GM Bankruptcy...

(The picture is of Alfred P. Sloan, the man who created GM as a consolidation of several smaller automakers)

I feel I have to say something about the GM bankruptcy, simply because the story is dominating the news: WSJ, NY Times, USA Today.

Frankly, the story bores me. It's full of wailing and gnashing of teeth, sound and fury, signifying nothing.

Why should I care that GM is going bankrupt? Is it simply because it's a venerable corporation? That doesn't do it for me. A corporation (or any institution) doesn't deserve to continue just because its been around for a while.

In an earlier era, the economist Joseph Schumpeter called capitalism "creative destruction". Like living organisms, corporations are born, they flourish, they fail, they die. When they fail or die, the corporate body (redundant, I know, because both words mean the same thing) becomes food for other economic agents: other corporations, individuals, institutions.

It is only our tendency to cling to the past that makes us think it is somehow wrong that a big corporation should go bankrupt. It's not wrong, merely part of the artificial garden of capitalism. People say, what about the workers? What about the jobs that will be lost?

It's better to clear out an institution that is not functioning, so that new jobs can be created. Americans will still buy cars. So other producers will buy GM's plants and equipment, hiring some of the workers, while others will find new jobs doing other things.

Change is hard. Some people may have to leave the communities they know to find work elsewhere, or they may need to start new businesses, or accumulate new skills. But this change is the cornerstone of the economy. To resist it, to go against it, to prop up these companies and others like GM that made disastrous errors during the boom years, is wasteful, inefficient, and rewards incompetence instead of productivity.