Martian's Daughter: A Memoir (33 page)

“Oh, shit!” My husband's language while driving had never been notable for its restraint, but in this case the outburst was entirely justified. Driving along a country road near Palo Alto, on a beautiful California April day in 1979, he had been watching the gasoline gauge drop to empty. We had run out of gas while looking for gas. For the second time in a decade, political turmoil in Iran had combined with misguided US price controls to produce empty pumps and long lines at gasoline stations, particularly in automobile-dependent states like California. If I'd been more savvy about the economics of the American automobile industry, I might have realized what this situation implied for the fortunes of the company I was about to join and wondered if I'd made a mistake in deciding to make a sharp career turn by becoming the chief economist of General Motors. But in my naïveté, I never connected the dots and anticipated the problems that were about to confront GM. Even less did I foresee its total inability to meet these challenges head-on.

We were on the other side of the country from our home in Pittsburgh because I was spending a year on sabbatical leave, free of teaching duties, at the Center for Advanced Study in the Behavioral Sciences in Palo Alto. High on a hill overlooking the campus of Stanford University, the center each year gave some forty to forty-five social scientists the opportunity to think, read, and write in their own specialties, while at the same time promoting interaction among scholars in different fields. To
encourage contemplation, the center provided each fellow with a simple study cabin, a single room comfortably furnished but without a telephone. In the days before cell phones and the Internet, this arrangement was very effective in giving us the opportunity to be alone with our thoughts. Above the center's redwood compound were more hills, with pebbled paths up and down, which groups of us would run, breathlessly if not always swiftly, dodging not only cowpatties but the cows themselves, which stared at these huffing creatures with bovine astonishment. When we arrived in summer, the dry season, the hillsides, dotted with pines and live oaks, were a shimmering golden brown.

Late in January, when the California hills had turned from gold to green, Lake Lagunita had reappeared in the dry bed below the center, and we were reveling in outdoor tennis games, I ran across the compound to take a phone call from Paul McCracken, my old boss at the CEA. McCracken, now back at the University of Michigan Business School, was also a consultant to GM. He told me that an executive from GM, Roger Smith, wanted to meet with me while he was in Palo Alto visiting his daughter at the Stanford Business School. I had no idea who Mr. Smith was or why he wanted to see me, but I said fine, I'll treat him to one of the center's excellent lunches. Back in Michigan, it was widely known that Roger Smith was slated to become the next chairman of GM within the year.

The gentleman who appeared at my rustic office was a short man with thinning, wavy blond hair and a squeaky high voice, wearing a business suit that contrasted sharply with the casual jeans and T-shirts that prevailed on the Hill. After a few pleasantries about his daughter's life at Stanford and the contrast between January in Detroit and Palo Alto, Mr. Smith suddenly asked, “Would you be interested in being vice president and chief economist at General Motors?” My first thought was that, with his fair complexion and mottled skin, the man must have had too much sun. But I was curious enough to ask him to tell me more about the job, from which the longtime incumbent was about to retire, as well as why he thought I would be a good fit.

It would have been hard to imagine a more improbable candidate to become a high-level automotive executive than me, who couldn't tell a Chevy from a Ford without a guidebook, left the mysteries of what went
on under the hood to my husband, and drove a slightly rusty six-year-old Dodge station wagon as the family car. But Roger Smith wasn't proposing that I design, build, or sell cars. What attracted him, aside from Paul McCracken's apparently enthusiastic recommendation, was my reputation as an academic economist but, even more, my government experience and the visibility it had brought with it.

