What's good for GM?

[Updated at end of post.]

Not many people today could identify Charles E. Wilson, former CEO of General Motors and later Secretary of Defense under Eisenhower, but many would have no trouble recognizing the famous thing he didn't say:

What's good for General Motors is good for America.

What Wilson actually said, and the context in which he said it, is much more telling about the differences between Then and Now:

Wilson's nomination [as Secretary of Defense in 1953] sparked a major controversy during his confirmation hearings before the Senate Armed Services Committee, specifically over his large stockholdings in General Motors. Reluctant to sell the stock, valued at more than $2.5 million, Wilson agreed to do so under committee pressure. During the hearings, when asked if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation "because for years I thought what was good for the country was good for General Motors and vice versa.

It comes out sounding a little more reciprocal in the actual quote, suggesting that the well-being of both America and GM were interconnected--in a way that could not but work to the advantage of both--and not simply that America existed simply to fuel the profits and growth of GM.

And, as comparatively wholesome as that sounds, we should remember that Wilson assumed that the post-war American economy would have to be transformed into a "permanent war economy" (years later, his boss would famously call it the "military-industrial complex") to prevent falling back into the pre-war depression. That's the context in which he imagined America and GM would be good for one another.

Of course, there were some other features of that post-war world that shaped the relationship of the automotive manufacturer and the nation:

• In 1953 thirty-six percent of the private sector American workforce was unionized, with the concomitant effect on middle- and working-class standard of living in general, and reducing the economic gap between the middle class and the wealthy to the smallest it's been since before the Gilded Age. (At the moment, unions represent about 13% percent of American workers, and the economic gap between the rich and the working class has returned to John D. Rockefeller-era levels.)

• Post-WWII politic at the national level was characterized by a level of bipartisanship unimaginable today. Enthusiastically or pragmatically, conservatives in the legislative and executive branches helped create programs that extended the economic clout of the middle class. Within a little more than a decade, conservatives had returned to their obsession with the care and feeding of the rich. The results for the middle- and working class standard of living were predictable.

All of which brings us to this week's news:

General Motors will on Monday disclose details of one of most dramatic corporate downsizings in US history, exceeding a key target of its turnround plan and accelerating the demise of the privileged American car worker.

Rick Wagoner, chief executive, is expected to announce that about 30,000 workers – more than a quarter of GM's blue-collar US workforce – have taken up its offer of early retirement and severance packages.

Almost all will leave by the end of the year, achieving in a few months what the company had set out to accomplish over more than two years.

A total of 50,000 workers or more is set to leave the industry over the next few months.

Later this week, Delphi – the former GM subsidiary which is north America's biggest auto parts maker – is expected to disclose that at least 9,000 of its 31,000 unionised workers have accepted similar buy-outs.

Many Delphi workers not included in the original offer, have until late July to decide.

In addition, Ford, the second-biggest Detroit-based carmaker, has disclosed that more than 10,000 workers have taken packages. All three companies are also cutting salaried staff.

The GM buy-out "is really historic", said Gary Chaison, industrial relations professor at Clark University in Massachusetts. He said it marked "the end of the good jobs" in the auto industry, created when the Detroit carmakers held a dominant market share, or were willing to grant generous concessions in return for labour peace.

GM shares have soared by a third since the company announced the "accelerated attrition programme" late in March. They closed at $26.97 on Friday.

Ah, yes. One of the great ironies of the American working world is that the average worker's pension or IRA is invested in a stock market that will go up every time a corporation announces big layoffs, especially if it reduces the portion of the workforce that was unionized.

"Accelerated attrition," indeed.

[Update: Kevin Drum raises an interesting point about the disappearance of unions from the Big Table of Democratic/progressive politics, and asks an interesting question.]