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Megan McArdle: GM shows that Trump can’t MAGA

Megan McArdle

Megan McArdle

In 1953, Charles Wilson, then the president of General Motors, famously told a congressional committee that “what was good for our country was good for General Motors, and vice versa.” A version of that soft industrial nationalism has been Donald Trump’s core political philosophy. Though with a codicil: “What’s good for both is also very good for one Donald J. Trump.”

The president has leaped to take the credit when even small numbers of auto jobs were added during his administration. In part that’s because of the electoral map; auto manufacturing is heavily concentrated in the Midwestern states that sealed his 2016 victory. But Trump also clearly believes that the way to “Make America Great Again” is to bring back jobs from overseas. When he talks this way, he is looking back to the days of Wilson at GM, when the fortunes of America and its large manufacturers were so tightly linked that Wilson’s formula was less a fine bit of self-delusion than a simple statement of fact.

During the midcentury peak of U.S. manufacturing prowess, the country’s industrial might was the envy of the world, and auto companies were its crowning glory. General Motors was America’s largest company, and the state-of-the-art cars rolling off its assembly lines provided highly paid, secure jobs by the hundreds of thousands. When America prospered, so did GM — and when GM prospered, so did America.

Wilsonianism has an undeniable appeal, and it’s not just helpless nostalgia. The formula’s underlying premise, of a common national economic interest, seems vastly preferable to our current politics, which offer little more than a battle to the death between the naked and incommensurable self-interests of various groups.

But if a politics of that common national economic interest is possible, it won’t come about by simply fetishizing the jobs of 1953. Trump learned that on Monday, when GM announced it was cutting up to 15,000 jobs and shutting several production facilities in the United States and Canada.

Trump, predictably, was furious, telling the Wall Street Journal, “They better damn well open a new plant there very quickly.” He seemed to be implicitly acknowledging that when he claimed the power to increase manufacturing in the United States, he would also be held responsible if it shrunk. Now that GM has announced a major restructuring, his grandiose claim looks, and was, politically foolish.

The truth is that Trump didn’t deserve much credit for the jobs added during his first two years in office; he also doesn’t deserve much blame for the jobs GM is now shedding.

Impact of tariffs

Yes, the tariffs the Trump administration has slapped on foreign steel aren’t helping an industry that consumes a whole lot of the stuff. GM’s chief executive, Mary Barra, has listed tariffs as among the “headwinds” facing the company, and aluminum levies have cost the company a billion dollars by themselves. But a modest increase in the cost of metal that is also borne by their competitors is unlikely to be the whole story. According to Mary Lovely, a trade economist, the tariffs “probably just added to the urgency of doing something to stem losses from unpopular models and production lines.”

What is spurring the losses? Americans just aren’t interested in the smaller sedans many of the affected GM plants manufacture. Between better fuel efficiency and falling oil prices, Americans have greater freedom to indulge their long-standing preference for larger vehicles. As a result, SUVs and crossovers dominate U.S. auto purchases.

In a Wilsonian America, GM might have hesitated to shut down production lines entirely, fearing what it would do to relationships with regulators, local communities and labor unions. But that America vanished decades ago, and GM can’t afford to stage a historical reenactment of its past glories. That’s how it got into so much trouble in 2008.

It’s a good sign for the company that Barra isn’t acting like a traditional GM chief executive, letting things go along as before, hoping that nothing will ever change. Instead of waiting for disaster to force her hand, she is repositioning the company, while times are relatively good, for the market realities and technological changes shaking up the industry.

But however good for GM Barra’s move ultimately proves to be, by Wilson’s metric — and by Trump’s — America is having a bad week. We no longer live in a country where what’s good for big business is good for its workers or for its politicians. There may be no way back to such a place, but if there is, it’s pretty clear that Trump doesn’t have the map.

Megan McArdle is a Washington Post columnist.