Here is born-against populist Rahm Emanuel writing in The Atlantic about the automobile-industry bailouts that were undertaken by the Obama administration.
It was the same story arc with the auto bailout. For decades, executives in Detroit had made indefensible decisions. They’d been selling less reliable cars. They’d never found a way to compete effectively with their foreign competition. They’d continually lost market share. But when the bottom fell out and they were forced to ask middle-class taxpayers for a bailout, they never took responsibility. Most of the top brass kept their jobs. And once they’d recovered, they returned to business as usual. The middle class was once again expected to foot the bailout while the execs kept on like it had never happened.
And here is Obama chief-of-staff Rahm Emanuel — who is the same guy, as it turns out!—talking about the automobile-industry bailouts that were undertaken by the Obama administration:
They’ve made changes and now, as you know, General Motors is going to have an IPO. And most importantly, they’re going to keep open factories that they were planning on closing.
So we’re righting an industry that was not doing itself, or the American people or its workers, the right thing. So it was a way of getting them to do the changes that they had postponed.
These accounts of the same episode by the same man are inconsistent. Either the industry was obliged to “do the changes” or it “kept on like it had never happened.” Either the industry was “righted” or it was not.
There is much that is wrong with this. It is the case that GM does not make great cars, but the most important causes of its cashflow problems were pension liabilities and troubles at GMAC — which is to say, the parts of its business arrangements that Rahm Emanuel and the administration he served were intent on protecting from reform to the extent that it was possible to do so. Indeed, critics at the time argued, not without reason, that the government had not so much bailed out GM as the UAW — and that it had subsidized Cerberus through GMAC.
Nor is it the case, as Emanuel writes, that the top brass kept their jobs. GM’s CEO and chairman was forced out, and most of the directors were replaced. If the government did not like how GM was run in the immediate post-bailout period, it has no one to blame but itself: The federal government owned 68 percent of the company at the time and appointed four of the five new board members. If Obama’s chief of staff wanted a bigger bloodbath in the C-suites, he didn’t say much about it at the time.
Emanuel’s account here is misleading. If we assume that he is not a moron—and he is not; he has many defects, but rank stupidity does not seem to be one of them—it is intentionally misleading.
Rahm Emanuel himself was right there. It is notable that he was a good deal less bold in the flesh than he is in print.
And neither is it the case that this is entirely a story about market share: The Chrysler group’s share of the U.S. market going into the financial crisis (11 percent) was about the same as it had been in the golden days of the early 1960s (10.2 percent, 9.2 percent, and 11.7 percent, respectively, in 1961, 1962, and 1963). Many companies thrive with low market share. Ford seems content to let its share of the U.S. conventional passenger car market decline to whatever zero plus Mustang sales equals, because it does so much better in the truck market.
But who cares about the details when there is a middle class to be flattered and serviced?
Perhaps Emanuel was a raging class warrior behind the scenes in the Obama administration, venting his spleen in frustration to . . . Tim Geithner and Peter Orszag. But that is not easy to imagine.