Intersection of economics and politics: a look at the “Big Three”
The American auto industry—led by Chrysler, Ford, and General Motors—has been the target of much criticism for lobbying against National Ambient Air Quality (NAAQ) emissions standards of the Clean Air Act, for lowering Corporate Average Fuel Economy (CAFE) standards promulgated by the NHTSA, for resisting more stringent auto safety standards, for exploiting economic downturns and the anxieties of policy-makers to prioritize job growth and economic recovery, for relying on and shaping the terms of government bailouts, for benefiting from the government’s seizure of private property through Eminent Domain, and so forth.
Briefly explain one example in which one of the “Big Three” has exerted its economic power to influence politicians in Washington and shape public policies or foreign policies favorable to their particular corporate interests. The following are some questions that should guide your response: (a) what were the stated goals of the executives of the particular corporation you choose, (b) what policy alternatives would the company have been willing to accept, (c) what was the final result (what policy alternative was chosen), (d) how was the company able to influence policy-makers, and (e) what were or are the ramifications of the chosen policy to average Americans?
After briefly discussing these specifics, the bulk of your response should explain whether the ability of powerful corporations like Chrysler or Ford or GM to influence the public policy process is a problem. If so, then why should we be concerned about, and how might we effectively prevent, this intersection between economics and politics? If not, then why isn’t this intersection a concern—how do the benefits of the influence of corporate special interests outweigh the costs?
12 responses to “Prompt 4 (Gov’t/Capitalism 2015)”
The Way Out of the Corporate Political Cycle
General Motors has had a long history of lobbying and trying to influence policy making in the Unites States. The corporation has tried to work against environmental policies in the state of Michigan. Republican John D. Dingell Jr. an individual who served in the House of Representatives fought against emission standards and fuel economy standards. Most of his family wealth came from a large amount of stock from General Motors that he obtained through his second wife (Kindy, 2010). This is just one example of an individual in an important political position being influenced by a corporation.
The ability for General Motors to influence the policy making in the United States serves as a big problem not only for individual people, but also for the country as a whole. People lose their voice when these large corporations have the ability to lobby and influence policies in favor of themselves. The reason that we should be concerned is that the efficiency that there corporations have with bringing the economy and politics together is very efficient (Kindel, 2013). General Motors has shown it knows how to manipulate the government into receiving tax cuts or eminent domain to help their corporation.
There are not many ways out there in ways to prevent the interaction between the economy and politics. The corporations out there have been lobbying for more and more money, mainly because they needed to be bailed out. Their risky business practices and poor judgment caused them to almost go bankrupt and call on the government for assistance. One options to combat a major part of the interaction between politics and the economy is to prohibit corporations from lobbying that are receiving money from the Trouble Asset Relief Program (Johnson, 2011). After they received assistance the corporations kept lobbying in favor of raising the TRAP, this meant that taxpayers would have to pay more for these companies paying. That is clearly not a representation of the entire people.
Even though there is evidence supporting that the collaboration of politics and the economy serve to have negative affects there are some positive as well. These companies that support many peoples lives if they failed then many of them would be out of work and no where to go. The amount of employment that some of these corporations still have could only be possible through bailouts and government interference.
Kindy, Kimberly, and Robert E. O’ Harrow Jr. “Dingells and GM Illustrate Limits of Congressional Conflict-of-interest Rules.” Washington Post. 11 Jan. 2010. Web. 23 Feb. 2015.
Kindell, Judith E., and John F. Reilly. “Lobbying Issues.” (n.d.): n. pag. Irs.gov. 5 Aug. 2013. Web. 23 Feb. 2015.
Johnson, Dave. “Stop Corporate Lobbying With Taxpayer Money.” The Huffington Post. 25 May 2011. Web. 24 Feb. 2015.
Good for General Motors is Good for the Country?
Charles Wilson, former president of General Motors turned Secretary of Defense under Eisenhower, once said, “for years I have thought that what was good for the country was good for General Motors, and vice versa” (Zywicki, 1). This state exemplifies the ideology of corporate heads and politicians who once were. They believe that what is good for big business is good for America and all of it’s citizens. That is not the case. Numerous times has big business, whilst expanding or opening new markets, damaged the lives of innocent middle class citizens.
