In 1953, General Motors chief executive Charles “Engine Charlie” Wilson famously declared that “what was good for the country was good for General Motors and vice versa.” GM was then the biggest company in the world, directly employing 600,000 workers and dominating the market for that quintessential product of the 20th century — the automobile.

How times change. GM is still No. 3 in terms of sales ($196 billion in 2005), but it employs less than 130,000 hourly workers in the United States (a number set to shrink by another 35,000 thanks to recent buyouts) and it’s losing money and market share at an alarming rate. Its market capitalization is less than $16 billion, compared to Microsoft ($239 billion) and even Caterpillar ($48 billion).

Now comes its largest shareholder, Kirk Kerkorian, to propose an “alliance” among GM, Nissan, and Renault. It’s not clear whether such a deal would make sense. GM has had many alliances with foreign automakers in recent years, none of which seem to have yielded much benefit. And selling off 20% of GM for $3 billion seems like an expensive way to bring in new management.

But Kerkorian’s surprise proposal has politicians grumbling about deindustrialization and perfidious foreigners. Representative John Dingell of Michigan, who would once again become chairman of the powerful Energy and Commerce Committee if Democrats reclaim the House in November, signaled that a hostile takeover might arouse a backlash.

But President Bush had it right last week: “I have no problem with foreign capital buying AMERICAN companies, nor do I have a problem with American companies buying foreign companies.” This followed a pointed comment earlier that Detroit needs to make “relevant” cars. Not since Gerald Ford told New York City, in the words of a famous headline, to “drop dead” has an American president offered such a chilly demeanor.

But Bush no doubt understands, as did Ford, that bailouts invite ever more government meddling. It is precisely the dynamism of America’s open capital markets that keeps our nation number one. He is right to head any meddling in the economy off at the pass.

As economist Larry Kudlow noted the other day, the American economy has grown by an amazing $2.2 trillion just since June 2003, or 20%, an amount equal to the size of the entire Chinese economy. Critics of “Bush economics” notwithstanding, unemployment is historically low and wages are growing. Nor is America deindustrializing. Manufacturing output in America actually has been rising, albeit with fewer workers, thanks to dramatic gains in productivity.

GM might not survive even with a foreign alliance. Or GM might become just one more automobile maker. In 1955 U.S. Steel Co., another symbol of American industrial power, was No. 3 on the Fortune 500 list. Now it’s 153rd, though plenty of steel is still being made in America.

But it’s also possible that GM will survive and prosper. The company has made major strides in product quality, cost control, and productivity. It might be helpful if Washington took an ax to the regulatory state, enacted tort reform, modified labor laws and took other actions that might benefit all corporations. But what’s good for America ought to be good enough for General Motors.

Mr. Bray is a freelance columnist who lives in the Detroit area.