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What the Economists Won’t Tell You

As Mead followers — both on-line and in print — are aware, culture interacts with economics in mysterious ways, creating complex and complicated situations that often defy simplistic economic explanations or solutions. Over at The Atlantic, Megan McArdle has a story noting that this dynamic might help to explain the decidedly unimpressive recent performance of General Motors:

GM has fixed basically every other problem that anyone could name: Instead of a $2,000-a-car cost disadvantage due in large part to legacy costs such as wages and retiree benefits, it now has a cost advantage. The eight marques that multi­plied the overhead and muddied the value propositions of its brands have been streamlined to four. The excess dealerships have been closed.

What’s left is culture. After everything, if GM begins losing market share again, we’ll know that it’s beyond saving. To paraphrase the old joke: ‘How many experts does it take to turn around a big company? Only one—but the company has to really want to change.’

We have pointed out, as McArdle does, that culture — whether corporate, political, or national — can change, but it does so in its own way and at its own pace. GM is the prototypical Blue institution, and as the model fails, old habits die hard.

The best way for change to come is for companies like GM (and states like Illinois and California and cities like Detroit) to change for their own free will while they still have some room to maneuver.  If that doesn’t happen, change will still come.  It will just take longer and hurt more.

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  • Walter Sobchak
  • Corlyss

    Change is the hardest and usually the last option any person, company, agency, or nation will undertake to save itself.

  • Mrs. Davis

    Someday the sign over Redwood City will read BK Best by Government Test.

  • Gene

    Let’s not forget that there are a fair number of people, like yours truly, who won’t spend one penny on a GM product until it’s free of its government entanglements. Quality and price mean nothing to me. Ownership does.

  • elisa

    some behave as if change is death, and become self fulfilling prophecy.

  • Kenny

    GM’s culture could have changed for the better if it had been forced into bankruptcy instead of being ‘saved’ for the sake of the parasitic UAW. Fact.

  • Jim.

    Wait a minute, you mean the takeover by the forces of Hope and Change didn’t make the cultural changes necessary for GM’s prosperity?

    Imagine my surprise!

    Simply because you’re changing doesn’t mean you’re getting better. Death is a change, after all.

  • Earl of Sandwich

    The Cruze gets an A for effort, but ultimately disappoints. Can’t say I’m excited by any upcoming GM car, and I set a low bar-I’m looking forward to the Dodge Dart

  • Tiffany Harris

    “it’s how we’ve always done things”… such a difficult phrase to overcome in business or in your own personal life. But, that change can happen and it has to start from the top. Moreover, the leadership has to understand the corporate culture before it can truly begin to make the change happen. I’ve just finished a book called Transforming Corporate Culture by Lisa Jackson and Gerry Schmidt, two leading change consultants. Their message is clear: understand your corporate culture and then impart change within that framework. They present a vision for concrete steps leaders at all level of an organization can take to actually see change happen. It’s amazing when it does.

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