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The Math of GM - I Can’t Help Myself

Last spring there was an email going around about the stimulus plan.  The logic was that instead of spending $787 billion on “stuff”, we instead send $250k to every man, woman, and child in America.  The spending that resulted from such an influx of cash would surely result in a revival of the economy.  The problem was that the math was off a bit.  $787 billion divided by 312 million people is not $250k apiece, it’s $2,500 (roughly) apiece.  Not very stimulative.

Now let’s look at GM. 

GM has roughly 285k employees as of 2008, per wikianswer.  Let’s assume that is still correct.  Divide $70 billion by 285k, and you get a whopping $245,000 apiece that we could have paid to every employee of GM.

However, we have already spent $20 billion.  Ok.  Make it $50 billion.  That’s still $175,000 apiece.  Not a bad gig for giving up your day job.

But this leaves retirees in the lurch for healthcare (the unfunded healthcare liability, or VEBA).  Ok.  Say that’s $20 billion.  That still leaves $30 billion, or a whopping $105,000 per employee AFTER taking the retiree healthcare into account.

So instead of this nonsense about saving jobs, which is dubiously based on a return to profitability through a sudden bout of American car buying, lower cost structure, and a jolt of engineering and design prowess, we could have paid for the VEBA, sent everyone a check for $100k, and then sold the business to whomever wanted to operate it as an ongoing, streamlined concern.