Wednesday 18 September 2019

Megan McArdle: 'General Motors' jobs cull puts the brakes on Trump's grandiose claims'

'General Motors was America's largest company, and the state-of-the-art cars rolling off its assembly lines provided highly paid, secure jobs by the hundreds of thousands.' (AP)
'General Motors was America's largest company, and the state-of-the-art cars rolling off its assembly lines provided highly paid, secure jobs by the hundreds of thousands.' (AP)

Megan McArdle

In 1953, Charles Wilson, then the president of General Motors, famously told a US congressional committee that "what was good for our country was good for General Motors, and vice versa". A version of that soft industrial nationalism has been Donald Trump's core political philosophy. Though with a codicil: "What's good for both is also very good for one Donald J Trump."

The president has leapt to take the credit when even small numbers of auto jobs were added during his administration. In part that's because of the electoral map; car manufacturing is heavily concentrated in the Midwestern states that sealed his 2016 victory. But Mr Trump also clearly believes the way to "Make America Great Again" is to bring back jobs from overseas.

When he talks this way, he is looking back to the days of Wilson at GM, when the fortunes of America and its large manufacturers were so tightly linked that Wilson's formula was less a fine bit of self-delusion than a statement of fact.

During the mid-century peak of US manufacturing prowess, the country's industrial might was the envy of the world, and car companies were its crowning glory.

General Motors was America's largest company, and the state-of-the-art cars rolling off its assembly lines provided highly paid, secure jobs by the hundreds of thousands. When America prospered, so did GM - and when GM prospered, so did America.

Wilsonianism has an undeniable appeal, and it's not just helpless nostalgia. The formula's underlying premise, of a common national economic interest, seems vastly preferable to America's current politics, which offer little more than a battle to the death between the naked and incommensurable self-interests of various groups.

But if a politics of that common national economic interest is possible, it won't come about by simply fetishising the jobs of 1953. Trump learned that on Monday, when GM announced it was cutting up to 15,000 jobs and shutting several production facilities in the US and Canada.

Mr Trump, predictably, was furious, telling the 'Wall Street Journal': "They better damn well open a new plant there very quickly." He seemed to be implicitly acknowledging that when he claimed the power to increase manufacturing in the US, he would also be held responsible if it shrunk. Now GM has announced a major restructuring his grandiose claim looks, and was, politically foolish.

The truth is Mr Trump didn't deserve much credit for the jobs added during his first two years in office; he also doesn't deserve much blame for the jobs GM is shedding.

Yes, the tariffs the Trump administration has slapped on foreign steel aren't helping an industry that consumes a whole lot of the stuff. GM's chief executive, Mary Barra, has listed tariffs as among the "headwinds" facing the company and aluminium levies have cost the company a billion dollars by themselves.

But a modest increase in metal costs that is also borne by their competitors is unlikely to be the whole story. According to Mary Lovely, a trade economist, the tariffs "probably just added to the urgency of doing something to stem losses from unpopular models and production lines".

What is spurring the losses? Americans just aren't interested in the smaller sedans many of the affected GM plants manufacture. Between better fuel efficiency and falling oil prices, Americans have greater freedom to indulge their long-standing preference for larger vehicles.

As a result, SUVs and crossovers dominate US car purchases. (© Washington Post Service)

Irish Independent

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