An example being that of Poletown in the suburbs of Detroit. General Motors used Eminent Domain to displace the polish immigrants, which the town was named after, who lived there so the 465-acre area could be demolished and re-developed for a production plant (Safire,1). GM pushed Detroit into an unfavorable position for everyone, except for themselves. They used Detroit’s rising unemployment and declining revenue to get what they wanted, a new plant with a good parking lot. They gave Detroit an ultimatum, either allow them to displace those middle class Americans, destroying their homes, to build plant or General Motors would leave causing Detroit’s future to look even more grim. GM was prepared to shut down at least 2 other plants in the area and move it’s production to cheaper location but causing thousands of working class Americans their jobs. Detroit had no real other choice, either GM gets their way or Detroit loses a huge portion of its auto industry. Detroit leveled the area and sold the it to GM for an estimated net loss of $192 million.
The fear that your private property can be taken away from you under the assumption of Eminent Domain is something no one should have. The broad terms that it can used under, “force private property owners to sell their property for ‘just’ compensation”, can used by big corporations for their profit (Safire, 1). Other big businesses like GM can force working class citizens to sell their homes if they say it is for the better good of the city. The issue being that they are like held accountable if it does not, if the land they take doesn’t hold true to the claims of bettering the city and the populous they face no ramifications. There is no punishment for failing to make their claims and thus people lost their private property, their homes, for no reason other than someone else’s profit.
A system to make sure that corporations come true on their claims needs to be put in place. If corporations make claims that what they are doing is best for the community then they must show down the road that it has, with clear concrete results. They must be held accountable of their claims if they fail and should pay additional compensation to either the city or those who the property was previously owned by. While Eminent Domain is backed by the fifth amendment so is an individuals right to own property. If it is to be taken away from someone it must clear that it is for the benefit of everyone, not just for someone else.
White, Jerry. “The Political Struggle Facing Detroit Teachers.” WsWs.org. N.p., 27 Jan. 2015. Web. 24 Feb. 2015.
Zywicki, Todd. “The Auto Bailout and the Rule of Law.” National Affairs. N.p., 2014. Web. 25 Feb. 2015.
Safire, Willaim. “Poletown Wrecker’s Ball.” New York Times. N.p., 30 Apr. 1981. Web. 24 Feb. 2015.
Response to Tyler
Although I agree with much of what you have stated, I believe that some aspects of the decision, while possibly are immoral, were looked over when making some of these arguments. You have made 3 major points in this post, the first being that corporations may in fact have more power than we realize when it comes to politics. The fact that a former president of a major auto industry is thrown into the world of politics is a cause for concern in itself. How can the people believe that someone with such power will not make decisions based on his “rich” lifestyle, without any regards to the middle class? However, sometimes a decision can be good for both big business and citizens alike. When a corporation is successful, they are able to produce more using less resources because of increasing returns to scale. This drives down the prices, providing the middle and lower classes with cheaper goods. In order to make someone better off, someone else will always be made worse off.
Your second main idea is in regards to matter of “Eminent Domain.” Through this concept, one may have their private property taken away from them if that property will then be used for something that benefits the population as a whole. Although I agree with you that this concept is morally wrong, I also understand that the leaders of our country and communities may have to make sacrifices to better America. When it comes to something such as building a GM factory and displacing hundreds of residents, the line between justifiable sacrifice and outright wrong becomes hazy. Robin Pannecouk, the spokewoman of the plant, said, “Everyone here in the plant calls it Detroit-Hamtramck, not Poletown,” expressing that Poletown was a name filled with emotion, whereas Detroit-Hamtramck is the official name of the area. If the residents can get over their emotional ties to this property and are compensated for the displacement, then why should this be a problem at all? From a completely logical standpoint, this decision may almost seem like a good one. However, I can’t help but to agree that forcing residents to move will almost never be a justifiable action.
Lastly, you argue that there needs to be a better system in play where corporations are forced to be responsible for their actions, since they claim that what they are doing is better for the community. If they fail to meet these expectations, then they should be held accountable for any relative loss, whether that be the amount of jobs they provided, income they brought to the city, or homes they destroyed to create a plant. In a static world, this idea would be easily attainable. However nothing can ever be concrete in the business world, so we will never be able to truly tell how much anyone owes. The economy is a place where one must takes risks, and therefore many will fail, even if failure means hurting many citizens of the community.
