Rick Wagoner was handed his pink slip yesterday.
To many Americans, that’s welcome news. After all, it seems they’ve been throwing good money after bad for months in vain efforts to bail out an industry that still acts like a dinosaur with respect to innovation.
There’s no question Wagoner needed to go. General Motors just couldn’t seem to right the ship at all. But it bothers me, and should bother every one of you, that President Obama was the one who cut him loose.
I have a real problem with a political organization dictating who stays and who goes in Fortune 100 companies. If you extend the logic further, I have a real problem with massive federal bailouts of companies that should be allowed to dissolve, then restructured so as to ensure maximum benefit to consumers with minimized losses and costs.
Instead of market forces and shareholders doing the right thing and firing Wagoner, Obama did it. That makes it personal. And despite the apparent “come-uppance” every American wants to serve on these CEOs, it sets a terrible precedent for future dealings with the private sector by public officials.
The Obama administration has now opened the door for federal “watchmen” to insert themselves in just about every personnel decision regarding companies that received bailout dollars. That’s sophisticated oversight, right? Wrong. What’s next — Starbucks being forced to hire veterans as baristas, all because they took some federal tax credits as part of Obama’s health plan? Laughable? Maybe not …
And how should investors feel? As I write this, the Dow sits 280 points in the hole today and falling fast. Apparently, Wall Street is a bit bothered by the administration’s moves with respect to the auto industry.
Sure, a host of factors influence the market, but this president can’t keep making dictatorial decisions without some regard for the fiduciary impact they could have on the rest of the market.
I’m no fan of Rick Wagoner, nor any CEO who can’t seem to keep his/her industry between the lines. But the administration needs a hard lesson in Adam Smith’s “invisible hand” that has steered this economy for centuries.
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