutting labor benefits, promoting lower wages, and laying folks off expect those same taxpayers to bail out the companies that “dis” them.