Risen, James. “Poletown Becomes Just a Memory : GM Plant Opens, Replacing Old Detroit Neighborhood.” Los Angeles Times. Sept 18, 1985
Patterson, Robert. “Whatever happened to the “America” in “corporate America”?” National Review. July 1, 2013
A Key American Asset
Response to Tyler
Well I would not say that “what was good for the country was good for General Motors, and visa versa” is strictly true, but what I would say is that what’s good for General Motors is what’s necessary for the country. Now it could be argued that the rise of super large corporations that are too big to fail has created inefficacies in the American economy, but I feel that in this case that is beside the point. The auto industry is a significant asset for the country, a sector that provides security and wellbeing to us all, and it is something that we should go out of our way to protect, even if in reality that means protecting the interests of a few giant corporations.
Maintaining our domestic production of autos is a significant military asset as well. The same factories that produce cars now can produce tanks and army trucks in the event of a war, just as they did during the world wars. A pamphlet from 1942 called The Job is being done explains this process, and claims that at the start of the war the auto industry was assigned to produce ¾ of the aircraft engines, 1/3 of the machine guns, 2/5 of the tanks, ½ of the diesel engines, and all military trucks used in the war effort. If auto manufacturing plants move abroad then we will lose the capacity to repeat this effort in the event of another major war. (And some other country will gain this capacity.) As an asset contributing to America’s military strength the auto industry must be protected and incentivized to remain domestic, even if that means giving the major manufacturers preferential treatment from the government.
The auto industry is also a major US interest just for economic reasons. Manufacturing is a critical part of the American economy. According to an article from whitehouse.gov, the manufacturing sector in America by itself would still be in the top ten largest economies in the world. A sector that employs so many people and builds up the wealth of the nation is certainly worth protecting and helping even at public expense. Now the tactics of General Motors in the Poletown case were underhanded, but I feel that those concerns were outweighed by the massive economic and security benefits of keeping manufacturing domestic. To prevent a future incident of a similar nature I would suggest changing the constitutional standards for eminent domain rather than coming after the corporations which will alienate them and cause them to be more likely to outsource.
Automotive Council for War Production. The Job is being done. Public Relations Department, Detroit, Mich. June, 1942. Found on: The U.S. / American Automobile Industry in World War Two. http://www.usautoindustryworldwartwo.com/
Rescuing the American Auto Industry. Whitehouse.gov, June 2011. Author unknown. Found on: Whitehouse.gov. http://www.whitehouse.gov/economy/jobs/rescuing-the-american- auto-industry
Winning With Integrity
Wining with integrity is the employee code of conduct motto for General Motors, a nice sentiment but rather questionable especially in light of GM’s distant and recent history. While a value like integrity can always be debated it was clear that in 2009 GM was clearly not winning, in June it had declared bankruptcy and in response to its needs the U.S. government gave GM about a $50 billion dollar bailout (Reuters, 2014 ). When most business fail and go bankrupt that is the end of the line, however in the case of GM with the political influence it economic size has afforded it bankruptcy just means tax money. GM Has claimed that this bailout had saved millions of jobs, that it is now making a profit, creating jobs, and paying taxes even though taxpayers lost about $11 billion on the bailout (Spangler, 2013). In the end perhaps General Motors is winning or at least not losing, the systems that have been created around these industries that are too big to fail have undermined capitalism and democracy.
Corporations that get too big to fail don’t do so in competitive environment, it is the failures of capitalism that creates these public liabilities. It is the duty of any government that would call itself capitalistic to regulate corporations and industries so that the market failures that create such monstrous corporations can be corrected. If this vital role of government is ignored for short term gains all will lose in the end. Any interest group or corporation that can with such extreme disproportion influence public policy is a problem; it is the duty of any government that would call itself democratic to give equal representation to all parts of society. While business is a part of the nation and deserves to be herd if government is being forced by business to finance their mistakes something has gone wrong.
To decrease corporate power in Washington it is necessary to reduce corporate power over the economy, in other words not more corporations that are too big to fail. How to break up corporations would most likely very from industry to industry but the bottom line is that through regulation make big business uneconomical. An example of regulations making big business uneconomical leading to the breakdown of big business can be seen in new regulations of the financial industry (Popper and Eavis, 2015). If capitalism is here to stay in the United States than let’s do it right, no more business that are too big to fail, no more tax money lost to prop up a failed corporation.
