Nationalization won’t save General Motors

If you had bought $1,000 worth of General Motors stock in 2000, your holdings would now be worth less than $40, for a loss of 96 percent. You could have made worse investments in that period—with Bernard Madoff, for one—but not many.

So anyone looking to participate in a viable business would look a lot of other places before they would look there. But the United States government thinks GM might just be a really smart place to put its money.

In its final weeks, the Bush administration lent the automaker $13.4 billion, along with $4 billion for Chrysler. On Monday, President Obama gave GM 60 days to come up with a better plan before deciding whether to sink more cash into it. But he placed a large bet on its survival by promising to guarantee all GM and Chrysler vehicle warranties.

He also held out a shimmering vision of the Big Rock Candy Mountain, expressing faith that his policies can lead to “a 21st-century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us towards an energy-independent future.”

Truth is, that industry already exists. The Big Three just don’t happen to be a part of it. The United States has robust, job-creating, fuel-efficient automakers, in the form of companies like Toyota, Honda, and Subaru.

But they don’t count in the eyes of this president, presumably because their employees don’t belong to the United Auto Workers union. So he apparently couldn’t care less how much they resemble what he fantasizes GM and Chrysler will soon become.

And a fantasy it is. On what basis could anyone expect GM or Chrysler to achieve greatness? It’s like expecting a glacier to appear in Phoenix. Just because it happened a long time ago doesn’t mean it’s going to happen again anytime soon, if ever.