GM's Forever Bankruptcy

The Washington Post has dutifully pointed out that the taxpayer may never recover its investment in General Motors (GMGMQ), post-bankruptcy. Assorted debt-pay-down and forward-looking share-price valuations figure into this analysis. But a basic point is being missed: We’ve effectively nationalized GM! And you don’t nationalize an industry if you want to make money on it.

The government’s stake in GM, in a best-case future, represents a kind of market-aided industrial policy. Sure, GM 2.0 is supposed to run itself, but if you believe that, I’ve got a shiny office tower in Detroit to sell you. (Oops! As a taxpayer and stakeholder in GM, I evidently do own a piece of a shiny office tower in Detroit!)

We should, on this very day, forget about ever getting our money back. What we gain from Obama’s management of the GM meltdown is the golden opportunity to convert a huge chunk of our industrial sector to something that more closely resembles the clean-tech economy we have rightly envisioned as our future.

This is one of those times when we should remember that governments can and should productively waste money, while businesses cannot and should not.