Saturday, May 30, 2009

On the End of General Motors

Last week it was announced that bondholders who control much of the massive debt owed by car giant General Motors (some $27 billion) had rejected its latest offer. Most opinion then concluded that bankruptcy was inevitable. As I’ve noted before, this strikes one who grew up in the 1940s and 1950s as roughly comparable, if not to the death of god, then at least to the end of an era. What this also portends, though, is the consequence of an idea—one that pervades much, if not all, of American business. That idea is that the important thing, in commerce, is not making an excellent product, but rather persuading the public to like it, and want it.

Now, of course, you won’t hear this from pundits; rather, what you usually hear is a complaint about the benefits packages GM and other American car makers have long been saddled with by those terrible unions. And though this has clearly contributed to the problem, it is not the whole of it, or even the most important part. The problem, in my opinion, lies in General Motors’ apparent inability to respond to its competition, a threat from Europe and Japan that didn’t just arise last year or last decade. On the contrary, I can still remember my first car—a 1962 VW bug. Scorned by most Americans, particularly those living away from the coasts, the German-made VW took certain segments of the population by storm, and this was even before 1962. What this means is that for anyone willing to look, the trend away from those big, finned, clumsy gas guzzlers GM and most other American car companies were famous for has been apparent for upwards of 50 years! Are we to understand that highly-paid American engineers and CEOs were blind to this challenge? Impervious to the superior craftsmanship and durability of the little German car, and then the little Japanese cars like Honda and Toyota? It is absurd to think so. Henry Ford started the mass-production of automobiles using precisely the philosophy that VW and Toyota capitalized on: build simple, well-made, durable cars that your workers can afford.

Rather, General Motors’ problem inhered in a little something called planned obsolescence. Why make products that last? That will simply encourage people to buy only what they need, and keep what they buy for years and years. No. American enterprise, with its contempt for its consumers, thought it was smarter than that. It would be better to produce products with a nice shine to them, but made in such a shoddy, complex way that they would not only break down quickly, but be incapable of being repaired by anyone but a trained engineer (i.e. expensively). Hence cars, and all else, would need to be replaced every few years—the very emblem of throwaway culture. And how get people to buy such crap? Why with advertising and public relations.

The British film maker, Adam Curtis, has produced a documentary called the “The Century of the Self” that traces the source of this idea. In it, Curtis credits the nephew of Sigmund Freud, Edward Bernays, with initiating the whole idea of public relations as a way of inducing, through psychological means, the masses to think in regimented ways, and specifically, for consumers to want that which they do not need (Bernays wrote a book called “Propaganda” in 1928 laying out his ideas). The key is to associate a product with someone or something desirable—cars with machismo, cigarettes with women’s liberation (which Bernays actually did), always keeping the unconscious motives hidden. This is the core of the American corporate idea, at least since World War I and especially post WWII. Consumers must be persuaded that a product gives them something they lack personally. Hence, getting things—a car, a washing machine, the latest fashion in clothes, the fastest computer—not only serves a physical need, it fills a psychological hole, and, in the aggregate, becomes one’s entire reason for living. In short, the be all and the end all of life is buying, consuming.

To see how successful this strategy has been, simply consider how critical consumer spending is now said to be in our overall economy. And the bulk of that spending goes for items that are not only useless, but designed to be obsolete in a few years if not sooner. Where once it was cars—trade in that new Oldsmobile, Lucille, every two years—now it is computers, whose operating systems and programs routinely become obsolete in three years or so.

Back to General Motors. Once the world’s largest automaker (as goes General Motors, so goes America), it simply could not believe its operating credo had been undermined by gas crises and the looming end of oil, not to mention global warming. And so, in response to the threat from European and Japanese automakers, whose cars were known, by anyone with half a brain, to be superior in every way, GM simply increased the advertising. Rather than build a better, more efficient vehicle, it built more public relations campaigns. Don’t focus on how big, bulky, inefficient and unsafe, SUVs are; just focus on the machismo of driving one, on how flimsy Japanese cars run for cover when they see a Hummer coming. Chevron does the same. In response to increasing evidence about the despoliation of the environment by the gasoline it produces, and spills, and ruins whole nations to obtain, it runs quietly upbeat, mendacious commercials inviting everyone to join good old Chevron in protecting the natural world. Again, the answer is not investment in new energy forms or a lessening of exploitation; the answer is to convince the stupid public of Chevron’s suddenly “green” intentions.

So don’t weep for General Motors. Or Chrysler. Or all the dinosaurs who will be going down with them soon. Weep for their obtuseness, their lumbering inability and arrogant refusal to see themselves in a mirror. Weep, too, for the ruin they have, with their infinite greed, inflicted upon our nation and our world. But rejoice, too, in the old truth: though you can fool some of the people all of the time, sooner or later the con job is revealed for what it is, the house of cards collapses, and the natural order demands its due.

Lawrence DiStasi

1 comment:

  1. General Motors will fail. It has to fail. That's because it is GM's corporate culture that has killed it. Hanging up a sign that says, "Under New Management" is just another example of public relations super deception which they think will make things all better.

    Michael Moore's documentary "Roger & Me" is about the director's trying to get a word in with Roger Smith, the CEO and Chairman of General Motors in the 1980s. Moore saw then how the company put profits ahead of the people it employed and looked down its nose at consumers. How arrogant they were and have continued to be. It is GM's corporate culture that has killed this company. You can't change the management and say everything will be better. "Oh, please, give us a second chance" is a pathetic plea. These people have had their second chance many years ago and they blew it then just like they are going to blow it now. GM should have collapsed along with the Soviet Union back in 1989. Their culture became part of a Cold War mentality whose time has passed.

    GM is not going to survive its bankruptcy filing. Just as a leopard cannot change its spots, neither can a corporate culture change once it has been set. It's like cement--once it sets and dries, it cannot be reshaped. GM's corporate culture has not changed in any fundamental way since World War II. America cannot sustain "too big to fail" behemoths in a world that is shrinking as populations grow exponentially and as democracies continue to develop and innovate new ways to empower citizens of the world. The big benefit from this is that American companies have now seen that once they take money from Uncle Sam, they are no longer in control. Uncle Sam is not a free ride. The cost of taking on the government as a partner requires sacrifice. That's a good thing.

    Now that Cisco Systems has replaced GM on the New York Stock Exchange, will it make the same mistakes? Silicon Valley has a brand of innovation arrogance that is similar to the one that made Detroit world famous. Have you heard about the U.S. Justice Department's probe into shady hiring practices among companies like Google, Yahoo!, Apple and Genentech? The U.S. Government has only just scratched the surface of the arrogant and incestuous nature of the Silicon Valley technocracy. It seems that American business arrogance just passes on from one industry to the next.