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Was the Government Takeover of GM Justified?

March 13, 2011

In June 2009, a floundering General Motors company filed for Chapter 11 bankruptcy, thus putting thousands of jobs at risk.  Many Americans were frightened at this aspect, and it was then that the Government stepped.  The Obama administration decided it would provide GM with financing in return for a restructering of the company.  Specifically, the U.S government would own 60% of what once was a private enterprise.  But is this justified?  Is the state allowed to encroach so far as to transfer private property to the public sector?

John Locke, in his “Second Treatise of Government” , wrote on the relationship between the state and the people in the state of nature.  Locke proposed that, “men therefore in society having property, they have right to the goods, which by the law of the community are theirs, that no body hath a right to take their substance or any part of it from them , without their own consent”.  Analying this, one can see that there is indeed an instance when government is allowed to take property; with the consent of the property owners.  In the case of G.M though, the company was owned by thousands of stock holders.  Seeing as there was never a referendum to the people in order to decide if they were all willing to give up their share in favor of the government, it is obvious that the people did not give their consent.  The government has now encroached so far as to take away private property against the will of the people.  To me, this does not seem like a role the government should play.  Locke even states that “the preservation of property [is] the end of government”.

It is clear that the government did not act to preserve property in favor of the private citizen.  Thus, their acquisition of GM directly violated the role of the state in John Locke’s state of nature.  The just result would have been the self re-organization of GM.  Stock holders would undoubtedly have taken a hit, but that is the risk which all private investors take when they choose to invest in a private company.  So, while some people argue whether or not the state was justified in taking over GM, there is no doubt where John Locke would stand on the issue; not justified.

  1. Jacob Saslow permalink
    March 13, 2011 6:29 PM

    I really liked this post. I appreciated the connection between the government’s actions and John Locke’s work. Usually the government is given some sort of lenience in matters where they are attempting to rejuvenate or revive a corporation. However, when examined like this, it becomes obvious that in fact they did act wrongly according to Locke, and should be punished accordingly. I also liked that you went back and examined an event that is relatively recent, it is not being covered all over the news media sources at this moment.

  2. ankitchowdhary274 permalink
    March 13, 2011 8:12 PM

    I find this post very interesting however I don’t particularly support the claim that you are making here that by acquiring GM, the government directly violated the role of the state in John Locke’s state of nature. In fact this takeover can be seen in a different light, and can be applied to similar instances where mammoth organizations such as GM and AIG fail.

    Locke says that “the preservation of property [is] the end of government”. What happens cases such as GM or AIG is that these organizations are so gargantuan in their reach and wealth that not saving them by an almost hostile take-over would mean more havoc in the financial sector, and therefore the ripple effects would be felt by so many more than are already in soup. In GM’s case, imagine a scenario in which GM would have completely shut down as Lehman Brothers. It would cause a huge loss in jobs and incomes, a massive deficit in car production and instant panic across the car industry in the stock market. Thus, I feel that the government in this case has been more in accordance with Locke rather than opposing him. By taking away property from one they have preserved the property of so many more.

    An example I can further cite is Lehman Brothers. This mammoth bank failed as we all know and with it took the hard earned savings worth billions of dollars and the hopes and dreams of all this who had vested their trust in it. This could have been avoided had the government backed Lehman Brothers and bailed them out. This alas did not happen.

    In conclusion, sometimes acting against one person to protect many people may be the bets interpretation of Locke when he says that “the preservation of property [is] the end of government”.

    • Emily Slaga permalink
      March 15, 2011 12:38 PM

      I think this was stated beautifully and made a great point that I agree with. Though the government took away the private property that is GM, they protected private property as well. The share holders own parts of GM, and the government stepped in to prevent the total collapse of the company. Had the company collapsed, all of those share holders would lose 100% of their money invested(which is their property), it would have made the car industry extraordinarily worse off, which probably would have made the recession even worse. The government, according to Locke, is supposed to protect our property. Our property (say, housing) is at risk when we’re unemployed. By saving GM, the government protected people from unemployment(though a lot of people were let go), which helped them protect their property.
      So yes, while some private property was lost, I think a lot more was saved in the process.

