General Motors, Poletown, Mi and the Executive Compass

In 1980, General Motors’ executives were faced with a dilemma regarding new plant construction in Detroit, Michigan. GM intended to close two of its aging facilities and rebuild new assembly plants at a different site location although still in the Detroit metro area. The only land site matching the construction specifications was a settlement called Poletown, Michigan. This township was home to more than 3,500 residents, all of whom would have to be relocated if construction were approved. The following is an analysis of this dilemma according to the four quadrants of The Executive’s Compass: Liberty, Equality, Community, and Efficiency.

Liberty

Liberty, as defined by J.S. Mill, “is that of pursing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it” (p.38-39). GM, without careful decision, stands to violate political and economic liberties by exercising powers of eminent domain in the Poletown, Michigan case of 1980.

Eminent domain, the power granted by the government allowing private property to be seized for public use, has been the source of political debate for centuries. Legal cases ruling on different sides of the issue date back more than 167 years. The most recent case to note is Kole v. The City of New London, which was just decided by the U.S. Supreme Court in June 2005. Although the court sided in favor of granting eminent domain, Justice O’Connor quoted the following in her dissent: “Law that takes property from A and gives it to B: It is against all reason and justice, for a people to entrust a Legislature with such powers.” The concept that governmental power should exceed that of the individual right is a cruel violation of political liberty. As stated in The Executive’s Compass, “it degrades the dignity of the individual to make him or her subservient to the will of the state” (p.39). If GM chooses to remove the approximate 3,500 occupants of Poletown from their homes, it would be a brutal infringement on the individual independence of those residents.

Economic liberty is an ideal initiated in the late eighteenth century by philosopher Adam Smith (p.40). This domain of liberty pertains to the freedom of the marketplace. It was Smith who stated in The Wealth of Nations that “the consumer is king”, urging also “that government, interfering in the market by granting mercantilist monopolies, abetted this injustice” (p.40). In the Poletown case, GM has been afforded the option of using governmental interference through eminent domain. GM must be reminded, however appealing eminent domain may be, the success and survival of the marketplace centers on limited governmental interference. The same government today that permits eminent domain, will be the same government tomorrow enforcing unfavorable regulations on GM and the marketplace as a whole.

In accordance with the Libertarian ideals set forth in The Executive’s Compass, GM must not remove unwilling citizens from their homes in Poletown, Michigan. The organization must find a more suitable location where the political and economic intrusions of liberty are absent.

Equality

Equality is the second of the four “great themes of political argument.” The concept of equality in and of itself displays varying positions of Egalitarianist's. From Aristotle’s summation of the notion, we derive “Ipso facto,” social inequality is natural. More contemporary Egalitarians argue “for the creation of a true meritocracy in America, in definition, the removal of all barriers to social mobility.” (p.59).

Most Egalitarians fight for investment in full-employment policies. American economist Arthur Okun suggests “the market is also said to encourage short-term thinking, which has led to the failure of corporations to reinvest, this causing a loss of American jobs to foreign competition.” (p.59). It is upon this view that GM would conduct most of their analysis of the Poletown case.

The quadrant of equality would force GM to look at two issues: 1) jobs created by the new plant and 2) the Poletown neighborhood. The first issue as it relates to equality is a simple one. Creation of the new plant would make room for 6,150 workers. Destruction of the old plant would eliminate 500 jobs. The net gain of employment is 5,650 jobs. Additional employment not only increases the value of GM to stockholders, but also to all other interested parties. Regardless of where the new plant is built, the potential to shrink the gap in the unemployment rate would favor the notion of equality.

The second issue involves the Poletown neighborhood. Building the new plant in the Poletown would result in 3,500 residents