Canadian Auto Worker’s play for permanent public ownership in autos

To the delight of skeptics, market uncertainty has not stopped government shareholders in Canada and the United States from successfully selling off the first tranche of their $60 billion equity/loan bailout of General Motors. Indeed, as Canadian Auto Workers President Ken Lewenza exclaimed, it was “a roaring success in financial terms.” Anticipating that governments may be able to recoup their entire investment, he reasserted that the rescue was both necessary and successful. In an essay published in the National Post, however, he leaped from there to a far more contentious position: rather than sell off the rest, the Government of Canada should retain a permanent equity position in General Motors in order to establish a “more stable Canadian automotive footprint going forward.” Click on: http://www.financialpost.com/todayspaper/Keep+foothold/3859706/story.html

Egging on debate and framing his position as steady-as-you-go common sense, Lewenza stuck out his chest and asserted: “Of course, free marketers will howl about creeping socialism. They are the same naysayers who denounced the rescue effort in the first place . . .”

Let’s have a national debate and let’s hear the arguments without deceitful stereotypes.

First, his vision was not shared by those who designed the bailout and then stood up to its critics. Stephen Harper, Barack Obama, and Ontario’s Premier Dalton McGuinty financed an emergency rescue, not a permanent partnership structure for the North American auto industry. Each saw the bailout as a lesser evil to the loss of a million jobs. And each assured competitor companies, legislatures, and taxpayers alike that they were not turning government into a profit-seeking manufacturing enterprise.

Second, Lewenza’s proposal—that Canada keep a minority share of an American multinational manufacturer in a fiercely competitive multinational industry—isn’t “creeping socialism” by any known definition. To those reasonable folks who assume that an idea accused of “creeping” must have some merit: don’t be fooled. Lewenza’s idea is not socialism, compassionate pragmatism, or even fascist syndicalism. It is not designed for the common good—it’s a protectionist gambit for one special interest in Canada.

Third, he doesn’t aim to change the new corporate culture of General Motors or the North American auto sector. He acknowledges that the successful initial public offering will continue to repair GM’s public reputation—“not just with financiers, but with consumers.” However, keeping the taxpayer at the table (along with, hopefully, one government board member on a twelve-member board) won’t make the company more effective or credible in Canada. It would only leave the taxpayer that much more vulnerable to being hit up again—and leave the CAW with the illusion that it was still negotiating with a privileged employer. While he suggested cheekily that what’s good for GM isn’t necessarily good for the whole country, he wants to implicate Canada more deeply in its future prospects. 

Fourth, using a little public ownership in one automobile company to, supposedly, anchor a “fair share” of production in Canada is probably self-defeating and futile. Without accepting the implicit defeatism of the suggestion that Canada may not continue to get more investment than the “fair share” provisions of an antique Auto Pact that was negotiated some 40 years and four or five investment cycles ago, continuing public equity in one company would inevitably add to the business risk calculations of other companies interested in investing aggressively in Canada.

Fifth, while Germany and other countries have blended public and private ownership in manufacturing, Lewenza doesn’t try to argue that their results are better. Amongst the major developed economies, in fact, North America’s privately owned and operated manufacturing sector is still spectacularly productive and innovative. Its ruthlessness and volatility is not everyone’s cup of tea—but it works.

Activist government in North America is part of the auto industry’s history and prospects. However, wouldn’t it be best to restore manufacturing generally rather than compromise its  internal dynamics with meddlesome public ownership?