Great article by Rich Lowry. I guess it is okay for a President Obama to grab hold of private enterprise, to reshape this country to a socialist country on par with the mediocre Europeans…
I can’t seem to imagine a journalist declaring “the President didn’t like the GM proposal and so the CEO was asked to step down” when the President was a Republican… what a difference an election makes… is it all about him?
Our new mixed economy has major pitfalls. First, when politicians call the shots, politics trumps all. Was Wagoner a godawful CEO, or did the Obama administration feel the need to sacrifice a corporate type to appease the increasingly angry gods of populism? Certainly Wagoner didn’t perform any worse than the CEOs of Wall Street’s big bailed-out banks. (A cynic will note that labor provided the muscle for Obama’s election campaign, and Wall Street much of the funding.)
Second, if politicians and bureaucrats knew how to run car companies, they’d probably be working for Toyota or Ford. Obama’s automotive task force has almost no experience in automobiles and includes no fewer than three experts on climate change (presumably on the off chance that GM and Chrysler revive enough to begin despoiling the planet again).
Third, once a corporation is dependent on government, it makes business decisions not on the merits, but to please its political masters. GM has been heavily involved in developing the politically correct Chevy Volt, an electric car. As Obama’s automotive task force concludes, “While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable.” You don’t say?
The American system has a proven method of restructuring salvageable but insolvent companies that avoids all of these pitfalls. It’s called Chapter 11 bankruptcy, where a judge can rip up a company’s obligations and launch it anew without the taint of politics. That is where GM and Chrysler should have gone last fall (perhaps with some minimal government support), before the Bush administration first bailed them out in a fit of political panic.
Another article on how the gov’t is looking for Treasury Secretary (Geitner) to determine the salary of ALL employees…(let’s see how that goes – yes how many more gov’t hires will be needed to accomplish individual employee reviews down to the secretary level???)
- But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved…the “Pay for Performance Act of 2009,” (which) would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies… the bill gives Geithner the authority to decide what pay is “unreasonable” or “excessive.” And it directs the Treasury Department to come up with a method to evaluate “the performance of the individual executive or employee to whom the payment relates.”…The legislation is expected to come before the full House for a vote this week… “It’s just a bad reaction to what has been going on with AIG,” Rep. Scott Garrett of New Jersey, a committee member, told me. Garrett is particularly concerned with the new powers that would be given to the Treasury Secretary, who just last week proposed giving the government extensive new regulatory authority. “This is a growing concern, that the powers of the Treasury in this area, along with what Geithner was looking for last week, are mind boggling,” Garrett said.