Motley Moose – Archive

Since 2008 – Progress Through Politics

I Just Don't Know About This One

The Detroit Free Press discusses how President Obama has asked GM’s CEO, Rick Waggoner, to resign as an apparent precondition of further bailout funds.  I’m a tad uneasy about this move.  Don’t get me wrong, I see the sense of it.  If they want more of our money we can damned well call some of the shots.  I dig, I dig.  I just don’t know if I like the road this takes us down…

On the one hand we have the obvious failure of leadership among so many sectors of our economy.  These people, as a class, have nearly (or maybe actually) wrecked the economy.  It’s easy to make this a class thing.  A part of me very much wants to do precisely that.  But something gives me pause.

I believe in regulation.  I believe in vigorous oversight to ensure that our laws and values are respected by corporate America.  Our government, via its many institutions, provides corporations with such protections that they might flourish.  We do all benefit when capitalism works within reasonable yet watchful constraints.  I consider myself a progressive because I don’t trust Adam Smith’s invisible hand alone.

But I have strong reluctance to support the notion that the public sector should be able to fire leaders of the private sector.  Perhaps this is the right choice now after a prior mistake.  Perhaps the size and scope of the bailouts has enmeshed us too much in private industry.  There has to be a line, there has to be a limit.

I am not concern trolling.  I am not decrying this decision, nor am I wailing at our President.  I’m really just musing on this one.  How far down does this rabbit hole go?  How many more executives should President Obama “invite onward”?

It’s one thing for the American people to demand new leadership from firms we have to bail out.  It’s another for the President to call them up and tell them they’re out.  This may not be the wrong call and it may work out brilliantly.  I do not know.  I just think this moment requires some reflection and introspection.  Do we want to select Waggoner’s replacement?  Control GM more directly?  Is this a substantive intrusion or was President Obama merely looking for a scalp to salve the angry public?

I don’t know.  But maybe we should talk about this one.  What are your thoughts?


Categories: Uncategorized.

/ 46 Comments

46 comments

  1. John Allen

    According to the NY Times –

    DETROIT – The chairman and chief executive of General Motors, Rick Wagoner, resigned Sunday as part of a broad agreement with the Obama administration to funnel more government aid to the ailing auto giant, according to people close to the decision.

    Mr. Wagoner, who has served as G.M.’s top executive since 2000, agreed to step down after it was requested by the president’s auto task force, these people said.

    …

    Administration officials stopped short of saying that Mr. Wagoner had been forced out, only that he was asked to leave and agreed, according to people with knowledge of the decision.

    …

    Last year, Mr. Wagoner led the celebration for G.M.’s 100th birthday, promising to steer the automaker into its next century with new technology and a renewed vigor. But G.M. collapsed last fall when new-vehicle sales in the United States plummeted to their lowest level in 25 years. G.M. lost more than $30 billion in 2008, and has been subsisting on government loans since the beginning of the year.

    Given the information I emphasized in that last paragraph from the Times article, I’d say this isn’t a simple case of the President asking a CEO to resign.

    From this diary –

    How many more executives should President Obama “invite onward”?

    I’d say as many as come to the Fed’s door begging to be saved from their own folly.

  2. canadian gal

    if i understang the premise correctly…  its that:

    But I have strong reluctance to support the notion that the public sector should be able to fire leaders of the private sector.

    but they are no longer the private sector.  by the shear fact that you the taxpayer are footing the bill to the epic failure executives greed and mismanagement they cease to be ‘private’ companies anymore.  i think obama is just making sure that his stakeholders (you) are being properly served.

  3. Chris Blask

    Probably a good call, probably not a good trend.

    Governments – no matter how well intentioned and intelligently staffed – are not businesses.  Governments have absolutely no motivation to be profitable and no deep and intrinsic understanding of a given market at a given moment or the trends that led there.  Governments as they have existed to date are – at their most efficient – vastly more inefficient than the worst imaginable functional business.  This is why the Communist Bloc ran like a Trabi, then failed.

    I’m not sure what the alternative for the administration is, but until we get past this period and government involvement in managing businesses is retreating I’m going to be a little tense.

    [FYI – for those too lazy to follow the Trabi link – the Trabant was the East German car that took ten years from the time a Citizen Worker Unit was permitted to place an order to delivery, and produced five times more pollution with a 26-horsepower engine than a 2007 Dodge Charger with a 6.1 litre 475-horsepower ESF HEMI V8)

  4. Neef

    Lets face it, if we can fire the CEO, we are acting as their Board of Directors. We have effectively nationalized them.

