WASHINGTON -- The times truly are out of joint when the most important IPO -- initial public offering -- of 2010 could come from what was American capitalism's iconic corporation for most of its 102 years. Andrew Bary, writing in Barron's, says General Motors "may go public in the second half of this year, and its stock market value could top $50 billion, more than Ford's $40 billion."
This is justice under today's state capitalism: Ford took on $23.6 billion in debt to avoid becoming dependent on Washington, whereas GM shed much of its debt by becoming dependent. Washington, Bary explains, turned most of its $50 billion loan to GM into 60.8 percent ownership, the United Auto Workers got 17.5 percent for forgoing a $20 billion health care claim against the company, and Canada's government got an 11.7 percent stake for $9 billion.
Detroit's long drive down the crumbling road to disaster is chronicled in "Crash Course" by Paul Ingrassia, formerly of The Wall Street Journal. It is a story of the hubris of a corporate oligopoly and the myopia of a union monopoly.
When Henry Ford said people could have his cars in any color they wanted as long as it was black, the actual name of the color was, portentously, "Japan black enamel." But in 1927, GM hired Harley Earl, whose father designed custom cars for Hollywood stars, to head its Art and Color Section, a harbinger of Detroit's emphasis on cars as "visual entertainment" -- Earl's phrase -- rather than on the technological improvements Japanese automakers would come to emphasize.
Enchanted by stabilizer fins on World War II P-38 fighter planes, Earl put tail fins on 1948 Cadillacs. By 1959 the fins were almost as high as the car's roof. The chrome protrusions Earl put on Cadillacs' front bumpers were at first supposed to project power by resembling artillery shells. Soon, Ingrassia writes, they were nicknamed "dagmars" after the breasts of a television starlet.
But in 1959, an ad showing a Volkswagen Beetle in front of a suburban home asked, "What year car do the Jones drive?"
This, Ingrassia says, "took direct aim at annual styling changes, which lay at the very heart of Detroit's business model."
When Lee Iacocca ran Chrysler, it spent $2 million on gold-plated faucets and other trimmings on the company's suite at the Waldorf. Even in the late 1980s, GM had segregation by rank in the "salaried men's rest room" and the "hourly men's rest room." Still, the UAW hourly workers flourished.