The government has a plan for General Motors. The government will continue to give GM money, which will benefit GM and its suppliers. Adding money to the economy will benefit the economy.

     However, as part of the plan, the government will wind up owning about 50% of the company. This ownership does not benefit GM, its suppliers, its employees, its shareholders, its creditors, taxpayers or the economy.  The economic value of government ownership is not just zero. It is a strong negative.

     GM loses because its leaders will have to contend with business-ignorant, government bureaucrats, when making decisions. Suppliers too, will need to deal with arbitrary, politically-inspired rules, that will impact efficiency and creativity. Employees will pay for government ownership through a reduction in salaries and benefits. Shareholders will pay through a dilution of share ownership. Creditors will pay by being cheated out of the money due to them. Taxpayers will not receive any part of the stock; only the government will own it. The economy as a whole will receive no advantage from government ownership.

     There is, in fact, not one good reason for the federal government to own GM stock, and myriad reasons not to. The mere fact that government bureaucrats want this harmful ownership of GM stock demonstrates the government’s lack of economic and business sense.

Rodger Malcolm Mitchell
Wilmette