- President Donald Trump criticised General Motors for idling a factory in Ohio, demanding that the carmaker reopen the plant.
- GM idled the plant because it was producing a slow-selling car and running well below capacity. The company said it would figure out what to ultimately do with the factory after it renegotiates a contract with the United Automobile Workers later this year.
- By imposing his political will on industrial companies, Trump is taking a page from the well-worn playbook of 20th-century socialism.
In the US, we actually have a long history with socialism. It isn’t woolly, storm-the-barricades, hard-left stuff. Rather, it’s democratic socialism, and for the most part, it has involved a long expansion of the welfare state.
FDR’s New Deal of the 1930s is the best example, but we also have Lyndon Johnson’s Great Society in the 1960s and, more recently, Obamacare.
The point is that the growth of this “socialist” side of the American experience hasn’t really touched on more ideologically controversial aspects of proper economic socialism – you know, the awkward Marxist approaches that in the hands of various freedom-hating dictators over the past century have turned the means of industrial production into instruments of the state. Or worse, instruments to bolster cults of personality, advancing the political aims of politicians.
That is, until Donald Trump became president and starting tweeting at the people who run major US companies to do what he says – or else.
Over the weekend, Trump blasted General Motors for idling a factory in Ohio that’s smack in the middle of Trump country, a rich region of voters whom the president will need to get reelected in 2020.
“Because the economy is so good, General Motors must get their Lordstown, Ohio, plant open, maybe in a different form or with a new owner, FAST!” Trump tweeted. “Toyota is investing 13.5 $Billion in U.S., others likewise. G.M. MUST ACT QUICKLY. Time is of the essence!”
The business logic of GM’s decision
Under CEO Mary Barra, GM has already acted on the plant, which was manufacturing a slow-selling compact sedan and running at 30% capacity. The vehicle, the Chevy Cruze, was “deallocated” for production ahead of a contract negotiation with the United Automobile Workers. (Under the current contract, GM can’t officially close a factory without making a deal with the union.)
The automaker has also sought to relocate workers to other plants – and in any case, the job hit is modest, about 1,500 positions.
In the auto industry, underutilized capacity is a money pit and needs to be brought offline for a carmaker’s entire production system to function properly. Before the financial crisis, companies might have kept an underutilized factory going to avoid the expense and complexity of shuttering it, but under Barra, GM has been unflinching in maximizing its return on investment. Using one shift to build an unpopular sedan means that cash is being wasted where it could otherwise be productively employed.
This means nothing to Trump, who has never managed a vast, global enterprise. Instead, he’s taken a page from the well-worn playbook of 20th-century socialism to insist that GM prop up employment in Ohio, rather than accept that GM is responding to free-market signals. Consumers don’t want the Cruze; therefore, Lordstown has to be idled.
That sounds brutal, but in truth GM probably isn’t inclined to let a valuable asset rot. Lordstown Assembly has been around since 1966 and could certainly be revived. GM indicated as much in its official statement after Trump’s tweet, stressing that it’s doing everything it can to find workers new jobs.
“To be clear, under the terms of the UAW-GM National Agreement, the ultimate future of the unallocated plants will be resolved between GM and the UAW,” the automaker said.
“We remain open to talking with all affected stakeholders, but our main focus remains on our employees and offering them jobs in our plants where we have growth opportunities. We have now placed over 1,000 employees from our unallocated plants to other GM locations, and we have opportunities available for virtually all impacted employees.”
Trump and much of the rest of the GOP are gearing up to clobber Democratic challengers in the coming years, accusing them of socialism, socialism, and more socialism.
To be fair, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez haven’t held back on pushing their somewhat exaggerated form of democratic socialism, and Ocasio-Cortez in particular really stepped into a problem when she started alluding to the Labour Theory of Value in an interview at SXSW. (The theory, a cornerstone of Marxist analysis, hasn’t been taken seriously by economists since the 1890s.)
But nobody on the left has been agitating for full-on state management of the means of production. That’s been Trump’s game – with the automakers since he was campaigning in 2016 and slamming Ford for a (now abandoned) plan to build a factory in Mexico, and for over a year now with assorted tariffs and the kind of trade war that would have once horrified market-loving conservatives.
In fact, Ocasio-Cortez’s welfare-state socialism pales in comparison to Trump’s heavy-metal socialism. His is the hardcore, industrial-grade stuff, the kind of thing you see depicted in Stalinist art from the prewar Soviet period – a workers’ playland, men and women bent to the task of constructing big metal things in big modern factories. Who cares if there’s anybody to buy the output? Keep those glorious machines running!
Trump has bungled into this deeply retrograde position not because he’s some sort of closet Marxist. His enthusiasm for nationalistic socialism has been motivated by what he can get out of it politically. That ultimately means it’s unlikely to morph into full-on collectivism, and he’s offset the socialism with hyper-capitalist moves, such as a huge corporate tax cut.
Unfortunately, Trump’s instincts here are pretty tin-pot. And the thing is, he isn’t going up against corrupt, weak companies that owe him favours. GM is a gigantic, multinational firm run by 21st-century professionals, steeped in the kind of high-velocity management that Trump has quite literally never been exposed to in his entire life.
In that context, his socialism is predictable. It’s easy, while modern business is hard.
But it’s still socialism.