Martian's Daughter: A Memoir (34 page)

These living arrangements meant hectic commuting schedules for both of us. Bob drove an hour to Newark to fly to Pittsburgh every Tuesday morning to teach and reversed the trip on Thursday evenings. Meanwhile, I took a 7:00 a.m. train each morning to Penn Station, where a GM driver picked me up in a current model Cadillac to drive me to the GM Building and took me back to catch a train that got me home around 8:00 p.m. And during most weeks, while Bob was in Pittsburgh, I spent a day or two at GM headquarters in Detroit, spending the night in one of the sterile, impersonal bedrooms reserved for visiting executives on the top floor of the stolid granite GM Building there.

I was well aware that the corporate environment I had stepped into was very different from the academic one I was used to. I quickly overhauled my wardrobe and accepted that, for the first time in my professional life, I had a real boss, something no tenured professor would ever admit to. At the same time, I moved rapidly to make an impact on that environment by means of two hiring decisions that could never have occurred without me. I offered a job to a smart, assertive young Greek
economist who was being blackballed because she had lodged a harassment complaint against her employer, the United Nations. I did the same for a woman who, seven months pregnant when she applied, said she would like to work part-time after the baby was born and then ease gradually into a full-time position. The personnel department's functionary was appalled. “There's no precedent in this company for the risks you are taking with these hires,” she declared, but she couldn't overrule the decisions of a vice president. The first woman didn't last long at GM; the other has spent her entire career there—I had batted .500.

It took me longer to come to terms with more fundamental differences in the way academic and corporate economists functioned, and to adapt to these new demands. At the University of Pittsburgh I, like my colleagues, was judged by my output of basic research, work that developed and tested new theories and models. At General Motors, my success depended on how well my staff and I used both theory and evidence to help resolve pressing problems confronting our employer. As a professor, I could plug away at an article until I felt it was ready for publication, while all the work we did at GM was tied to tight deadlines dictated by the needs of the business. In my academic life, I was a specialist in international economics; GM, like the CEA, required me to apply my skills more broadly, bringing together insights from whichever branches of economics were relevant.
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Universities are the last frontier of individualism; my lectures and research output were my own, as were the plaudits or brickbats they attracted. In business, as in government, I soon discovered, achievements are almost invariably collective, and the ability to listen, interact, persuade, and compromise is as important—if not more so—than simply being right. And, while trenchant criticism is an academic tradition, the corporate world requires the softer touch that had been one of my father's hallmarks. I soon learned that I couldn't criticize subordinates in front of other people, or write comments like “bullshit” in the margins of their work.

Perhaps the biggest difference of all was the ambiguity of my perspective, which, I soon discovered, was a mixed blessing. I had a double vision as an insider and an outsider, and that was both my strength and my weakness. Because I was one of the few at GM who wasn't born there, I
brought a different perspective from those of employees who had started their careers at the company, but I was also continually being tested. I had to continually prove myself.
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Although I didn't realize it at the time, the role changes that accompanied my move from Pitt to GM echoed the much more dramatic shift my father had made in midlife. Up until he became an American citizen and the US military began to ready itself for war, all his brilliance had been focused on various aspects of pure mathematics, and his fundamental contributions to the great scientific issues of the early twentieth century were largely individual achievements.
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From about 1937 on, his focus shifted to applied mathematical research in the military field and in numerical analysis, computers and automata, as well as the application of game theory to economics, all of which involved working as part of a team.
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He was sometimes criticized for having abandoned the purity of abstraction for the messy problems of the real world, but, convinced as he was that he was fighting a battle of Armageddon, he expressed no regrets.

My situation was hardly comparable to my father's, but I did decide almost immediately after I arrived at GM to work at changing the role of the chief economist from providing economic data and analysis, as well as material for speeches, to the chairman and the financial staff to producing output that could be useful to the operating units, the profit-making side of the house. My personal focus would be, I told myself, to explain the world to GM and GM to the world. But I quickly discovered, to my dismay, that this shift meant coming to terms with GM's deeply embedded and profoundly dysfunctional culture.

Maryann Keller, an astute observer of the automobile industry, summarized GM's self-destructive attributes as a Goliath complex, a parochial worldview, leadership by the numbers, and contemptuous paternalism.
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To this list, I would add the incredible isolation of the company's top executives, the inhabitants of the legendary fourteenth floor of the GM Building in Detroit.

General Motors had long been accustomed to being the largest automobile company in the world, and the belief that the economies of scale arising from its size were a fundamental source of competitive advantage ran throughout the company. I heard Roger Smith opine more
than once, and in all seriousness, that being CEO of the largest firm in the United States should entitle him the highest compensation of any chief executive, regardless of how the company's profitability stacked up.

The GM I joined in 1979 was proud of being known as a midwestern car company. The Midwest was its world, and its lack of understanding not only of its Japanese competitors' sources of strength but even of its own customers' attitudes was devastating. It did make use of a standard market research tool, focus groups of potential customers, but it did this so late in the design and production cycle of a new model that, as I commented in frustration, practically the only thing that could still be changed on the basis of their comments was the color of the seat covers.

Since the late 1950s GM's chief executive had almost always been drawn from the ranks of the finance staff, whose members were the company's elite: recruited from the best schools, afforded the highest pay scale, and responsible for coordinating information and decision making for top management. Because their primary attention was to the numbers in making product and investment decisions, the concerns of designers and engineers were too often pushed aside. And these financial “hi pots” (high-potential employees whose careers merited special nurturing) were skilled in the art of making the numbers support whatever decision the chairman favored.

