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Not a way to revitalize the U.S. auto industry

$50 billion to shut plants and fire workers? Nonsense.

By John Nichols

The trouble with the Nixon-goes-to-China theory - grounded in the calculus that big progress is made when a politician goes against type to address a seemingly intractable challenge - is that sometimes the "bold" gesture is really just more of the same.

It's important to recognize this reality as the major media in the United States begin to play up the reshaping of General Motors by the Obama administration's auto-industry task force as a courageous or groundbreaking new initiative to save domestic automaking. It's not.

The GM bankruptcy and bailout are the continuation of the post-industrial policies of the Clinton and Bush years. Those policies, which encouraged companies to shutter factories in the United States and move operations to foreign countries with lower wages and weaker regulations, were defined by Wall Street rather than Main Street. The model of a "healthy" American company was defined by stock and bond speculators, who rewarded short-term thinking and brutal cost-cutting, even if they resulted in the loss of millions of jobs, the closing of hundreds of functional factories, and the deindustrialization of communities, regions, and whole states that had once been among the most productive in the world.

Nothing about the old way of doing business made sense, and it made a wreck of GM. After decades of closing factories, laying off workers, and shifting production overseas, the company now finds itself with $172.8 billion in debt.

It would make sense to change course radically. But the Obama administration is not doing anything radical. Rather, it wants to create a "New GM" that stays the course of the old GM.

If all goes according to plan, the New GM will close down as many as 20 factories in Michigan, Indiana, Ohio, and Delaware. Additional plants in Tennessee and Michigan will be put on standby for probable closing. At least 21,000 family-supporting jobs will be lost as the corporation shifts production to new facilities in China and other foreign countries.

The cuts come on the heels of GM factory closings last year, which cost tens of thousands of jobs and shattered communities across the Great Lakes states just as the downturn was becoming a deep recession.

This massive de-industrialization plan - with its rapid offshoring of work once done in the United States - will be paid for by the federal government. It will cost U.S. taxpayers a great deal to eliminate this many U.S. jobs; Washington has already handed GM $20 billion and is expected to shift an additional $30 billion into the coffers of the corporation. "Whether that investment will ever be recovered is still an open question," the New York Times reported.

So what should taxpayers make of a scheme to risk $50 billion on a project to lay off U.S. workers, close U.S. factories, and shift work overseas in order to satisfy speculators who continue to reward race-to-the-bottom strategies?

The Times suggests that we ought to be impressed with the "Nixon-goes-to-China" courage being displayed by the president and his auto-industry task force. "The company will also have to shed 21,000 union workers and close 12 to 20 factories, steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor," the paper chirped on its front page.

Spare us. It takes very little courage for a Democratic president to side with multinational corporations in the same way his Democratic and Republican predecessors have.

Courage involves breaking pattern and doing something bold, like recognizing that the United States needs a manufacturing sector and making a commitment to modernize basic industries and keep skilled workers on the job. That would not be a rejection of globalization. It would be an embrace of a future in which the United States chooses to compete rather than give up.

An investment of $50 billion in federal money to close 20 major factories and shed 21,000 jobs is not a plan to save, let alone revitalize, manufacturing in this country. It is an abandonment of workers and communities that speeds up the de-industrialization of the United States. And it encourages GM executives - be they old or new - to be more concerned about the company's stock value than they are about smart long-term strategies.