General Motors is shutting down several American plants, cutting thousands of jobs in the process. One of those factories, in Lordstown, Ohio, went dark just a few weeks ago, taking almost 1,000 jobs down with it. And President Trump is not happy.
Over the weekend he took to Twitter to blast GM and its CEO, Mary Barra: "Because the economy is so good, General Motors must get their Lordstown, Ohio, plant open, maybe in a different form or with a new owner, FAST!" Late last year, when news of GM's plans first broke, the president even threatened to revoke unspecified subsidies in retaliation.
Of course, you can't just order a business to stay open. Like any other private company, GM needs to remain financially viable, and would prefer to make a profit. It's decided it needs to shutter five North American plants and cut 14,000 jobs to continue doing that. Trump may complain about this, as may both senators from Ohio (a Republican and Democrat) and the bipartisan mix of Congress members who grilled Barra late last year. But simply shouting at GM won't accomplish much. If we want workers to be valued by their employers and enjoy abundant jobs, America needs to build a national policy environment to facilitate that.
How do we do that? First of all, we should make sure that GM and any other businesses are always scrambling to hire new people and pay them good wages and benefits. That requires keeping labor markets permanently tight, which in turn requires keeping aggregate demand strong. That means robust fiscal stimulus, public investment, and loose monetary policy.
Unfortunately, our policymakers tend to focus on budget austerity and tight money. Trump himself pushes budgets that threaten to gut most government spending other than the military, and when he embraces deficits it's to provide gigantic but economically useless tax breaks to the wealthy. Trump does complain about the Federal Reserve keeping interest rates too high. But his appointees to the central bank tend to be middle-of-road types; hardly the kind of reformers that would push monetary policy in a radically pro-worker direction.
Instead, Trump could try fiscal stimulus via expanded welfare spending, or direct industrial policy through subsidies, research and development, and seed projects. Left-wing progressives are talking about a national job guarantee and a Green New Deal; Trump could partner with them on either or both to get the job done.
Another issue Trump wants to take on in theory — but screws up in practice — is trade. His trade war seems more about branding and showboating than encouraging smart strategy. America's trade deficit does in fact weaken our aggregate demand, but smart industrial and macroeconomic policy could make up for the shortfall. Trump could focus on systemic fixes like balancing international currency values to close the trade gap itself. Instead, Trump's trade war with China has emphasized intellectual property and technology transfer, which are all about juicing corporate profits rather than jobs.
Of course, all these fixes are very broad. They basically ensure that when something like GM's plant closure does happen, workers can quickly find good jobs elsewhere. But the fact that GM made such a cold-blooded calculation in the first place also rankles people.
This is where the GM example also gets tricky, because their business reasoning for the plant closures isn't crazy. Cheap oil has turned consumers away from the smaller cars these plants tend to focus on. In fact, in 2018, GM's capacity utilization rate for its factories was a mere 73 percent, compared to rates in the high 80s or low 90s for most other automakers. It was wasting time and money. And GM wants to retool for a future of more autonomous and all-electric cars.
So while these sorts of decisions are arguably necessary, they sting because they come down from on high. The wealthy shareholders who run the companies make the call, and the workers just have to live with the consequences. A potential fix would be to give workers a more equal say in how companies are run. That wouldn't end this sort of creative destruction, but it would at least ensure it occurs on more democratic terms.
One way to achieve that goal would be to empower unions. Unfortunately, Trump's White House has taken the GOP's standard anti-labor line, pushing regulatory changes and a Supreme Court strategy aimed at gutting the union movement.
At the same time, GM is unusual in that it's heavily unionized already. And therein lies the limits of this particular strategy: Unions can be ignored by management and the corporate board. But another option is to just mandate that a certain percentage of all corporate boards themselves be made up of worker representatives. Sen. Elizabeth Warren (D-Mass.) has a bill that would do just that. Has Trump supported it at all? Of course not.
There are tools available to prevent things like the GM plant closures — or at least soften the blow. It's just that, for the most part, Trump doesn't actually use them. He's mainly interested in barking criticism on Twitter. This is a long-running theme in his presidency: Trump seems to wish he could just go around giving orders all the time. But unfortunately, whenever he discovers he can't solve a problem that way, he's likely to just lose interest and move on.