GM Bankruptcy

One of the largest companies the world has ever known has gone bankrupt. Over the last five years, its stock was selling near the fifty dollar range at times; for a few weeks it stayed near a dollar before being de-listed last week. How could this happen?

Everyone has their opinion, so here’s mine.

When companies get to a certain size, when the sheer numbers in the workforce attenuate any clear message or purpose, when the bloat makes it very difficult to track accountability, when they go public and are answerable to stockholders looking only for profit, they lose the core beliefs that inspired the company in the first place. It becomes a race for dollars for this quarter and “how much can I get,” not regard for the long term consequences of actions. 

Unions and management have been setting their wages and benefits based upon what they would like, or think they should have, rather than on the reality of the market and the company’s profitability. Notice how companies operating in the red and on debt just continue to pay out big wages, salaries and the now-infamous bonuses. This is unconscionable and immoral.

Actually it is theft. One does not get to have what they do not earn. One does not get to borrow from others, promise to pay them back, take a salary and benefits that are not justified by the earnings of the company, and then leave those who loaned the money in good faith holding the bag (bankruptcy).

Government has been a big player in this debacle. It imposes onerous regulations, permits unfair competition from other countries, fosters unions when they are not necessary, and forces the payment of unemployment to employees who deserve to be fired. Perhaps most destructive is the movement toward socialism and its encouragement of the idea that everyone deserves a certain standard of living and that we all should have equal results regardless of our efforts, risk taking, ingenuity...or lack thereof.

All of our economic problems spring from ignoring reality and attempting to operate society and business as we believe it should be, not as life actually is. It may take a total collapse of our economy—as present actions by government are indeed facilitating—to force us back to the most basic economic principle of all: YOU GET WHAT YOU EARN. (See Living Life As If Thinking Matters for rational thinking about money, business, and politics)

The following videos demonstrate what work and ingenuity can do. These people are not playing victims, they are not waiting for others to solve their problems, they are not whining that their lot in life is not equal to somebody else’s. If companies and government would operate using these principles, there would be no economic disasters.