Changes

Occasionally a major company will suddenly declare itself to be broke and will ask the government for a “bailout” to save its jobs.  The car maker Chrysler did this about 25 years ago.  The federal government, despite substantial criticism, provided cheap loans to Chrysler to keep it out of bankruptcy.  So many jobs were at stake that there was political benefit to some officials for doing this.  But don’t expect the government ever to save a company you work for from going bankrupt.  Should the government bail out a company to keep it from going bankrupt?

Occasionally a major company will suddenly declare itself to be broke and will ask the government for a “bailout” to save its jobs.  The car maker Chrysler did this about 25 years ago.  The federal government, despite substantial criticism, provided cheap loans to Chrysler to keep it out of bankruptcy.  So many jobs were at stake that there was political benefit to some officials for doing this.  But don’t expect the government ever to save a company you work for from going bankrupt.  Should the government bail out a company to keep it from going bankrupt?

==Alfred Sloan==

==Alfred Sloan and Charity==

Born in 1875 in Brooklyn, Alfred P. Sloan, Jr., preferred studying over playing.  After attending college, he went to work in ball-bearing factory in New Jersey.  His employer was having financial difficulties, and Alfred persuaded his father to buy the troubled company at a discount.  His father was an importer of coffee and knew nothing about the ball-bearing business.  Alfred took it over.

Born in 1875 in Brooklyn, Alfred P. Sloan, Jr., was a hard-working student.  After attending college, he went to work in ball-bearing factory in New Jersey.  His employer was having financial difficulties, and Alfred persuaded his father to buy the troubled company at a discount.  His father was an importer of coffee and knew nothing about the ball-bearing business.  Alfred took it over and spent all his time and energy trying to make a success out of the struggling firm.

In just six months Alfred was able to revive the company, and then ran it for 17 years before selling it in 1916 at a handsome profit to the founder of General Motors (GM) car company.  Alfred then joined GM and spent five years studying its operation in detail as he worked there.  He wrote and published “The Organizational Study,” which was the first treatise on management ever written.  Its inspiration was the U.S. Constitution and its system of checks and balances.  Sloan’s vision was to divide GM into many small divisions that could have their own revenue and cost targets, and check and balance other divisions in the company.  The high performers could be easily identified and given greater resources; the poor performers could be replaced.

In just six months Alfred was able to revive the company, and then ran it for 17 years before selling it in 1916 at a handsome profit to the founder of General Motors (GM) car company.  Alfred then joined GM and spent five years studying its operation in detail as he worked there.  He wrote and published “The Organizational Study,” which was the first treatise on management ever written.  Its inspiration was the U.S. Constitution and its system of checks and balances.  Sloan’s vision was to divide GM into many small divisions that could have their own revenue and cost targets, and check and balance other divisions in the company.  The high performers could be easily identified, rewarded, and given greater resources; the poor performers could be replaced.

When Sloan was promoted to become Chairman of GM in 1923, GM had less than one-fifth of the car market.  Ford Motor Company, founded by the legendary Henry Ford, enjoyed over half of all car sales.  But within a mere eight years, by 1931, GM surpassed Ford based on Sloan’s organizational principles.  GM became the largest corporation in the world.  Sloan’s vision was for GM to make “a car for every purse and purpose.”

Eventually Sloan himself was rewarded for his valuable work by being promoted to become Chairman of GM in 1923.  When Sloan took over leadership of GM, it had less than one-fifth of the car market.  Ford Motor Company, founded by the legendary Henry Ford, was much bigger and more successful, selling more than half of all cars in the market.  But within a mere eight years, by 1931, GM surpassed Ford based on Sloan’s organizational principles.  GM became the largest corporation in the world.  Sloan’s vision was for GM to make “a car for every purse and purpose.” Many felt that GM's success was important to the success of the United States.  “What’s good for GM is good for America” became a popular saying due to Sloan’s leadership of the company.

Sloan ultimately gave much of his wealth to found the Sloan-Kettering Cancer Center in New York, considered the finest in the world.  “What’s good for GM is good for America” became a popular saying due to Sloan’s leadership of the company.

Sloan was an example of what some students discussed in their answer to the homework question about charity and the free market.  Sloan made a fortune in the free market, and that enabled him to make enormous gifts to charity.  He kind donated much of his wealth to found the Sloan-Kettering Cancer Center in New York, considered the finest in the world for treating cancer.   

Times are different today, and GM may no longer deserve that motto.  GM is now one of the largest private employers in Mexico.  In its defense, it would say it has to move production to Mexico to lower its costs and compete with cars imported from Japan and Korea.

Long after Sloan died, GM began to fail.  In 2009, it failed and was taken over by the United States government.  Most firms do fail, if not in the first few years then later.  But Sloan's charity continues to help cancer patients at the Sloan-Kettering Cancer Center.

== "Real" Price and the CPI ==

== "Real" Price and the CPI ==