Popper, Nathaniel and Eavis, Peter. “New Rules Spur a Humbling Overhaul of Wall St. Banks.” New York Times. 19 Feb. 2015. Web. 25 Feb. 2015.
Reuters. “ U.S. Government Says It Lost $11.2 Billion on GM Bailout.” New York Times. 30, Apr. 2014. Web. 24 Feb. 2015.
Spangler, Todd. “Should GM Repay $10B Rescue Cost? CEO Says No.” USA Today. 17, Dec. 2013. Web. 24 Feb. 2015.
Bankruptcy is the Correct Way to Deal with Large Corporations
Response to Grant
I agree with much of the position that Grant takes on this subject. Big businesses that are “too big to fail” are harmful in our capitalistic economy. For instance, the purposes behind government passed legislation such as anti-trust laws are to prevent corporations from having too much power in any one market, and to promote competition. While this may appear to be a good policy for preventing businesses from getting too large, the policy is not extensive enough. We often fail to consider the massive amount of power a corporation is given when it crosses the ‘line’ and is classified as too big to fail. This classification provides a safety net for corporations to engage in unsafe and risky business practices, and if these risks don’t pay off, they simply get a massive bail out from the government to make up for their mistakes. In an article from CNN, Jeffery Miron states that “a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government.” (CNN, 2008) As stated earlier, this point that Miron makes only helps to reaffirm the idea that corporations who engage in such risky practices and end up going bankrupt for it, should be allowed to go bankrupt instead of being bailed out. Now, an objection that a lot of people would argue, is that allowing such a large corporation to fail would put hundreds or thousands of people out of work. But herein lies the problem. If a company is so large that when it fails, it makes an impact on the national economy that causes severe and lasting damage such as massive loss of work and GDP, a corporation this large should not have even existed in the first place. The anti-trust measures need to take effect much sooner than when a company finds itself in a state of bankruptcy.
For example, a company such as GM that was on the brink of bankruptcy for poor business practices ended up receiving a $50 billion bailout from the government in 2009. In a survey taken by the National Legal and Policy Center, it said “60 percent of respondents said that the fact GM had taken bailout money would influence their decision on what brand of truck to buy next.” (Forbes, 2013) This type of thinking makes a huge impact on the automobile market, considering a majority of buyers are bothered by the fact that GM was doing so poorly, it needed to be bailed out. Clearly there was a problem with the way GM was running its business. There should be no reason for $50 billion of taxpayer money to be spent on a company that has a negative stigma associated with it. Therefore with a revision on anti-trust policy, many of these complications could be averted before they even begin.
Flows, Capital. “The Government’s Bailout Of General Motors Is Strangling GM.” Forbes. 14 Nov. 2013. Web. 26 Feb. 2015.
Miron, Jefferey. “Commentary: Bankruptcy, Not Bailout, Is the Right Answer.” CNN. 29 Sept. 2008. Web. 26 Feb. 2015.
Much Influence – and Pay – for the Few
Response to Grant
In evaluating Grant’s position that corporations too big to fail should not be allowed to exist, I find that Grant’s analysis is correct. Large corporations in the United States have undue influence and power. Grant argues that such corporations should be allowed to fail.
It is first important to note that it is possible that there are benefits to having large corporations. They do supply the economy with a larger number of jobs – according to some figures, the Big Three accounted for 10% of US jobs in years before the financial crisis, if including jobs that depending on the production of cars as well as the jobs which actually produced those cars (Rampell 2008: 1). However, this is not a reason why these corporations should be granted undue influence on public policy, since they already have much influence over the employment of many Americans.
It is also notable that, the General Motors bailout likely did prevent the economy from collapsing. Even if not all 10% of the jobs which the Big Three was responsible for was actually a job in manufacturing cars, Rampell explains that there was still enough interconnectedness that, had the government not bailed out GM, there would have been serious ripple effects (Rampell 2008: 1). It is possible to argue, then, that the General Motors bailout was done out of necessity for the public – GM’s influence on the government and even on the president was influence drawn from their great importance to the American economy and, therefore, the American people.
However, this view just doesn’t seem to sit right when one examines the income of General Motors executives in the years surrounding the bailouts. Even as the crisis was beginning to mount, GM executives were accepting salary raises in the millions (Bailey 2008: 1). The bailout, then, supported General Motors much more than it supported the actual American people.
