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A family correspondence about GM and the UAW

October 15, 2008

Yesterday, I received an email from my daughter, Casey, back in Michigan, complaining about how the UAW is destroying General Motors.

She drew a parallel between the UAW destroying GM and the labor unions that tried to destroy Dagney Taggart in Ayn Rand’s Atlas Shrugged. This was my reply:

Dear Casey,

You have to be careful when applying theoretical principles to the real world. You can end up being wrong even though your principles were right because the real world has an inconvenient habit of throwing you curveballs.

From what I’ve seen, the UAW is not responsible for General Motors' condition, and based on what I know of the Ford family, it’s not responsible over there either.

Atlas Shrugged is a novel and fiction writers have to simplify for dramatic effect. For example, in real life people don’t move to Colorado to distance themselves from bureaucratic control of their productivity—in real life they distance themselves inside their own minds. They don’t withdraw to Colorado—they withdraw to their television shows, to their apathy, to their feelings of hopelessness, to early retirement, to an unwillingness to work at full capacity.

Ayn Rand didn’t anticipate the way bureaucratic control of the productive segment of our society would be engendered within large corporations. Either she didn’t understand modern corporations at all or she simplified to make her novels readable. Her protagonists all seem to be sole proprietors or individuals running family enterprises with full authority.

That’s not what we see in the modern world. We see giant corporations like General Motors where self-aggrandizing management bureaucracies isolate the day-to-day operation of the business from its ownership, and practice nepotism and cronyism to such a huge extent, and bog themselves down in so many layers of red tape, that they can barely function as productive enterprises.

The same socialistic leeches who gravitate toward government jobs find a home in these giant corporations and create the same damage there. If Dagny Taggart wanted to build a new car at GM she would have to fight the bureaucrats in her own company long before she would run into government bureaucrats.

Example: when I was a supervisor at GM they were running their “Quality First” program. Some brand new college graduate who happened to be some high-level GM officer’s daughter came up with an idea—she suggested that GM require the same exhaustive investigation for a parts error at an SPO (Service Parts Operation) warehouse as GM required for an on-the-job injury. An on-the-job injury, no matter how minor, required about two hours of on-site walk-through, investigation, and paperwork. During a typical day on second shift, my employees would make about five parts errors. Do the math.

I would have needed to spend ten hours every day jumping this new bureaucratic hurdle.

It took me mere seconds to decide that my shift would no longer have errors—I would simply correct them myself, talk to the offending employee in private, and no longer report them. Instead of errors being measured, analyzed, and corrected, as they had been, my new goal was to avoid reporting errors whether they happened or not.

It was suddenly all about reprimanding employees stupid enough to actually report an error, because that meant two hours of extra work for me. The poor quality guy was in a bad situation—his job was finding the errors before they were shipped out, and then doing the initial analysis. But that required a report and he knew if he reported an error I’d be angry.

Quality improved, of course... statistically. The girl who made the suggestion got a promotion. Her daddy was proud. General Motors rotted a little more from within.

Why did quality improve? Simple: because front-line supervisors like me all over the world stopped reporting errors to avoid the paperwork. Statistically, it looked like a huge improvement in quality.

Bureaucracies love statistics.

Drags on productivity exist everywhere. They’re in the union, sure, because union officials are simply another mindless bureaucracy interested in their own well-being above all else, but the drags can also be in management.

From what I’ve seen, read, and experienced, most of the drag at GM is created by management. They have a corporate environment that is excessively bureaucratic, stifling, anti-productive, and just plain stupid. Since the Ford family seems to be comprised of congenital idiots, I’m guessing it’s the same story over there.

Talk about the real world throwing a curveball: Dagny Taggart isn’t in Detroit building cars for General Motors—turns out she’s the governor of Alaska.

Love, Dad

From Reno, Nevada, USA

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