  3. Noah Gordon permalink
    March 13, 2011 8:54 PM

    Although I found the original post interesting–the connection between Locke’s idea of personal property and the idea of the government taking a company over as property brought up some interesting possibilities–I think ankitchowdhary274’s response was the best-written piece on the page. Locke’s century-old ideals are clearly insightful and remain important but that doesn’t mean they apply to every situation in the present day. Neither does the constituion. Or the Bible. The takeover may not didn’t work miracles but it did work. The American car industry was on the verge of extinction. The Government wasn’t doing what Locke campaigned against and taking over. They were taking in.

    • Jeremy Kucera permalink
      March 15, 2011 9:17 PM

      First of all, I am going to agree with you Noah that Locke’s ideas are important, but they can’t be applied to every situation today. I did find it interesting that David, the author of the original post, could draw a conclusion between Locke’s ideas in the state of nature and the GM bailout, because I struggled to relate the two. The reason for this is because it is hard for me to relate any event from today to any philosopher’s “State of Nature.” I say this because today us human beings aren’t in a state of nature, and we never will be. Our natural states have been erased by society’s advances over thousands of years. Thus, I find it difficult to relate 21st century, or even 18th, 17th etc. century, events to any of the philosophers’ states of nature. I agree with Rousseau’s idea that the state of nature only applies to humans when we were first in our animalistic states.

      Secondly, I have to respectfully disagree with your statement Noah that the Constitution doesn’t apply to every situation today. I believe that when there is an issue in question, the Constitution is the best place to look for guidance. Even though it was written hundreds of years ago, the ideas are still very useful in today’s government policies. For example, if the Constitution says citizens have the right to bare arms, then citizens should have the right to bare arms. Now, I know every issue isn’t that clear cut, but the main concept is: The text of the Constitution is still relevant today, and it should be upheld.

  4. Chelsea Hoedl permalink
    March 14, 2011 12:30 PM

    I agree that Locke’s views may not be pertinent to all situations in today’s society, however, I believe it is important to note how he and other political philosophers would view an occurrence. If we consider how others would look at a situation, it makes it easier to decide how we ourselves see it and from there we can take action. It also forces one to look at a situation from several different viewpoints. Locke’s ideas are not outdated because he makes claims based on the essence of human nature, not on the current state of society. For this reason, we can apply his thoughts to our own era.

    I find that this quote summarizing Locke’s ideals furthers the argument that Locke would not support the government taking control of GM. “f a tyrant oppresses the people by using unlawful force to deprive them of their liberty or property, then the people of society have a right to forcefully oppose that tyrant. Furthermore, the people of society have a right to defend themselves against those individuals who use violence to try to take away their freedom and security.”
    Locke not only suggests that the governments intervention is wrong, but he also suggests that action by the people is just.

  5. Robert Tepper permalink
    March 14, 2011 9:34 PM

    I found this post to be very interesting. The connection between the government takeover of GM and Locke’s principles is clearly present, and I agree that Locke would not have approved. I believe Locke’s theory on preservation of property is one of the most important principles that this country was built on. In the United States of America we enjoy free markets and minimal government interference in private business. Capitalism is what has made this country great and we must be allowed to continue to preserve our private enterprises without government interference.

  6. Anthony Sinishtaj permalink
    March 14, 2011 9:38 PM

    This post is a very interesting one. And I agree that Locke would frown upon this government take-over of the corporation. However, our government is not Locke’s child, that has to listen to Locke’s every whim. Our constitution does have obvious influences from the early Liberalists, such as Locke; but the U.S government must take care of its industries. Locke may disagree with this, however, the other famous Social Contractor, Hobbes, would probably not. He would say that in order to stop financial crisis, which causes political crisis, this is justified. Governments do not have to be set up the way that any of these people intended.

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