GM has finally declared bankruptcy, unfortunately not before it was nationalized. We have now nationalized our financial service industry and our manufacturing sectors. Welcome to the new socialist world. Read the GM White House fact sheet. The government has repeatedly declared that they do not want to run the company, except that they are dictating that more fuel efficient vehicles be made and the government of Canada is also a part owner. Congratulations, the rules have changed. I have discussed this in past entries, but I think this is the best illustration of rule changes that we have to date. The company’s bond holders have been relegated to last in line, while the common stock holders who “get a greater return because they assume a greater risk” have now been moved to the head of the line. Why? The government who “does not want to have an equity position in a company” now has one, and under the guise of shared sacrifice, appeals to our short term vision and will only extend our pain in the long term. There is no company too large to fail, and it should be painful. These lessons teach us that failure is not the end, but it does hurt and you have to be resilient enough to endure. It seems we have lost the ability to live with failure. We do not hold student’s back, because no child should be left behind. With failure comes lessons and as Henry Ford said after the first assembly line failed “Failure is the opportunity to begin again, more intelligently.” We are failing to learn from the lessons of California, GM, and a host of other examples, because there is no pain. The failure of GM is a psychological failure on a personal and organizational basis. The Unions forgot their missions to keep the company from overstepping reasonable bounds. They took out the reasonable part and went after everything they could get, and were very successful.
Why will bankruptcy not fix GM? The psychology has not changed. Frank Durant the founder of GM decided to go into the car business after his buggy business failed because of Ford. Ironic. This is why we need history. We need the destructive process to create something better. Who knows the best industry creating idea could be just waiting for enough pain to get started, but by supporting a failed company, we reward failure and suppress the very things that make success rewarding. If you look at any story worthwhile, the hero is always terrified, always an inch from death. Do you think the hero or heroine is enjoying themselves through most of the story? Is there a bailout, just in case they don’t make it? As a zen master would say it is the journey that is the reward. Unless we undertake these scary, painful and testing journeys how will we know what we are destined to accomplish? The hero of the story never really plans to go out and be terrified, but in spite of everything they keep trying and have faith they will succeed. You can only fail when you stop trying.
Growing up my father pounded the “don’t work, don’t eat” motto into my head. It has kept me going through some very tough times. Because I know I don’t have it in me to grovel enough to get the government handouts. I don’t and won’t tell a sad enough story. We have choices in life, and the government has become the great enabler of our addiction and has learned to play on our fears and sympathies. This is how our officials are elected, and why we struggle to solve problems like social security and Medicare. We are no longer willing to make the true sacrifices necessary to solve the problems. Until we fix our psychology we will always be victims and you will continue to see more GM stories. The social drama we see playing out is an example for most of our individual lives as well. We must have faith not fear and focus on what we want to accomplish and then never give up.
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