The Price Commission had made some significant decisions affecting GM, and I suspect that my efforts to minimize the damage to the economy from price controls, both there and then at the CEA, had come to the company's attention. As the largest firm in a heavily regulated industry, GM relied on its chief economist, among other duties, to make its case to the Congress and various regulatory agencies, and the ability to articulate the arguments persuasively was important. On my side, my varied career experiences combined to pique my interest. To an economist whose specialty was international macroeconomics, GM's sheer size and impact on the American economy, as well as its operations on several continents, made it enticing. My work on the Price Commission and at the CEA had given me an insider's view of the importance, and the complexity, of relations between government and business. And membership on the boards of Procter and Gamble, Westinghouse, and Manufacturers Hanover Bank had given me insights into how large multinational firms made critical business decisions.

In the back of my mind was also the thought that I was being offered an opportunity to make my mark in the business world, an arena that no one in my family had entered, at least in living memory. I told Mr. Smith that I would think hard about his offer but, because I didn't know whether we would still have one child at home for the next couple of years, in any case I wouldn't be able to give him a definite positive response for several months. “Okay,” said Mr. Smith, “I'd rather have a yes in April than a no in February.” Not until I had been at GM for some time did I realize what a remarkable reply that was. Generally, in industry, people are expected to say yes or no to an offer or a promotion within a few days at most.

The key question was whether Laura would return to the school in Pittsburgh she had attended since kindergarten or go off to boarding school the following year. The free and easy California culture that had
unexpectedly produced what looked to Bob's and my astonished eyes like a positive orgy of partner swapping up on the Hill, also pervaded the Gunn Senior High School in Palo Alto, where she was spending her sophomore year.

The transition from a small, all-girls private school in Pittsburgh to a large public high school in Palo Alto would have been sharp in any case. But Laura, who was used to demanding teachers and a solid curriculum, found herself, as a latecomer, shut out of all the honors courses except English. Her other classes she dismissed, with adolescent scorn, as “ridiculous.” “I do wish Mr. Love wouldn't let kids smoke pot in Algebra,” she would say, slamming her books down on the kitchen table, “because then we have to teach it all to ourselves after school.” Or “The social studies teachers keep showing films in class because they're too dumb to lecture.” I thought she was indulging in teenage hyperbole until I met the teachers in question. And Gunn was reputed to be one of the best public high schools in California.

What Laura did learn during that West Coast year was how to handle social situations involving alcohol, drugs, and casual adolescent sex without either violating her own standards or being shut out of the social whirl. Bob was pulled away from a dinner party more than once by a call from Laura, saying, “Dad, would you come and pick my friend Tammy and me up at so-and-so's house?” which he did promptly, no questions asked.

The nadir of this California culture struck us when I had to find a pediatrician to fill out Laura's health form for Phillips Andover, the boarding school back east where she had been accepted for the following year. She had applied there because her experience at Gunn had made her more and more certain that she didn't want to return to the Ellis School in Pittsburgh where, she said, given the use of drugs that had begun to pervade the social scene, she would have to “choose between being a pothead and a pariah.” She knew she would encounter the same issues at Andover, but she felt that in a larger and more varied school environment she would be able to find friends who shared her outlook.

I made an appointment for her with a highly touted pediatrician on the Stanford medical faculty, and she pedaled down to his office on her bike. When I got home that evening, I found her white-faced with fury. When I finally wormed the reason out of her, it turned out that the doctor
had asked her if she was sexually active (she had just had her fifteenth birthday) and, when she said no, suggested that some psychiatric sessions might help her overcome her frigidity problem.

A colleague to whom I poured out my indignation asked me if I was considering a malpractice suit. “No,” I replied, “I'm much too busy keeping my husband from committing homicide.” Even after she had moved beyond the “problem” pinpointed by the doctor, Laura was still angry, and her conviction that women deserved more respect from the medical profession was a factor, I'm convinced, in her decision to become a physician herself.

