General Motors is on the ropes, should Americans care?

How long can America produce little of what it consumes and expect the rest of the world to continue to wait in line to service American consumers?

What happens when we run out of land to sell, bonds to issue, dollars to print, and companies for foreigners to acquire? The difference between what Americans think they deserve and what they will be soon able to afford may be affected by this general attitude of consumer first, country second.

Its seems that most American consumers do not consider the impact (beyond their own wallet and personal gratification) in choosing between foreign and domestic cars, gasoline, or foreign produced electronics, clothes, and other goods. They seem to believe they deserve the best price, features, warranty, and service. There appears to be little loyalty to brands or country, only to their own perception of quality and value.

This has been driven successfully for 70 years (following the great depression) thus far by the American free-market consumption model, which has led to tremendous innovation, choice, and low prices.

However, it wasn't consumerism that led to American buying power, it was American global dominance of key industries that produced goods in demand by the entire world.

For most of this period, innovation and production was originating from American owned production. Now most of the significant consumer oriented advances are originating in and going to other countries first, if they ever arrive in America at all. The fanciest gadgets and home entertainment systems arrive first in Japan and Korea. Cell phones are hundreds of times faster or more feature rich in other parts of the world. These foreign producers decide when and where to ship their goods and these decisions are driven by economic reality.

Americans are in fact getting what they deserve. Up to this point, America commanded tremendous worldwide respect and buying power, dictated by the tremendous industrial base that America has had, yielding leading exports to the rest of the world and ownership of much of the global production.

America cannot maintain its worldwide economic leadership position by a military alone that is paid for by borrowing money from other countries and with equipment and key components that are purchased from foreign producers.

Now as America loses $700 Billion to the rest of the world each year in trade deficits and interest payments and produces less and less on its own, the rest of the world should begin to wonder why they should pay so much attention to what Americans think they deserve.

Should Americans be so quick to dismiss General Motors' failings as a natural consequence of the infallible American "Free Market?" Should we not consider that industrial bellwethers like GM are as important to our national sustainability as a strong military and a stable government? Should the entire country suffer because of the failure of leadership in a single board room? According to a recent BusinessWeek report, General Motors is responsible for 900,000 US jobs (directly and indirectly), $8.7 Billion of direct payroll, and 26% of the US auto market.

GM is supporting a large portion of this country's economy. When GM shut down for 54 days in 1998 because of labor action, it knocked a full 1.0% off of the US economic growth in that quarter according to BusinessWeek.

President Bush said of the recently reported $1.1 Billion GM loss in Q105 that GM is "going to have to learn to compete."

Bush continues, "in other words, if the consumer starts saying, 'We want a different kind of automobile,' they're going to compete once again with, say, the Japanese automobile manufacturers to ... keep their lion's share of market demand."

What President Bush does not say is that General Motors has no hope of competing alone against with the entire unified nation of Japan, just as Boeing cannot compete with the entire continent of Europe in the form of Airbus.

GM pays on average $1,600 more per vehicle than foreign competition in order to shoulder the current and retired labor health and pension benefits that sustain a large part of this country's economy according to BusinessWeek. Other countries have protected markets and simply do not have these high costs to sustain their economy.

This is not a matter of an individual company failing to compete, it is a systemic imbalance that is making it impossible for the country to be competitive.

Shouldn't we consider the agenda of other countries that are subsidizing their own industries, holding down their labor costs, and protecting their own markets? By offering foreign subsidized competitors free access to our unprotected markets, we run the risk of destroying our own industries and global competitive forces not necessarily because they are inept or inefficient, but because perhaps we have not taken enough care to put our own country first.

After all, Americans today enjoy the freedom to buy products from all over the globe because of the wealth that our industries have created in this country to date. If we abandon these industries, from where will our future source of wealth and products come?

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