Sunday, March 29, 2009

GM = Government Mush

At the urging of the Obama Administration, chairman and CEO of General Motors Rick Wagoner is stepping down so that GM can get federal funds in the future. Some are cheering this decision because Wagoner was behind some of the bad decisions GM has made over the years that created the conditions under which they needed a bailout. Others are stating that the government is overstepping its bounds by forcing Wagoner out as an enticement to get more money.

Guess which camp I'm in.

The main problem I see with the Administration's actions is that the Executive Branch doesn't control where funds get sent or spent; that's the Legislative Branch's job. Granted, there's not much chance of Congress not doing what Obama wants, but that's not the point. The point is that it is a sheer power grab that will negatively impact the economy. By giving government the power to determine who runs a company, you give government the power to determine how that company is run. And last time I checked, don't they have a country to run?

On an economic level, the government calling the shots at a company is a bad idea because government officials are not traditionally bound by the laws of supply and demand. When the government doesn't have enough money to cover their expenditures, they can simply print more money. When a business doesn't have enough money to cover its expenditures, it has to either cut costs or go out of business. Anyone else see the problem with letting government take over a business? If not, let me explain it slowly to you. If you get someone in charge of a company who has no clue of how make ends meet, that company won't last very long.

Even more disturbing than the government's hardball tactics with GM is the fact that Wagoner agreed to the terms. Obviously, he probably was responsible for the business decisions that lead to the company's economic troubles. If not, he would have been made the person to blame by the government. Seeing how the government and the general public treated AIG's CEO recently, Wagoner would have been in for a lot of anger directed his way. I'm sure he didn't want to put his family through the hell I'm sure he saw, which could have played a role in his decision.

Having said that, I would have liked Wagoner to stand up for the capitalist system. What would the Obama Administration have done if Wagoner had said, "You know, I'm not going to resign until I'm ready to resign. Sure, we'll be out the federal money you'd be able to give me, but we'll figure out a way to get by without it because the price tag you put on my compliance is far too great for myself, and for this country."

But that would have required courage, and regrettably, these days it's in rather short supply.

1 comment:

Stella Rondo said...

So in less than three months, Obama has managed to be the ONLY one in America who knows how to fix the banking system, the auto industry, the environment, the health care system, and education. Of coure, why none of thtis talent was apparent durng his few weeks in the Senate remains a mystery - perhaps he didn't want to expose his brilliance all at once.

I'm certain the wine indstry is on tenderhooks, just waiting for the day when grapes are no longer needed, as long water and Obama's hands are around.