Additionally, it is interesting to note that the controversy around General Motors has not been eradicated in the last few years. In explaining how General Motors has recently been under trial for faulty ignition switches in 2005-2007 Chevy Cobalts, Jenkins argues that we can now see that the events of bailout and bankruptcy did not bring forth a new GM (Jenkins 2014: 1). This is because the company had enough influence to not have to undergo the crisis in such a way as a normal company would have to. Rather, the bailout was “little more than the government buying GM with taxpayer money and giving it to the UAW” (Jenkins 2014: 1). This is consistent with Grant’s idea that the bailout was an unjust use of taxpayer money.
Overall, then, I find that Grant’s evaluation is accurate. Although when they sought bailouts they did end up saving many jobs, it is only because of their undue influence that they affected so many jobs to being with. Furthermore, the bailout did little to reform that reality, and in fact perhaps perpetuates it.
Bailey, David. “GM’s CEO Compensation Jumps 64 Percent in 2007.” Reuters. April 25, 2008. Accessed February 26, 2015.
Jenkins, Holman W. “In Defense of ‘Old General Motors.’” Wall Street Journal. April 4, 2014. Accessed February 26 2015.
Rampell, Catherine. “How many Jobs Depend on the Big Three?” New York Times. November 17, 2008. Accessed February 26, 2015.
Response to Grant
Although it is true that the government has the responsibility to a certain extent to ensure that these large corporations do not fail in order to keep a healthy economy, I would have to contest the point that when they neglect this duty capitalism fails. In regards to the government constantly monitoring cooperation’s its noted that the bailouts of Chrysler and General Motors prove to be, “Far from a success story, the events surrounding the bailouts offer a cautionary tale of executive overreach.” (Zywicki, 1) With the government so heavily involved there is a large chance that there could be a backfire leaving the economy and companies very vulnerable. With bailouts designed to preserve negligent companies comes at the price of taxpayers and other banks.
This notion of government supervision of companies grants them too much power. Allowing the government to bail out various companies of their choosing presents them with the power of picking what cooperation’s will survive economic hardship. Companies such as General Motors who have strong ties to the government are able to stay afloat because of the bailouts they know they will receive because of the power they hold.
The issue of dependency on the government also comes into play. General Motors experiencing large amounts of recall assume they have the government rapped around their finger and can recieve help once again. This past week, “lawyers representing the reborn, and profitable, G.M. were back in Judge Gerber’s Manhattan courtroom seeking his assistance once again.” (Stout 1) With the government preforming bailouts like so can cause preferential and expected treatment that in turn can inevitable dismantle the system of capitalism all together.
There needs to be a government presence to protect basic rights, such as property rights. However, there needs to be a clear line as to when they begin to overstep their boundaries and create an instable economy. Restriction need to not only be in place, but also upheld.
Stout, Hilary. “Judge Hears Arguments Over G.M.’s Exposure to Recall Suits.” New York Times. 17 Feb. 2015. Web. 26 Feb. 2015.
“The Auto Bailout and the Rule of Law Publications National Affairs.” The Auto Bailout and the Rule of Law Publications National Affairs. N.p., n.d. Web. 26 Feb. 2015.
General Motors’ Influences and their Repeated Mistake
General Motors (GM) was the automotive company which benefitted most from the 2008-2009 Troubled Asset Relief Program (TARP), where they received around $49.5 billion from the Automotive Industry Financing Program and other forms of loans (Woodyard 2013). As a modern-day parallel to Chrysler’s potential collapse in 1979, two of the “big three” U.S. car companies, GM and Chrysler (once again), were faced with potential failure in 2008.
GM’s goal was to recover from its massive losses over the last few years, which would consequentially save the United States’ economy from collapsing on top of a “Great Recession” due to the auto industry’s great influence in the American market, similar to what Chrysler had argued in 1979. GM was vulnerable unless they merged with another company, sold their assets, or received government assistance (Gow 2008). They were most accepting of the bailout in 2009 (rather than merging with Chrysler or Ford to create a monopoly force), taking loans which have since been mostly paid back. GM’s executives were able to take advantage of “the current state of the economy and credit markets,” which “left [President Bush] no choice but to act,” (Isidore 2008). In this situation the automotive companies bypassed influencing policy-makers in Congress and went straight to the President, backing him and his successor into a corner where they were unable to let the industry collapse. Average Americans were affected when their tax money was used to purchase around 61% or 500 million shares from GM (Healey 2013), and they had no say even in whether or not the bailout should go through.