Coming from the ruthless up-or-out tenure system that governed faculty appointments at major universities, I was astounded to discover how rarely anyone was fired at GM. The job security enjoyed by blue-collar workers, with generous benefits guaranteed at the end of a lifetime career, extended to salaried staff and even to the executive level. Incompetence in the higher ranks might prevent someone from being promoted, or even lead to being shuffled off into a backwater position, but the company's paternalism was near-certain protection against being shown the door. When Elmer Johnson, newly arrived as an executive vice president, tried to institute a rigorous evaluation system that called for dismissing those who ranked at the bottom of the curve, his effort was short-lived; although the chairman never explicitly overruled Elmer's innovation, the old practices crept back. And the talented African American factory manager Elmer had installed as personnel vice president to execute the new system soon left the company.

Transported by GM drivers (no one used the “foreign” word
chauffeurs)
in late-model GM cars into the private garage under the GM Building, the company's top executives ascended by a private, key-operated elevator to the fourteenth floor, where their area was protected by two sets of heavy, electronically locked doors, a security guard, and a receptionist. They lunched together in their private dining room—actually, there were three levels of executive dining rooms in the building—and could leave at the day's end uncontaminated by contact with the ordinary mortals who ate in the large cafeteria on the first floor.

These executives were isolated not only from the rest of the world but from each other. Their offices were all along the same corridor, but there was no spontaneous popping in and out or casual talk around the water cooler. The door to each executive's office was generally closed; in order to enter, one had to make an appointment and be admitted by the secretary who sat on guard in the outer office. This protocol didn't apply, of course, if the visiting executive stood above the visitee in the corporate hierarchy, and a summons from one's superior always sent the recipient sprinting down the hallway.

This was a culture that provided an effective bulwark against reality. With their heads planted firmly in the sand, the majority of GM's top management clung stubbornly to their belief in a stable, reasonably predictable world. The incursion of new Japanese competitors who happened to be in the right place with the right kinds of cars when the oil shocks hit was seen as a temporary or at least reversible aberration. For most of them, furthermore, the only vehicle market that mattered was the one in the United States, which accounted for some 70 percent of GM's production and sales. The idea that the markets and the competition relevant to the company's fortunes were rapidly becoming global was foreign to their thinking.

The picture of the world I tried to persuade GM's management and directors to accept was very different. I began by shifting my staff's forecasts and analyses away from treating the United States as a basically self-sufficient economy, onto which international trade and investment were tacked almost as an afterthought, to seeing it as fundamentally interdependent with the rest of the world. In the decades immediately after World War II, when exchange rates were fixed, foreign competition
had not yet revived, and very little capital moved across international boundaries, a decision by the Fed to push interest rates up had affected GM mainly through a drop in total vehicle sales. Sales fell both because Americans cut back on spending in general and because the cost to automobile dealers of financing their inventories and to customers of financing their car purchases rose.

In the more financially integrated world of the early 1980s, in contrast, the sky-high interest rates that resulted from Paul Volcker's determination to break the back of double-digit inflation brought funds pouring in from abroad. With exchange rates no longer fixed by governments, this capital inflow caused the dollar to appreciate relative to other major currencies, making imports cheaper and exports more expensive and putting GM's products at a competitive disadvantage vis-à-vis imported vehicles. Both the business risks and the appropriate responses were different in an economy that was now far more open to the outside world.

I made these points over and over again in presentations to the top management and Board of Directors before this integrated worldview sank into minds that found it strange and unfamiliar. Some of GM's shareholders took real umbrage at my internationalist perspective, writing angry letters to the company protesting the appointment of Marina Whitman, a member of two “treasonous” organizations, as a vice president of their company. One of these organizations was the Council on Foreign Relations, since its establishment in 1921 the incubator and home base of America's East Coast foreign policy establishment—most secretaries of state, many other cabinet secretaries, and several US presidents have been members. It was a men-only club until the 1970s when, fresh from the CEA, I was one of the first women to join.

The other object of the shareholders' anger was the Trilateral Commission, a group of 150 high-profile members, equally divided among North America, Europe, and Japan. It had been founded in 1975 by David Rockefeller, with the aim of pulling Japan, our former adversary and by then an important ally, solidly into the ambit of the “Western” world. No one could fault the commission's organizers on their ability to select as members the rising political leadership of the United States. The winner of the 1976 presidential election, Jimmy Carter, his two major opponents, John Anderson and George H. W. Bush, and 26 senior appointees
in the Carter administration were all members, as were Walter Mondale, Bill Clinton, and numerous high-ranking members of subsequent administrations, both Republicans and Democrats.

The powerful positions occupied by members of both organizations, and especially the fact that David Rockefeller, the multimillionaire head of Chase Manhattan Bank, was a leader in both of them, strengthened the spread of conspiracy theories. On the left, both the council and the commission have been suspected of existing to further global business and banking interests at the expense of ordinary folk. On the right, they have been accused of promoting world government and chipping away at the sovereignty of the United States. Some of the more paranoid opponents of the internationalist outlook they represent have even spread rumors of a secret fleet of black United Nations helicopters poised to invade and take over the United States.