Government Promise [Un]Keepers

Below is a post practically unchanged from Greg Mankiw's blog. The shock about what the government has done with GM is not that it failed to do what it promised. It's that they failed -- in staying out of business decisions -- immediately.

President Obama's remarks on General Motors restructuring, given on June 1, 2009:

What we are not doing -- what I have no interest in doing -- is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around.

WSJ article dated 10/30/09 on how one dealership avoided shutdown. Hint: it had nothing to do with business decisions.

In May, even before the government's ownership became official, lawmakers erupted when GM disclosed it planned to produce a new subcompact car at its factories in China. Under congressional pressure, GM dropped those plans and promised instead to retool an existing U.S. facility in Michigan, Wisconsin or Tennessee for the new model.

Lawmakers from those states demanded and received high-level meetings in Washington to quiz GM on the criteria for site selection and to tout their states. GM in the end picked a site in Michigan.

That same month, GM dealer Pete Lopez in Spencer, W.Va., received notice that GM was giving him just over a year to shut down his Chevy, Pontiac and Buick dealership, which he'd acquired two years earlier. GM's move to shutter more than 1,300 dealerships -- about one-quarter of its network -- was central to its restructuring because it cleared out underperforming showrooms and brought the network more in line with its shrunken sales.

With an assist from his mayor, Mr. Lopez took his complaint straight to one of his state's senators, Jay Rockefeller, the Democratic chairman of the powerful Commerce Committee.

Sen. Rockefeller sent a letter to GM headquarters on Mr. Lopez's behalf, according to a staff aide. He arranged for Mr. Lopez to come testify before a Senate panel in early June, alongside GM Chief Executive Frederick "Fritz" Henderson. The senator introduced the two men, giving Mr. Lopez a chance to make a personal pitch.

"He couldn't have been nicer," Mr. Lopez said of the GM CEO. "He said to me, 'We've made some quick decisions and now we're going to look it all over again.' "

The GM chief executive put Mr. Lopez in touch with Mark LaNeve, then the company's top official for North American sales. The dealer received a response on the last Saturday in June while fishing on a lake near his house.

"Mr. LaNeve called and said, 'I've got some good news for you. We're going to save your dealership,' " Mr. Lopez recalls. He says he owes it all to Sen. Rockefeller.

Where is the fig leaf of pretense? 'I don't need no stinking fig leaf,' the man-child is rumored to have said.