As you've probably heard by now, Obama is sending General Motors to file for Chapter 11 bankruptcy. And, as you've also probably heard, the United States will become the majority shareholder of the restructured company, with 60% of the stock. Nationalizing a large car manufacturer is interesting and controversial for all kinds of reasons (is Ford, the "last American car company," now competing with America?), and I think Jon Cohn is making some good points here. But this, from Politico, is kind of odd:
Even as it gets set to announce the bankruptcy of General Motors Monday, the Obama administration is struggling to set parameters on how it will act after taking a 60 percent stake in the new company that emerges -- and now that it has become the owner of a significant swath of Corporate America.
The United States "has become the owner of a significant swath of Corporate America"? Really? That has about as much perspective as, um, line drawings before Brunelleschi (or something). So I thought it would be fun to come up with a graphical representation of what the "significant swath" looks like:
In the coming week there will be much debate over what it means for the United States to be the majority shareholder of a major car company. Much of that debate will be serious and interesting. There will also be a lot of talk about how the United States is a socialist country in which the government has nationalized half of what was formerly known as private industry. That debate will be a lot less interesting.
(*I should have a little note on methodology here: I took the value of all publicly traded companies in the United States, which is available in the CIA factbook. The last data available is from December 31 2007, so I adjusted that value based on the percentage declines of a few major stock indices. I took that value -- about $12.5 trillion -- and subtracted the publicly traded values of the companies the United States owns. I used AIG, General Motors, Fannie and Freddie. I estimated values for a couple of other companies -- Amtrak, the Corporation for Public Broadcasting, the TVA, etc -- and threw them into the mix, too. A little algebra and presto, we have the chart.
If you wanted to be very generous you could use figures other than the publicly traded values for GM and AIG -- the Obama administration certainly thinks GM is worth more than what it's trading for. If you wanted to be even more generous you could add a couple of the big banks that the government is implicitly guaranteeing. I don't think that will substantially change the picture above, but email me or post a comment with any methodological suggestions.)