The idea of a large corporation having the ability to directly influence a presidential administration to back a bailout opposed by Congress seems to be morally unacceptable on at least some level. There was no consultation of American citizens when the appeals were made, as mentioned above. One concern here is that this tax money could have been spent on anything else because the bankruptcy was not avoided, and not long after the bailout it was assumed that GM would file for bankruptcy yet again (Woodhill 2012: p. 1). If this had happened, there would have been massive losses that could not have been recovered quickly. I believe there is a problem when they are allowed to exploit the situation of the national economy to recover from a potentially bad situation. However to counter this notion it is impossible to know whether or not the bailout had a definite impact on the company, as mentioned in the Luger reading (Luger 2000). This uncertainty could be the driving force in the fact that the federal government actually went along with fulfilling the corporations’ requests. In this, it becomes hard to believe that their influence can be prevented. It may be worth it to let a large car corporation fail after going bankrupt, since it has still been prevented over the years and it may not have the impact the executives predict in each situation.
Gow, David. “We’ll go bust without bail-out or merger, says General Motors.” The Guardian. 7 November 2008. Date of access 24 February 2015.
Healey, James. “Government sells last of its GM shares.” <em.USA Today. 10 December 2013. Date of access 23 February 2015.
Isidore, Chris. “Bush announces auto rescue.” CNN Money. 19 December 2008. Date of access 23 February 2015.
Luger, Stan. Corporate Power, American Democracy, and the Automobile Industry. University of Cambridge, 2000. Print.
Woodhill, Louis. “Save General Motors From Bankruptcy, Vote For Mitt Romney.” Forbes. 31 October 2012. Date of access 24 February 2015.
Woodyard, Chris. “GM bailout played out over five years.” USA Today. 9 December 2013. Date of access 24 February 2015.
The so called ‘Big Three’ have been plying their way around US regulations such as the NAAQ, CAFE, and other safety standards as early as the 1980’s, when the US Government proposed that all vehicles be equipped with seat belts. (O’Malley) Another fine example of the auto industry’s resistance to consumer safety standards (as discussed in class), was the 1968 proposition to have airbags installed in every new vehicle. Through extensive lobbying efforts, the ‘Big Three’ were able to table these standards until 1996! One wonders just how many lives could have been saved within 30 years of airbag-less car accidents. The underlying goals of lobbying against these standards are obviously to reduce production costs of vehicles, however, as a cover, auto manufacturers were attempting to protect their customers from getting tickets for not wearing seat belts. (O’Malley) As an alternative, the auto industry accepted that if 80% of the population were covered under the mandatory seat belt law, then the mandatory airbag standard could be put off indefinitely. (O’Malley) Thus, to get mandatory seat belt laws passed in 80% of the states, auto makers launched a $100 million dollar campaign, just to wiggle their way out of air bag standards. The cost to the average American; possible death in a motor vehicle accident that lacked air bags.
In my own personal opinion, I truly believe that it is downright wrong for the auto industry to influence policy makers with their money. In 2009, Chrysler spent $3 million on lobbying efforts, however, that same year the auto industry received an $80 billion dollar bailout! (Opensecrets.org) The auto industry is essentially spending tax payer dollars on influencing public policy in such a way that is detrimental to the average American. I also believe that it is entirely wrong for the auto industry to skate safety standards that put American lives at risk, just to make a fraction of a dollar more in profit. Something must change; economics and politics should be two completely separate entities. Although this would be nearly impossible to accomplish, I believe that large firms like these are not ‘people,’ and should not be able to make political campaign donations in effort to sway policy makers. The only plausible way to restrict lobbying is to impose laws that only allow for ‘ethical lobbying practices’ as I discussed in the previous blog critique. Public safety should come before the dollar.
O’Malley, Patrick. “The Onslaught Continues.” Motorists.org. Web. Feb. 25, 2015.
“Annual Lobbying by Chrysler Group.” Opensecrets.org. Web. Feb 25, 2015.
