Wednesday, November 28, 2018

President Donald Trump v. Prof. Walter Block on Who to Blame for Plant Closings and Job Cuts by General Motors

Donald Trump
President Trump placed responsibility for this week’s announcement of General Motors plant closures and layoffs on the Federal Reserve, during an interview, reports The Washington Post.

GM has announced that it will close 5 plants and eliminate 14,000 jobs.

But Dr. Walter E. Block, Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans, has a different theory.

He wonders if Trump is behind the closures and layoffs.

He emails:
Dear Bob: 
Re this: Trump Explodes: GM Eliminates 14,000 Jobs, Closes 5 Plants

One wonders; do the increased prices of steel and aluminum have anything to do with these closings? Enquiring minds want to know.

Best regards,



  1. I thought so too, but Maria Barra confirmed that the tariffs had very little to do with the move. It could be a mixture of things: business restructuring, unions, market demand, tariffs, and a transition to electric and autonomous cars.

    1. What about tying up nearly 40 BILLION dollars in the last few years via stock buybacks and still losing half your stock value in the end anyway?

  2. Wasn't GM called "Government Motors" in the days of BHO because it had been prevented from necessary restructuring by massive government intervention, even to the point of illegality? (Favouring the unions and penalizing the bondholders, heedless of the rule of law)...back then I don't remember the cost of steel being an issue.

    Years ago GM had been operating within a business model where it made a profit from its lending subsidiary but lost money on the actual sale of its vehicles. Perhaps this is still true today. GM's cost structure is high but has had no incentive to take corrective action during the administration of its political patron. Having said that, Trump, of course, is just as much of an economic meddler as any of his predecessors; if he offered to give GM another bailout to sustain a failing business model should we be surprised?