General Motors must be allowed to crash

There is probably no company in the world as iconic as General Motors. As the manufacturer of Cadillacs, Buicks and Chevrolets, as well as Opels in Europe and Vauxhalls in Britain, it would be no exaggeration to describe GM as the corporation that perfected 20th-century industrial capitalism. Henry Ford created the first mass-production car 100 years ago but it was GM, under the leadership of Alfred Sloan in the 1920s, that completed the package. Easy credit, brand segmentation, mass advertising, conspicuous consumption, built-in obsolescence: the tools of the modern multinational were hammered into shape by Sloan, then deployed to crush all opposition as the first truly global manufacturer. GM became the standard-bearer for the industrial might of the United States, a view summed up in the classic, often misquoted, phrase of its president, Charlie Wilson, on being appointed Secretary for Defense by Dwight Eisenhower in 1953: ‘What’s good for GM is good for America.’

GM thinks that’s still true. ‘It’s about saving the US economy,’ declared chief executive Rick Wagoner as he pleaded with Congressional leaders for a bail-out. Not everyone is as convinced as they were a half-century ago, however. One of the first tough decisions Barack Obama will have to make as President is whether to take that piece of American folklore and tear it in two. The paths of GM and the US may be about to part for the final time.

It will be a big call. GM’s demise might well prove the moment that future histor- ians choose to mark the end of American economic dominance. But there is nothing to be gained by not facing the problem. In reality, GM is beyond saving. Better, as we discovered with British Leyland, to let it shrink beyond recognition, and to start restructuring your economy around the things you are good at.