10/29/2009

GoodFellas Motors

There's a great scene in GoodFellas when a bar owner asks local mob boss Paulie Cicero to be his partner, if only to protect the bar from Paulie's goons. Paulie claims to know nothing about the bar business, but what the hell, it might be fun. So, Paulie takes a piece of the bar and, um, we know what happens next.

Paulie's crew guts it from the inside.

They steal inventory, they use the place as a front, they force the original owner to borrow money against the bar, which they also steal. And when there's no money or product left to steal, Paulie's boys torch the place to collect the insurance. And no one can stop them because they're the mob and they make the rules.

Courtesy of the WSJ's intrepid reporters, what RSP and many others predicted has now been documented. Congress is feasting on GM because it can. Welcome to the new GM, better known as GoodFellas Motors.

Before Anonymous has a hissy fit, I know the analogy isn't perfect. Congress isn't doing anything illegal, there are no threats of violence, they're not literally going to burn GM down for the insurance, but the theory is similar enough. Congress makes the rules, Congress put up the money, so individual members demand GM serve the needs of their individual constituents. GM is now merely a conduit, through which public money flows to this or that politically powerful stakeholder. Of course, the MoC will pretend there was no undue pressure, that the sought after outcome was only the result of "a constructive dialogue" with the company. Just like the mob, you don't have "a constructive dialogue" with a Senator. You do what you're "asked" to do or the next call is from the IRS, or oversight committee counsel or the Paymaster Czar's office.

Normally businesses only succeed when they serve customers. Those days are long gone at GoodFellas Motors.

3 comments:

Johnny Keynes said...

I like it. The Congressional equivalent of the threat of violence is the threat of pulling funding. And of course the Congressional equivalent of the cash pulled out of the business is the votes extracted from union members. I would alter it in one other way as well, the bar in Goodfellas is more akin to the overall US auto industry, rather than just GM. Because GM as an entity is just a tool to suck economic value out of the entire US based auto industry.

What makes this more pernicious, however , is this: imagine that the mob had the ability to keep the business going perpetually by using resources that it controlled but did not belong to it (taxes, in the GM example). This scheme will never end as long as those that benefit from it are in power...which, of course, the scheme is designed to make more likely. And it will all be funded by the American taxpayer. The only way it will end is when GM makes such crappy cars that it will not possibly be able to sell them unless they are a monopoly.

Steven L. Baerson said...

GM is already being forced to make cars that no one wants. All you have to know is that they are being forced to make smaller cars due to increased fuel efficiency standards. Americans do not want smaller cars and probably never will. All this means is that the new GM will continue to make cars that will not be sold and the need for another government bailout is just around the corner.

Anonymous said...

So the USG is behaving like any other vulture investor. Shocking, given that the 'auto czar' was a vulture investor on Wall St.