Choosing winners and paying for failure

"A Flush G.M. to Lavish Cash on New Vehicles"
http://www.nytimes.com/2009/12/08/business/08auto.html?_r=1&hpw

Key points:
- GM has more cash now than at any other time in it's entire history.
- Virtually all of the cash came from the government (you and me).
- The last time GM had much of a cash cushion was during the height of the SUV era - which set the stage for it's current problems.
- GM invested in the Hummer, Toyota hybrid cars.
- Many of its products were not recommended to consumers in a recent survey by Consumer Reports magazine.
- GM now has more cash than Ford which did not need any help from the government.

At the top levels of Corporate America the following lessons must be pretty obvious:
1) If you are big enough, it does not much matter how well you run your business.
2) The most important relationship is not even with your customers, it's with Washington DC.

The apologists for this bailout might say that it was necessary to avoid a depression, so it's simply what we had to do. What about all those auto workers, what about all the GM middle managers, suppliers who sell to GM etc. etc.

That answer is that in a dynamic economy that is functioning as it should, most of what was good and valuable in GM would have been absorbed into other companies. Government money meant to help the auto industry could have gone to companies like Carbon Motors (www.carbonmotors.com and www.foxnews.com/story/0,2933,465329,00.html), Frisker Automotive (karma.fiskerautomotive.com/), and Tesla www.teslamotors.com. Why did GM get billions for the Volt when they have shown over the years that they really don't care about electric cars. Remember what they did about 10 years ago? They killed the whole market to clear the way for another wave of SUV's and Hummers!

They are engaged in making electric cars now because they have to.

Electric cars are at the core of Tesla and Friskers businesses.

But GM is much more powerful in Washington DC (and the state houses that matter).