What's Good for Microsoft is Good for America?
When we saw General Motor's results for the last quarter, we couldn't help
remember another America in which it was oft said, "What's Good for General
Motors is good for America". A lot's changed since then but we thought it was
worth considering the same metaphor in a new light; i.e.; is what's good for MSFT or GOOG
or YHOO good for
America? And if so, what does that mean?
But first, we'll get back to good old GM. Once upon a time there were three
American car companies and then there were two as Chrysler fell first into bankruptcy
and then into foreign hands.
In those days GM had about a 70% share of the US market and, at least through
the rose colored glasses of nostalgia, made some pretty sweet cars. Never mind that the built
in clock hardly made it off the sales lot before it stopped or that in the
course of three years you could expect your fuel pump, your water pump, transmission and your battery to all need replacement. Of course, if you lived
in a northern state, you also had to deal with the body around the wheel wells rotting out.
Today, GM has about a 27% market share and if you want to buy a competitive
sedan or convertible from them you have to do some serious research. They, like
their major American competitor mainly make pick-up trucks, vans and SUV's. They
have, it appears, been particularly hard hit by the recent rise in fuel costs,
given the average size of the behemoths in their fleet but their problems go
much deeper. Even in the large vehicle area, more and more of their potential
customers are choosing autos made by their foreign headquartered foes that often beat them
competitively, not on price but on design, quality, fit and finish.
Interestingly, GM hasn't made a profit on the vehicle it makes for several years so that even in
years when they showed a profit, it all came from their financing operations.
And, as everybody knows, GM has been selling more and more models over the past
few years by inducing customers through 0 percent loans and other
incentives. You don't have to be a
financial genius to understand that if you are in the finance business loans
that pay no interest are bad business. So, it should come as little surprise
that as they got all their customers into ever bigger gas slurpers at monthly
payments that reflect zero interest and when the price of gas went up, as
everybody knew it would, especially with all those guzzlers, GM was looking
at customers with less and less disposable income. Money that might have gone to
their finance wing, was now flowing into the pockets of the oil companies and
the producer countries.
Are we to be surprised, then, that GM just reported a quarterly loss of over 1.5
billion dollars?
We are, it appears, beginning to see the signs of the coming day of reckoning,
when all of the contradictions of the last few years come to roost. What if all
that deficit spending, all those tax giveaways that were supposed to spur
investment just turned into the stuff of ever greater further deficits? What if
Fed Reserve and government policies aimed at stimulating consumption succeeded
mainly in stimulating the Chinese economy to build more capacity? What if trade
deficits have put the US at the mercy of the foreign countries who hold all our
debt? What if we ended up with interest rates so low and creeping inflation that
would tie the hands of the Fed? What if we had invested over $300 billion
dollars, the lives of 10's of thousands, and the country's prestige on a war
that is coming to look more and more like a low level national cancer?
Two weeks ago, as if on prompt --which, of course, is their wont-- the sock
puppets of the MSM (mainstream media) all started singing about the improvements
in the situation in Iraq. This coincided with the two year anniversary of the
"end of major combat". We were to believe that the three warring
ethnic groups, Shiites, Sunnis and Kurds had lain down together like proverbial
lambs and tigers, that the insurgents were losing interest and thinking about
other targets. What these sock puppets failed to mention is that the cost of taking a
taxi the six miles from the Green Zone in Baghdad to the local airport is
$35,000. Now, we may be a little old fashioned here in Dymaxia, but 35 grand for
a six mile taxi ride in the capital of a pacified country seems a little stiff.
Until, of course, as we read yesterday, typically four people a day, even in
armored Humvees, die trying to make the trip.
GM, its manufacturer, tried selling the Humvee in civilian form to the US
public as the latest in fashionable bigness. Never mind that it gets around 5
miles to the gallon. To help them in their costly marketing campaign, Congress
wrote a loophole in the tax code that allows all vehicles above 5 tons to get
special tax depreciation treatment.
America's real business, we all agree, is not cars but high tech. Are our
leaders fighting about how to get the population educated and trained for the
demands of a high tech economy, are we worrying about laying the infrastructure
for a high-speed broadband that connects us and leads to the new applications
that the world will need, are we encouraging more foreign trained engineers into
our graduate schools, are we making connectivity a right rather than a
privilege, etc.?
Of course, the answer is no, not in this US that is still fighting over
things that should have been settled when GM really was king. We are buried in
arguments over whether pharmacists should be forced to fill prescriptions for
people whose habits they don't like, about what equipment is being carried below
the belts of people who wish to live legally as couples, whether a person's
spouse has the right to make medical decisions against the will of her parents,
we are discussing whether our DNA links with other species on the planet means
anything in the scientific scheme of things, whether the earth is really more
than 5000 years old, whether we should shut down the
government in order to potentially determine a woman's right to choose what's
good for her body or whether stem cell lines that promise major health benefits
should be allowed to come from fetal materials we commonly dispose of.
Maybe there is a reason we are in Iraq that doesn't have to do with oil and
Saddam Hussein, maybe in this fixation for the rear view mirror we are really
there looking for enlightenment from a society that has deep cultural roots in
beliefs little changed in 1500 years.