The Revolving ATM
The American Auto industry is one of the few business’ that can be labeled as political activists. The auto industry spends close to $50 million dollars a year on congress alone (Attkisson, Sharyl). During 2008 GM and Ford gave close to 3 million dollars to three representatives to advocate for a federal bailout for there respective corporations.
The time was tough America hadn’t seen a financial collapse like this since the early 30’s. The area being hit the hardest was Detroit, the epicenter of American Auto, an essential area for the success of our country. GM and Fords assets and capital were plummeting; their inefficient gas-guzzlers were not selling to the market demand of fuel-efficient vehicles. One of the representatives that were given an absurd amount of money to lobby for the bailout of Detroit was congressman John Dingell. Dingell actually had so much capital in Ford that if they tanked then he would loose a major chunk of cash. In the early 2000’s Dingells’ GM assets in stock options were worth around 5 million dollars (Attiksson, Sharyl).
So it is easy to see the large influence that big auto has over different sections of the government. How about their public policy and political action power in the American public, does the spending compare to lobbying of government officials? Well before the bail out Ford Motors spent 7.3 million dollars on advertising and public fairs to motivate people to get behind their need for a buy out. While GM spent 8.7 million, both were one and two respectively in this category. This was a quote from GM’s Director, Greg Martin, “We believe we have an obligation to remain engaged at the federal and state levels and to have our voice heard in the policymaking process,” Martine continued, “It’s important that we keep and open and constructive dialog on important issues like franchise laws, environmental issues, and taxation”(Ransom, Kevin). That is the head of GM telling the American public that it is his company’s duty to participate in political action. This participation is what lead to GM and Ford successfully receiving their bailout in 2010.
Ransom, Kevin, “How the Car Companies Lobby the Government: Millions Spent, But the Message Is Changing”, Autoblog, May 7th, 2010, http://www.autoblog.com/2010/05/07/car-companies-lobbying/
Attkisson, Sharyl, “Big Three Spending Million On Lobbying”, CBS, December 3, 2008, http://www.cbsnews.com/news/big-three-spending-millions-on-lobbying/
Sacrificing SUV’s for Clean Air
General Motors is a massive global corporation that develops domestic auto models such as Buick, Cadillac and Chevrolet. Last year GM spent a total of 8,510,000 USD on lobbying and opposing several congressional bills. Many of these bill are aimed at reducing carbon emissions and air pollution in the U.S (4) and in general propose policies that will most likely result in the multi-billion dollar corporation having a sharp decrease in annual revenue. One act that the company opposed is a proposal from California that aims at imposing a 62 miles per gallon efficiency standard by the year 2025. This is the most expensive regulation that auto corporations face. Regarding this proposal, Auto companies in 2011 agreed to a set miles per gallon standard of 54.5 miles (2). Auto companies like General Motors want lower MPG standards because auto products such as SUV and trucks are unable to be that fuel efficient and as a result would be removed from the market. (3) It will cost auto companies a large chunk of the annual revenue if they were to remove an entire product line from being legally used. GM for example is willing to compromise at 54.5 MPG for 2025 as that standard is more realistically achievable and would give auto companies more time to develop the technology necessary. General Motors has joined with other auto companies like Ford and Toyota to lobby against the MPG standard from being increased. (1)
My opinion on the issue is that this is a problem. These corporations who’s only incentive is profit making will continue to lobby against any bill that imposes expensive costs on them and unfortunately for us, the bills that have the best benefits for humanity are also the most expensive ones and thus unlikely to be agreed upon by auto companies. And even though the CAFE standard compromise is relatively high for 2025, who knows if these corporations will even follow through with their agreement 11 years from now. These corporations will continue to lobby for as long as these corporations are in existence. And as a result issues such as pollution will be an issue that wont be resolved in the near future. If we want to actively reduce carbon emissions, whether its through the Clean Air Act or reducing CAFE standards, corporations must be stripped of their power to influence politics.
“GM Revs Up Its Lobbying.” WSJ. N.p., n.d. Web. 27 Feb. 2015. .
“Automakers Agree to 54 MPG Standard.” CBSNews. CBS Interactive, n.d. Web. 27 Feb. 2015.
Allen, Alexandra. “The Auto’s Assault on the Atmosphere.” Web blog post. Multi National Monitor. N.p., n.d. Web. .
“General Motors.” Opensecrets RSS. N.p., n.d. Web. 27 Feb. 2015.