Once Laura's schooling was settled, Bob and I decided that we could handle the complexities of a commuting marriage, and I finally said yes to Roger Smith. The more I thought about it, the more the notion of this major career change excited me, creating another piece to fit into the jigsaw puzzle of my professional life. My training in economics had given me a set of analytical tools, what I think of as a mental filing cabinet, to work with. As a professor, I had used this tool kit to teach and write for captive audiences, students and professional journals already solidly anchored in the economist's perspective. It was a tempting new challenge to use it instead to persuade the unconverted, business executives and members of Congress who, rather than sharing the unspoken assumptions of economics, tended to be highly skeptical of them. I never dreamed that the real challenge would be a persistent and ultimately unsuccessful battle to change an ingrown, self-satisfied, and self-destructive corporate culture.

The competitive decline of America's Big Three automobile companies had begun during the first oil shock in 1973. The combination of a sudden surge in gasoline prices, caused by OPEC's sharp cuts in petroleum output, and an artificial scarcity created by US government price controls on domestic oil, caused a sudden shift in the preferences of American consumers. Buyers turned away from the large, powerful cars that were the Big Three's specialty toward the smaller, more fuel efficient vehicles in which Japanese producers like Toyota and Honda excelled, and which they were exporting to the United States in increasing numbers.

If only I had read a book with the prescient title
Paradise Lost: The Decline of the Auto-Industrial Age
¹
published the same year as that first oil
shock, I might have been better prepared. In it the author, Emma Rothschild, argued that a productivity slowdown, skimping on investment, and technological backwardness were bringing about the decline of the US automobile industry. She described a variety of new ventures, many of them showcased at a government-sponsored exposition called Transpo ′72, that offered possible sources of revival. General Motors' display included recreational vehicles, mass transport, and experimental “city cars,” including a minicar and an electric-gasoline hybrid suitable for rental car fleets that could be picked up and dropped off around town. Many of these new vehicles were eventually introduced in the United States, years later, but GM wasn't in the forefront of building and marketing them. Despite its slogan at Transpo ′72—“GM is a total transportation organization”—the company chose to focus on incremental improvements in its cars and trucks. Its gradual but persistent decline in market share was under way, however much those in charge tried to explain it away as just a temporary glitch.

The encroachment of Japanese vehicles on the US market was speeded up by the second oil shock of the 1970s, set off by the Iranian Revolution of 1979. The worldwide decline of a mere 4 percent in petroleum production sparked panic and a sharp rise in oil prices.
²
In the United States, the Carter administration responded by imposing price controls on gasoline, causing severe shortages, which pushed consumers, even more precipitously than in 1973, toward the small, fuel-efficient cars that were a Japanese specialty.

This may have been the reality of the firm I was about to join, but neither the company nor the American public had yet absorbed the impact of what was happening. My friends congratulated me on joining “Generous Motors.” And that quip closely matched the company's image of itself: the nation's largest corporation, stable and secure, with a dominant market share, large profits even in bad times, and an iconic role in American society. As the combined pressures of recession and growing Japanese competition made me the frequent bearer of bad news during my first few years on the job, senior executives assured me that the world would soon “get back to normal,” by which they meant a world in which GM sold half of all the vehicles purchased in the United States, as it had in its heyday.

Like my appointment to the CEA, my arrival as one of the first female vice presidents in the notoriously macho automobile industry attracted a good deal of press attention. But, unlike that first episode, this time the press mostly played it straight. With the exception of the business editor of a small California newspaper, who referred to me as a “delicious looking dame,”
³
the outpouring of press reports on my new position described my background without coy references to my appearance.

Although GM's official headquarters and the center of its operations were in Detroit, the chairman's and treasurer's offices were in the elegant General Motors Building on the corner of 59th Street and Fifth Avenue in New York City, and that's also where the chief economist's office was located. We chose my old hometown, Princeton, as a reasonably convenient suburb in which to live, with good train service and many old friends from our earlier life there. The house we bought, a large, half-timbered stucco structure with a hedge of magnificent rhododendrons, served as a striking backdrop for a photo of us that accompanied an article in
Fortune
magazine about a new phenomenon: husbands who were willing to become “trailing spouses” as they relocated for their wives' executive jobs.
⁴