    This is scary to me, as I don’t believe governments are intrinsically good at making a profit. However, many of our brethren on the Left have been looking forward to nationalization, so perhaps I’m just to the Right of the prevailing wisdom.

  5. creamer

     It seems like its been a few years since GM posted a profit, could they have been paying dividends while losing money?

  6. creamer

     I’ve read the document addressing the governments position going forward, and while I understand the logic, its leaves me a little uneasy. I live in Michigan and we are facing and accelerated change in our economic and cultural structure. Many families in Michigan have worked at auto companies for generations, and dispite the abuse’s of the unions and the lack of vision by management, this “change” we are going through is painful. As a state we are ill prepared to take many more hits economicaly.

     So, I believe in this man Obama. If he’s decided this is the way he has my support.

     But isn’t it time for the boards of the wall street firms to take a hike.

  7. rfahey22

    As I understand it, the government could not force him to resign.  I don’t see anything inherently wrong with placing strings on requests for additional funding.  It would be a dereliction of duty if the government gave away taxpayer money without making certain requests to improve the company’s long-term prospects.

    He could always refuse bailout funds and keep his job.  Of course, the board would then be free to remove him in order to obtain the funds.  Whether the latter option makes people more comfortable, the result would be the same.

  8. nrafter530

    that here you are saying this may be too much, while the other blogs on the blogsphere think this isn’t enough.

    I’m not disagreeing with you…there’s a line that the government is approaching that it can’t cross, but it’s interesting that we’re having a discussion about whether or not this is the right move while our brothers are complaining that this is not enough.

  9. GrassrootsOrganizer

    It’s difficult for me to not read this as a PR stunt — “though shalt not fuck with the Obama Administration” — of limited value and carrying a raft of bad messages.

    For one, the guy replacing Waggoner is his underling and was his hand-picked successor.  How the hell will this make a difference again?  

    I’m also more than a little fed up with the double standard for auto companies and financial institutions, especially when the greed bordering on corruption in the financial sector blew the last hole in the bottom of GM’s leaking life boat.  

    Believe you me, as a life long Detroiter I get the part where the Big Three have not exactly set the standard for sound corporate practices, but hey, at least they produced something besides bad paper and employed people at a living wage.  But rather than hanging “Detroit” on a fence, there’s plenty of blame here to spread around, beyond the UAW and the companies themselves, for the heartaches caused by the failure of he industry — trade policies, energy policies, oil tycoons, the healthcare mess, consumer tastes, off shoring and lending institutions all led to this.

    I swear to god, if I hear “Detroit” used as a pejorative one more fucking time I’m going to spit.  Detroit, the city and it’s citizens, are the big victims here, not “Detroit” the Jabba-like gas-guzzling monster flinging Escalades at the innocent drivers of America.  And for the record, “Detroit” has been howling about the economy and where it was heading and how it was hurting for years before ya’ll had your first 401K related coronary.  

    where’s the tar and feathering of Target and Walmart for ham-fisted gorging on the federal trade deficit and the death of American manufacturing of everything from paperclips to lawn tractors?  Where’s the outrage over the off-shoring of all those jobs that left UAW members looking like working class royalty?  Why isn’t anyone out there bemoaning their own stupidity at not taking the howls coming out of Detroit a little more seriously just a little bit sooner?

    I think I get it.  The “successful” CEO is he who acquires so much power he call all the shots and runs the corporation in such a way that it stays in the black at all cost, business ethics and common decency be damned.  The “bad”  CEO, on the other hand, is the one that can’t bust a union, buy enough political influence or invent new diabolical ways to game the system and fuck over the American people.  

  10. creamer

     And I think we should have been more strict with the banks. But when it comes to a working business model I wonder if GM was unwilling or unable to admit to a drastic change. The banks, I suspect, have a model that is sustainable given the right regulations. The fact that Ford is keeping itself afloat might speak to the decision making process at GM.

    I do take issue with those who continue to blame GM for making trucks and suv’s that people wanted to buy. Making smaller more fuel efficient cars is only a good business model if people want to buy them. In the 90’s and before 2007 Americans didn’t.

    I also think that with a little help the Midwest will recover. We have an infrasructure made for manufacturing, along with a work ethic that other parts of the country might lack. (Along with a fair amount of empty facilities).

    So now we can quit begging for help, find our bearings and move on.

    Oh, screw wall street.(And Senator Shelby)

     

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