US To save or not to save G.M.

As the economy continues to go down the drain, the next big casualty may be one of the great icons of America, General Motors. If it were to fail, then it would be so symbolic of the crisis. An America without cars is unthinkable, and for one of its Big Three to fail is almost unimaginable. Cars are real things that everyone drives and sees every day, so G.M.’s disappearance will be felt immediately and ubiquitously. It’s much easier to feel sympathy for mechanics and workers losing their jobs and pensions than for the plump bankers (or used car dealers). There is no denial that G.M. is in a dire state and the company may run out of cash early next year. The question is whether public money should be spent on saving this car manufacturer. I have no idea about the economic rationale for or against the bailout, but I can see some political stories behind it.

Mr Bush, who is still running the country, is damned if he does and damned if he doesn’t save the company. Either way, his decision is going to be unpopular. Let it sink and the failure will be the epitome of Mr Bush’s presidency, the totem of his economic incompetency. There will be job losses and add to the doom and gloom. Confidence, as we have seen, is a very brittle thing, so further turmoil and panic among the markets, banks and corporations may result. By trying to save G.M., it will raise questions about which companies the state helps and more importantly which ones it lets fail. Each decision will be highly contentious, since there will be difficult cases: implicitly the state decides which companies and jobs it deems worthy of saving and others unworthy. Naturally, the worst possible outcome is trying to save the company but it nevertheless fails: given the speed and depth of the economic malaise and uncertain political will, such a disastrous course of events is possible.

Ms Pelosi and Mr Obama may make pious noises about saving the manufacturer but, methinks cynically, it is political prudence to keep quiet and let Mr Bush take the fall. If they are good Machiavellians, then they would be invovled to the extent of plausible deniability and plausible credibility: if things go badly then they wash their hands, but claim credit for the policy if it works. Whatever happens, "G.M." would be a byword for Mr Bush’s and the Repulican Party’s failure in guiding the economy. Whatever dirt and accusation that the Republicans throw at Mr Obama or the Democarts, "G.M." will surely haunt them and will be an effective rebuttal. The charge of ‘Tory economic incompetency’ worked for the Labour party in Britain: of course the US and the UK are different but if Mr Obama and the Democrats can continue with the political narrative of ‘failed’ Republican economic policies, and the electorate buys it, then the Republicans cannot do much against that charge.