Wednesday, June 10, 2009

Whitacre Vows to ‘Learn About Cars’ as Chairman of New GM Board -

June 10 (Bloomberg) -- Edward E. Whitacre Jr. built AT&T Inc. into the biggest U.S. provider of telephone service over a 43-year-career. By his own admission, he becomes chairman of General Motors Corp. knowing nothing about the auto industry.

Not to criticize his selection (I don't know enough one way or the other), but if you look at the history of AT&T you will see that it was for most of it's history a monopoly until roughly 1984 when it was busted up into several smaller regional monopolies providing local phone service. AT&T then proceeded to flounder around either merging with other companies or spinning off parts of itself in a desperate struggle to survive as a non-monopoly company.

The regional bells, continuing to rake in unearned profits wisely sought to diversify themselves, going into publishing, cable TV, cellular, and even the furniture business. It would be at least very difficult to catalogue where all the monopoly money ended up, except to say that some of it, if not most of it, ended up wasted on dead-end products and projects. In the process all the baby-bells as they cam to be called went on wild rebranding sprees yielding meaningless names such as Verizon, Qwest and SBC (which might have stood for Southwest Bell Corporation at one time but just stands for SBC (nothing ) now).

I certainly don't know what Whitacre's real resume would look like, but he was at least NOT with AT&T during most of this time, but when AT&T re-merged with SBC in 2005 (AT&T as the company being acquired) he was head of SBC, not AT&T.

Someone else can figure out to what extent he was responsible for the success of what was still a mini-monopoly, I'm more interested in the principle than the individual.

The principle being, as someone put it recently, that most of these companies are not too big to fail, they are in fact too big to exist. I personally think that busting the AT&T monopoly was a good thing, particularly as it wasn't just a big company it was almost an extension of the government in its monopoly powers.

Now, in saving GM (and some banking and investment businesses), we are moving in the opposite direction, that of combining more and more businesses into government run monopolies (including offloading of Chrystler to the Italians so that we at Government Motors only have one remaining private company, Ford, to deal with). Of course we are told that all of this is only temporary. Problem with that is that temporary can turn into a very long time.

The two most likely outcomes are that GM will succeed, at the expense of the only other large American car company, ending real choice, or that through gross mismanagement, it will fail, leaving taxpayers with a big bill to pay and also leaving Americans with only one company to chose from.

Very little that is good can come from this, but our die has been cast, and I will not let those around me forget who (which voters that is) are the responsible parties. Before anyone protests, no, the Obama administration didn't cause it all, they have just provided the "punch line" that shifts our course from heading toward simple socialism to something much much more sinister.

For the real punch in the gut, we should all remember that none of these recent course changes can be corrected during most of our lifetimes, assuming we start correcting them in 2010, which is still doubtful considering new high school graduates know almost nothing about this country's history or how its government was designed to work. Congratulations to all of you who "won".

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