Nearly two years ago, David Brooks predicted disaster for the government’s acquisition of General Motors, calling it a quagmire:
For the elemental facts about the Obama restructuring plan are these: Bureaucratically, the plan is smart. Financially, it is tough-minded. But when it comes to the corporate culture that is at the core of G.M.'s woes, the Obama approach is strangely oblivious. The Obama plan won't revolutionize G.M.'s corporate culture. It could make things worse. […]
The end result is that G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company's viability. It will impede it. We've seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn't really understand. The result is quagmire. The costs escalate. There is no exit strategy.
Let's see how this prediction held up:
General Motors has reported net income of $4.7 billion, or $2.89 per share, for 2010, its first annual profit since 2004. Revenue for the year totaled $135.6 billion. For the fourth quarter, GM reported net income of $510 million, or 31 cents per share on revenue of $36.9 billion. Before charges, the company earned 52 cents, beating Wall Street's expectations of 49 cents per share on revenue of $34.3 billion.
Generally, I'm not one to disparage skepticism for government; it's a useful instinct. But Brooks doesn't have a great record for predictions, and given his stature, it's useful to point this out on occasion.
* Post title borrowed from Apple-blogger Jon Gruber.
