First-time readers, this blog is set in the future (sometime after the year 2020).  Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution.  More about Revenge Revolution and author, Entry #1.  List and general description of entries to date.  Annual assessment whether Revolution plausible.

Note: most characters appear in a number of entries, with many entries building on previous conversations.  Profile of characters.  You’ll catch on quickly.  Thanks for your time and interest…and comments. 

Scene: Jordan and POTUS continue conversation about rebuilding US manufacturing. Starts entry #179.

POTUS: “As you were saying, GM technically went bankrupt in the 1990’s but never declared it. How so?”

Jordan: “Remember a company called GMAC?”

POTUS: “Wasn’t GMAC the finance arm of GM?”

Jordan: “Yes.  To help beef up the cash position and avoid being forced to declare bankruptcy, GM moved money from GMAC to the operating company.”

POTUS: “Isn’t that illegal?”

Jordan: “Probably so but the financial guys covered their tracks very well. Part of the problem was caused by a number of accounting changes in the 1980’s during  Squeaky’s reign.  The accounting changes masked some earnings shortfalls.”

POTUS: “Pardon me for interrupting but whoever gave Roger Smith the name Squeaky deserves a drink.”

Jordan: “And I’ll buy.  Anyway, with all the accounting changes, it became very difficult to determine where there were real performance problems.  I’m not sure the finance guys really knew what was happening month-to-month.  Sales and market share kept dropping and the cash was no longer coming in…and they essentially ran out of cash in 1992.”

POTUS: “Without getting into more detail about GM, what policies should we consider to encourage manufacturers to stay in the US, or return to the US if they’ve left?”

Jordan: “One issue that has always bothered me is the ability of companies to pick up and relocate with little or no consequence.”

POTUS: “Isn’t that a fundamental of capitalism?”

Jordan: “It’s very one-sided. Why should community and the employees make a commitment when the other side, the company, does not have to make a commitment?”

POTUS: “Are you saying the current system is unfair?”

Jordan: “Grossly unfair. And there are a couple of reasons why. First, the community and employees are often forced to make a financial sacrifice if the company threatens to relocate. Then the company can still pick up and leave.”

POTUS: “But, the community and employees have benefitted. The company has paid taxes and the employees have jobs. What’s not fair?”

Jordan: “The company has no downside risk. Heads I win, tails you lose.”

POTUS: “What if the company doesn’t sell product and make any money?”

Jordan: “Decisions that affect competitiveness are made by executive staff, not the employees or the town’s taxpayers. Failure to develop and introduce new product is a management issue, not an employee issue.”

POTUS: “What else?”

Jordan: “Laws in this country allow a company to bleed a community dry, and then relocate. As part of the relocation plan, the company demands prospective towns provide incentives.  It’s a shakedown.”

POTUS: “Many people consider that economic development.”

Jordan: “I consider it stealing. Its only economic development in the eyes of the city where the company relocates. And most of those cities are too lazy to develop businesses on their own.”

POTUS: “Jordan, that’s pretty harsh.”

Jordan: “Pardon me, Mr. President, but to call incentivizing a company to relocate ‘economic development’ is BS. The only people who gain in the deal are the executives of the company…and probably a few elected officials. The overall economy loses.”

POTUS: “Tell me why you think the economy is worse off.”

Jordan: “Employees and the community where the plant was located now have a lower tax base, and very likely a higher welfare roll. They got screwed.  People where the company relocated have to absorb the cost of the incentives. They might not know it but they’ve been screwed.  Simple question, ‘Did employees’ wages increase?'”

POTUS: “No. Wages probably decreased except for the executives. Shareholders might benefit. I see your point.”

Jordan: “When you cut through the layers, relocation is another way to redistribute wealth…but disguised as economic development.”

POTUS: “How do we fix the problem, assuming we can convince people it is a problem?”

Jordan: “Convincing people should not be difficult. Start talking to people in cities where companies have left and see if they think its a problem.  And ask them who came out ahead.”

POTUS: “You mean people in cities like Flint, Buffalo, Cleveland…and a bunch of other places.”

Jordan: “You got it. The solution to such relocations…at least a partial solution?  Make the relocation costly…and difficult.”

POTUS: “Can a plan like that work?”

Jordan: “Look around Europe. Go no farther than Germany if you want to see if such an approach works.”

POTUS: “Lots of things work in Europe that don’t work in the US. National health care and gun control, for example.”

Jordan: “Attitudes in the US have changed since the Revenge Revolution. Now seems to be a good time to rethink whether we allow companies to pick up and move with no consequence.”

POTUS: “What if companies just declare bankruptcy and restart somewhere else?  And what about the unions?  Don’t they have some responsibility to keep a company from moving?”

(Continued)