Some interesting dots worth connecting.

First, from the WSJ on GM’s contribution to employment:

But GM is failing to do what President Obama perhaps needs most: Hire droves of U.S. workers.

According to the automaker’s second quarter earnings release this morning, GM added only 2,000 employees to its North American workforce since the start of 2010. Its North American workforce has edged up to 105,000 workers from 103,000 — an increase of a mere 2,000 additional workers. Its world wide workforce has fallen to 208,000 from 215,000, largely driven by the sale of its India Operations and Saab brand, which was manufactured largely in Europe

The GM bail out and government backed bankruptcy was meant to save the company’s existing jobs, not necessarily create new ones. But a top priority of voters, cited in countless surveys, is getting Americans back to work.

Mike Mandel adds some perspective on why GM might not need more workers:

Today the Federal Reserve announced that manufacturing output rose 1.1% in July, led by an 9.9% gain in the output of motor vehicles and parts. Over the past year, the output of motor vehicles and parts rose by 32.6%.

But remember, this is an output gain, not a value-added gain. Output measures the number of motor vehicles and parts leaving domestic factories. But it doesn’t take into account any increase in offshoring–that is, use of imported parts.

It turns out that over the past year, imports of motor vehicle “parts, engines, bodies and chassis” rose by 79%. Yowza.

The implication is that there are a lot more imported parts and engines going into ‘American-built ‘ cars and trucks.  So value-added in the domestic auto industry–which is what really matters–went up less, maybe a lot less, than 32.6%.

And this via James Pethokoukis citing Andy Xie’s larger perspective on the global fluidity of fiscal stimulus:

Stimulus is prescribed as a panacea for recession. In today’s global economy, it isn’t effective in the best of circumstances and is outright wrong for what ails the West now.

Trade and foreign direct investment total half of global gross domestic product. Multinational corporations drive both. They shop around the world for the lowest-cost production centers and ship goods to wherever the demand is. Demand and supply are dislocated. So when a government introduces stimulus, the initial increase in demand doesn’t necessarily boost local supply. More importantly, if multinationals decide to invest somewhere else, there wouldn’t be an increase in jobs to sustain the growth in demand beyond the stimulus.

Just as water flows down, stimulus affects low-cost economies more, wherever it is initiated. As the West pours money into the global economy through large fiscal deficits or central banks expanding balance sheets, the emerging economies are drowning in excess liquidity. Everything is turning red-hot.

With respect to GM, it’s pretty clear that its bailout simply saved union jobs. How many is a matter for conjecture as we have no idea what might have happened if the company had gone through a normal Chapter ll. Those who support the rescue argue that the economy could not have coped with the failure of so large a company given its fragile state at that point in time. On the other hand it’s just as logical to suppose that GM’s best parts would have been picked up by competitors, that the lost production would have been filled by other US based manufacturers thus sparing the parts suppliers and that many of the workers would have their same jobs albeit with different companies. Neither proposition is verifiable so we are left with the reality that as a job creator the salvation of GM benefited only those employed by the company.

Oh, and it set an awful precedent for the next large corporate failure.

Andy Xie’s piece puts an interesting spotlight on multinationals.

In may respects, these companies are marvels of business engineering. They’re able to respond to economic shocks anywhere in the world and adjust their operations to meet challenges. Giving the devil its due, they not only manage their businesses in a manner that would turn their predecessors green with envy but in doing so they have lifted at least some of the populations of lesser developed countries out of abject poverty.

Having said that, it’s pretty clear that these companies are “American” only by virtue of their domicile. They function as engines of job creation largely in low wage countries. Their choice of the US for their base is largely a function of access to capital markets and the security afforded by our legal system and role as the ultimate superpower.

As such, it makes a great deal more sense for government, to the extent it thinks it needs to “assist” business, to direct those efforts toward smaller, more domestically oriented companies. Multinationals are a great source of employment for our lawyer/accountant class but they’re not going to put a lot of our unemployed back to work.