What's Bad For GM Is Bad For The Country.

                       “I’ve never seen a bankruptcy

                             that has such a happy face

                              on it as this one.”

 

                                                Gary N. Chaison

                                                Clark University

 

 

There are no good reasons for going into bankruptcy,

only significant ones. If you’re a young and foolish –

or old and cunning – individual, it’s an easy and

popular way of avoiding your financial obligations

(except to your lawyer.) If you’re a businessman 

who can’t even run a candystore  - and you run a 

candy store – it’s irrefutable proof that you should 

choose another career. What if you’re engaged in 

something larger? Suppose you are, from time to 

time, the largest industrial corporation in the world? 

It’s no longer a question of stiffing some 

soon-to-be-former friends or guileless candy suppliers, 

  your going bankrupt will effect a lot more people in

  a lot worse ways. That’s the issue that General Motors

faces right now. Yet, in an article by Michelle Maynard

and Michael J. de la Merced in the 5/26/09 New York

Times, Gary N. Chaison, professor of Industrial Affairs

at Clark University, sees the bright side.

 

Among the reasons for his happiness are the following:

The mere threat of GM going bankrupt has already 

coaxed concessions from the United Autoworkers Union;

If GM does file for bankruptcy, suppliers and the 

communities where GM does business will be eligible for 

federal assistance and, finally, consumers who insist 

on buying cars from General Motors will be rewarded 

with warranties backed by the Federal government.  

Professor Chaison claims that, from GM’s point of view, 

“You’re going to the hospital and that’s really good 

because you’ll be out soon and you’ll be much better.” 

I take a different point of view. Bankruptcy is not a 

business model and going on federal assistance is not 

a cause for rejoicing.  Everyone who trusted GM is 

being cheated and the further down the list of 

creditors you are, the more you’re being screwed. 

Calling it reorganization or Chapter 11 is just 

window dressing. Literally. It's like a restaurant 

that goes out of business and the landlord hangs 

a "Closed for Renovation" sign in the window or 

one of those electronics stores that exploits tourists 

by putting a "Going Out of Business" sign in their 

window - for years. There are no pros to this 

particular con. General Motors going bankrupt 

is like siphoning gas: a traditional form of stealing 

that leaves a bad taste in your mouth.