Another unintended consequence of “Government Motors”

AFP: “Is US bullying Toyota on recall?

The US transportation chief’s public rebukes of Toyota’s handling of a massive safety recall have raised eyebrows, given the US government’s major stake in rivals General Motors and Chrysler.

“The optics are terrible because — and this is what happens when a government owns a company – the two companies that are going to gain the most out of this are General Motors and Chrysler,” said Peter Morici, a professor at the University of Maryland’s business school.

“But their behavior is consistent with the general policy of the US government, whether it’s dealing with coffeemakers or cars.”

… Transportation Secretary Ray LaHood sat down with reporters Wednesday to lay out a timeline of how US officials had “pushed Toyota to take corrective actions” on its pedal problems since 2007.

The meeting came a day after he issued a statement accusing the Japanese automaker of dragging its feet on recalling vehicles in danger of sudden, unintended acceleration due to pedals which could get trapped under floor mats or become “sticky.”

He also caused a brief panic when he told a congressional panel that owners of 5.3 million Toyota vehicles affected by the recalls should “stop driving” them.

LaHood later sought to tone down his remarks, telling reporters: “What I meant to say and what I thought I said was if you own one of these cars or if you’re in doubt, take it to the dealer and they’re going to fix it.” (emphasis added)

After the government assumed control of General Motors and then assigned a portion of its shares to the United Auto Workers, serious questions were raised about the future objectivity of the UAW; specifically, how could the UAW continue to fairly represent employees of Ford Motor Co. while simultaneously owning a significant share of GM?

Now another aspect of the auto bailout has reared its ugly head — can our government be trusted to treat other auto manufacturers fairly (specifically foreign-based companies whose American factories are non-union) after it has formed a business alliance with our largest domestic car company and its employee’s union?

As the AFP article correctly states, the US Government has long been involved in product safety issues and, in this case, the safety issue with Toyota’s sticky accelerators seems to pre-date the government’s GM takeover by some time.

But from now on, as long as the government owns a significant stake in major car manufacturer, any government activities involving the auto industry will be tainted by the suspicion of self-interest and cronyism. That’s probably not the kind of change most of us have been hoping for.

"There But For The Grace Of God Go I"
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