To say that yesterday's announcement that GM CEO, Rick Wagoner, was forced out by the president himself was chilling is the understatement of all understatements. On some levels, this is a fairly natural act. Very few people would say that Wagoner deserved his job. After all, that he needed to take tax payer's money just to keep the company running speaks for itself. Furthermore, if the company is going to take tax payer money, then this cannot be with no strings attached. In this case, the president speaks for the tax payers. If GM is to get anymore money, then step one is the removal of the CEO.
Yet, it is chilling to the bone that we have come to a place where the president of the United States tells a private company exactly who their CEO can't be. Today, the president pronounced that he doesn't want to run GM. Yet, that's exactly what he is doing. He has just made a significant staffing decision. Furthermore, he has pronounced that their restructuring plan is not good enough. Furthermore, he has formed an auto task force to figure out a way forward.
This is exactly the sort of things that venture capitalists do. They often find companies that are struggling. They infuse them with cash and then they begin to make managerial, staffing, and management decisions. In essence, these venture capitalists run companies, at least until they are turned around.
For the president to now say he doesn't want to run GM is the height of duplicity. You can't on the one hand demand the CEO fired and proclaim a restructuring plan unacceptable, and then say you don't want to run a company. You are running the company.
Worse than that is this. If GM is to take government money, then, in fact, this is the prudent thing to do. After all, isn't this behavior significantly more prudent, then simply authorizing a series of endless checks and credit lines to the tune of more than a hundred billion dollars? In fact, on one level, the president is acting very responsibly. The problem is that this behavior exposes just how irresponsible the idea of bailouts is altogether.
These companies all came to Congress exactly because traditional venture capitalists wouldn't fund them. The private market wouldn't allow these companies to continue. That should have been all the Congress needed to know. Yet, instead, they deemed these companies too vital to fail and gave them a lifeline. The Congress, along with the president (both current and prior), also gave them a warning that they wanted a plan. Once the politicians did this, they immediately took on the role of venture capitalists.
This was in fact a major step toward a more centrally planned economy. The minute that the federal government, in any way shape or form, decides business plans, hiring decisions, and firing decisions, we have crossed a very slipppery slope toward a centrally planned economy. In fact, bailouts go hand in hand with centrally planned economies. Once governments decide which companies succeed and which companies fail we have a centrally planned economy. We have taken a very dangerous step toward a centrally planned economy with this move.
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