Sunday, June 7, 2009

Why Not "Government Motors?"

The Federal Government - that is to say, you and I - now own an astonishingly large piece of General Motors. In the long run, this may or may not prove to be a good deal for the public and the American auto industry. Of course, in the long run, as Keynes famously said, we're all dead, so who can say?

Still, critics of the government's role in GM's bankruptcy seem to take it as an article of faith that the government should not step in to take over a failing industry, like car production, because governments have no business operating in the private sector.

As GM's bankruptcy approached, I heard and read several versions of the story of the British car industry in the 1970s: collapsing of its own inefficiencies and ineptitudes, it was taken over by the Labor Government and consolidated into one, enormous entity. Which then failed even further, causing a huge loss of taxpayer money. Moral of story? Government should not dictate what private companies do.

The British story is certainly a cautionary tale, but at roughly the same moment much of the American railroad industry was also collapsing. It was taken over by the government and turned into Consolidated Rail. Conrail managed to stabilize the American freight railroad system, and modernize it to some extent. Indeed, Conrail was successful enough that it was broken up and sold back to the private sector (CSX, in particular, benefitted magnificently from Conrail's breakup, thus from the public investment in it). Conrail's story would seem to offer a different lesson for GM, though we've heard less about that.

Indeed, as many commentators have noted, GM's operations in emerging markets are doing better than its domestic operations. In China particularly GM is making and selling lots of cars. Of course, in China GM operates in a roughly 50-50 partnership with the government. It seems to work there.

I don't mean to argue that the government take over is either good or bad, though it was probably necessary and unavoidable. (The government may not be able to save GM, but it can hardly do any worse than GM's own management and board have already done.) But as we contemplate the changed economic landscape that will emerge after our current economic mess we need to dispense with the dogma that government ipso facto is incapable of partnering with industry. We need to stop genuflecting at the altar of the MBA as the source of all wisdom about our economy. We need to recognize that the private sector has public responsibilities and that government's job is to protect our interests and enforce those responsibilities.

Thursday, June 4, 2009

A Court that Looks Like Us?

It has been hysterical to watch the Republican Bund react, hysterically, to the nomination of Sonia Sotomayor to the Supreme Court. Newt, Pat Buchanan, Bill O'Reilly, Rush, and not a few Republican Senators behind the scenes - all in a foaming lather over the prospect of a woman and a Hispanic. Or is it a Hispanic and a woman??!! Watch their eyes rotate in different directions.

There is another piece of Sotomayor's identity, however, that is apparently off-limits even to those who would de-rail her nomination at any cost: she was raised Catholic. If she is confirmed - and I certainly expect she will be - she will join Scalia, Alito, Thomas, Kennedy and Roberts as the 6th Catholic sitting on the bench. Should that trouble us? Should the question of religious affiliation be a matter of public scrutiny during nomination hearings?

Joyce Appleby, a distinguished professor of history at UCLA, has just written a brave op-ed piece for the History News Service, in which she says: yes. The whole piece is available at (full disclosure: I write pretty regularly for HNS), but let me quote from it here:

"In truth, religion is not a factor in the majority of decisions that the court will make each year. It might not be relevant at all had not the Catholic Church, with some other denominations, taken public stands on issues of great political significance today.

Abortion comes immediately to mind, but it's not the only constitutional matter where religion and politics clash. This past week two eminent lawyers, David Boies and Theodore Olson, filed a law suit in Federal District Court in San Francisco as co-counsel for two gay couples challenging California's Proposition 8. The California juarSupreme Court's upholding of the proposition's ban on same-sex marriages triggered the action, which seeks relief for gay couples under the Constitution's protection of equal rights.

The case could go all the way to the Supreme Court, raising questions about the vigorous opposition to same-sex marriages by the church to which five, and possibly six, justices will belong. The death penalty, which the Catholic Church also opposes, is another.

Recusal sounds like a radical measure, but we require judges to withdraw from deliberations whenever a personal interest is involved. Surely ingrained convictions exert more power on judgment than mere financial gain. Many will counter that views on abortion, same-sex marriage, and the death penalty are profound moral commitments, not political opinions. Yet who will argue that religious beliefs and the authority of the Catholic Church will have no bearing on the justices when presented with cases touching these powerful concerns?"

The Catholic Church in this country over the last generation, but particulary in the last 8 years, has injected itself more and more intrusively into our politics, precisely in areas like gay marriage and abortion. Should we be concerned that while less than 30% of American citizens come from Catholic backgrounds but soon 2/3rds of our Supreme Court justices do?