GM: Counterfeit Free Enterprise (2013 Jul)

by Barry A. Liebling

Recently the US Chamber of Commerce announced that it is partnering with General Motors to run a two-month cross country tour called “On the Road with Free Enterprise”…   “to tell the story of free enterprise and what it means to the American economy.” The tour will make appearances at “more than 15 cities across the United States, visiting with small businesses, participating in local events and stopping at famous landmarks.”–free-enterprise-tour-

The objective of the tour is to boost the image of both GM and the US Chamber of Commerce. GM management anticipates that car buyers, business professionals, and the public at large will appreciate the company for praising the merits of free enterprise and the gesture will have a positive impact on GM’s bottom line. Executives at the US Chamber of Commerce calculate that the tour will enhance its reputation as a promoter of American business.

What is wrong with this picture? It is a colossal fraud. GM is infamous as a company that operates on principles that are antithetical to free enterprise. Any institution that provides services and makes or loses money might be a business. But in order to qualify as a free enterprise company a firm must be untainted by special government favors, privileges, and connections.

The concept of “free enterprise” is closely related to the concepts of “free market” and “pure capitalism.” Free enterprise describes an arrangement where a business is privately owned, where policies and decisions are the responsibility of the private owners, and where the government’s role is limited to the important task of preventing the use of force or fraud.

Free enterprise is to be contrasted with situations where the government shoves its visible hand into a company’s business – owning, directing, supervising, or protecting it. Under socialism the government owns all or part of a business. Under fascism a business is nominally privately owned but is closely controlled by government agents. A company that gets special favors from the government such as loans, exemptions from rules that apply to everyone else, forced “leveling of the playing field,” or protection is a crony-capitalist company and is certainly not an example of free enterprise. In the United States it is considered impolite to label a company as socialist, fascist, or crony-capitalist – so those who yearn for the government to be in charge call for a “private-public partnership.”

GM is an excellent example of a company with a recent history that is diametric to free enterprise. In 2009 it was on the verge of a conventional bankruptcy when the government stepped in, changed the rules, and bailed it out. The government rescue favored the interests of unions (who are strong supporters of the Democratic party) and short-changed bondholders. Furthermore, the US Treasury acquired a 61% controlling interest in the reorganized GM, and to this day owns a substantial proportion of its stock. Even those who wholeheartedly approve of the relationship between GM and the government cannot say with a straight face that GM can be categorized as free enterprise.

What do GM and the US Chamber of Commerce hope to gain by sponsoring a counterfeit free enterprise show? They are certainly attempting to be deceptive. If they were honest they could put on a tour that is described accurately. It could be called the crony-capitalist tour – visiting major cities and boasting that even though GM management failed in the real marketplace they had friends in Washington who used the force of government to keep the company going – on terms advantageous to government expansionists. They could brag that GM’s continuing survival is proof of its political skill, since many other companies went out of business that did not have cozy relations in the beltway.

But the tour is fundamentally dishonest. The intent is to destroy the concept of free enterprise by pretending that it encompasses all businesses – those that deal only by mutual consent as well as those that thrive by the coercive force of government muscle. The tour is trying to make crony-capitalist companies appear to be “not so bad, really the same as all companies.” And it is attempting to throw honorable businesses that do not seek government favors into the same bucket as their corrupt, politically-connected rivals.

The old cliche “imitation is the sincerest form of flattery” applies here. A counterfeiter always attempts to make a fake copy of something that he knows is better. Real money has value, and fake money does not; real branded watches are superior to clumsy imitations; real designer purses are better than knock-offs.

The people behind the GM Chamber of Commerce tour – “public-private partnership” enthusiasts – must deep-down know that real free enterprise is superior to crony capitalism. At some level they must be ashamed that they are apologists for a practice that violates individual rights and is essentially immoral. But instead of doing the right thing – embracing free enterprise and rejecting businesses that are debased by government meddling – they make-believe that crony capitalism is just another variant of free enterprise.

The objective of the “On the Road with Free Enterprise” tour is to boost the image of GM and the US Chamber of Commerce. But the mischief of counterfeiters should have the opposite effect.

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