…when the President of the United States can do this:

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.

On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.

The White House confirmed Wagoner was leaving at the government’s behest after The Associated Press reported his immediate departure, without giving a reason.

General Motors issued a vague statement Sunday night that did not officially confirm Wagoner’s departure.
"We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement," the company said.

The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.

Don’t want to call it "socialism"?  Fine, but don’t call it "capitalism", either. 

I will note that this descent into "whatever-it-is-ism" was entered in mutually.  GM begged for money, the government gave it to them, and then government started pulling the strings.  Both sides contributed to this, but just because it was consensual doesn’t mean it was the right thing to do. 

This is path taken by most anyone who takes money from the government, whether they be churches, schools, welfare recipients or major automakers.  When you surrender your self-sufficiency, you lose much more in the bargain than originally thought. 

Could companies be bailed out by the government without leaving capitalist, free market principles?  Possibly.  But is this move by the President in line with those principles?  Not really.  An underperforming CEO would be removed by any responsible leader…of the Soviet Union.  We should not be putting our President in the position of being able to do that, and he shouldn’t be accepting that position.

Don’t want to call it "socialism"?  Fine.  What do you want to call it?

Filed under: EconomicsGovernment

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