It's a testament to our business illiteracy that giant companies can make statements like this, unchallenged by the financial press: "GM officials say no American taxpayer money is being used to expand in China."

Okay... do the people covering GM really believe that the company has segregated accounts for "taxpayer money" and "other?"

Even if GM did have such accounts, don't the people covering GM realize that our 60% ownership in the company entitles us to ownership of 60% of all of GM's assets and liabilities, no matter what accounts the money is put into? It means we own 60% of GM's real estate in Detroit AND 60% of GM's real estate in China. To imply otherwise would be to imply that the Treasury's investment was really a joint venture in GM's American operations, which it wasn't.

It's not just that money is fungible, as Professor Reich correctly points out, it's that as 60% owners of the company we are entitled to 60% of its worldwide earnings and to 60% of the value of its worldwide assets minus liabilities should we have to liquidate the darned thing.

We should also be able to run the company in the public's interest. Actually, we can do that we just choose not to for some reason.

Perhaps there's no connection, but I can't reconcile the fact that the US is the world's largest economy (3 times larger than its nearest competitor, in fact) while at the same time our large industries are investing and earning and increasing hiring abroad. So what makes our GDP the world's largest?

So why isn't GM using it trillion dollars in profits to buy back the 60% share owned by the taxpayer? Since the price of each share has gone up -- is going up, it would stand to reason the taxpayer might actually gain a profit from just such a sale-back.

Whay am I missing?

ex animo
davidfarrar

First, lots of their profits are coming from their overseas operations. So that's where they're investing and expanding production.

Mr. Reich, who was involved in it, conveniently fails to mention that the US government has long had a policy of helping corporations expand their overseas operations, thus increasing productivity and profits to the detriment of US workers and discouraging US employment.

The outsourcing of production and jobs has been done through "free trade," connivance between the US Chamber of Commerce in overseas investment with State Department assistance, burdens on US corporations (e.g. healthcare) which increase US hourly labor costs, licensing difficulties, lack of innovation seed money, focusing research funds on military junk, restrictions against immigration, etc.

The reality is this: Big American companies may never rehire large numbers of workers. And they won't even begin to think about hiring until they know American consumers will buy their products.

Wrong again. Consumers have little to do with it. In response to the US government's policy of discouraging US employment companies have figured out ways to get the job done with the same number or even fewer employees by temping, outsourcing production and services, increasing employee workload, mechanizing and computerizing. There are many ways to avoid hiring people and thus avoid the government's onerous (but well-designed) penalties for hiring.

Don't blame consumers, blame the government operators (like Mr. Reich was). They're pro-business to the core. In other words, follow the money.

Could it be done better? Sure, China does. China GDP increase 2009, 8.7%. US, -2.4%. China puts more emphasis on both employment and innovation, and less on immediate profits.

I think you're whipping the wrong horses. Increasing worker productivity has always been with us. It's a GOOD thing because it reduces the cost of goods, which allows people to buy more of them which leads to MORE jobs, not less. Likewise free trade leads to MORE jobs, not less because it opens markets for the goods we produce and creates the demand for those goods. At least, that's the way it's supposed to work.

The problem isn't increasing worker productivity or free trade. The problem is that the normal working of the economy has been subverted by the concentration of wealth at the top, which leads to less wealth for working class people, which, in turn, leads to them buying fewer goods. With a few notable exceptions, the economy has almost always been DEMAND-limited, not supply limited. When the people who provide the demand have less money, the economy suffers and no amount of tax cuts for the wealthy will resuscitate it.

If you want to revive the economy, reverse the concentration of wealth and put more money into the hands of the people who spend it. Do that and free trade and increasing worker productivity will become positive forces.

The problem with free traders, is they fail to protect the country, they are indeed traitors.

They are only interested in trade
Thomas Jefferson knew it when he wrote,

"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gain." Mayer Amschel Rothschild knew it when he said, "Give me control of a nation's money and I care not who makes the laws." William Henry Vanderbilt knew it when he said, "The public be damned." Businesses know it when they use every possible ruse to avoid paying taxes, they know it when they offshore jobs and production, they know it when the engage in war profiteering, and they know it when they take no sides in wars, caring not an iota who emerges victorious. IBM, GM, Ford, Alcoa, Du Pont, Standard Oil, Chase Bank, J.P. Morgan, National City Bank, Guaranty, Bankers Trust, and American Express all knew it when they did business as usual with Germany during World War II. Prescott Bush knew it when he aided and abetted the financial backers of Adolf Hitler.

http://www.silverbearcafe.com/private/07.09/oligarchy.html

I don't understand something....if a company is able to develop new technologies to produce the same number of widgets more cheaply with only half the number of workers, why are they morally obligated to higher more workers, if they aren't going to contribute anything? It sounds like Reich is saying that companies are "immoral" if they don't higher useless workers.

The real engine of economic growth are NEW businesses started by entrepeneurs with NEW ideas, and this is what needs to be encouraged, not bloated, overstaffed dinosaurs keeping people on in a modern version of useless, make-work leaf-raking jobs that exist only to keep the jobless rate artificially low. The only ones who benefit from that are the politicians in power. Are those the ones Reich is really interested in helping?

Activist Marjorie Kelly (a heroine of mine), eloquently in her excellent 2003 book The Divine Right of Capital, has been making the point for years that, to businesses, compensation is quite literally a cost, even if to employees, families, communities, and society it is a benefit. It shows up as a cost on business balance sheets.

So, no surprise that businesses, where they can do so cost effectively, typically are not especially interested in putting more people on their payrolls. Especially medium and larger-sized businesses, where the people making the decisions often do not know the employees they're about to lay off.

A society that wants as many people as possible employed and able to live with dignity is not too sharp to put so much of the load for health insurance and retirement security on businesses as we do.

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