Utah Free Press

Obama Takes Over GM; Fires Boss

By Richard Okelberry (Note: This essay was originally published at KVNU’s, For the People Blog.) 

General Motors (GM) said Monday that Chairman and CEO Rick Wagoner is stepping down immediately after the White House rejected restructuring plans submitted by GM and Chrysler…

…Wagoner said in a written statement that administration officials asked that he “step aside.” – Sharon Carty, USA Today

For anyone who doubts that government money comes with long and powerful strings attached, consider that the President of the United States now seems to have the power to fire the CEO of any company taking his cash. While I know that most want to assume that the now ex-GM chief simply ran his company into the ground and deserves to be let go, I have something for you to consider.

None of the major U.S. auto makers are succeeding. If it were only GM that was failing we might be able to blame their corporate leaders for the failure. Instead we must accept that there must be something in the water that is poisoning these three giants.

It is widely held by a large number of financial experts that the cost of labor in the U.S. for these three companies is to blame and we can’t talk about labor costs among the Big 3 auto makers without bringing up Unions. Unlike the very industry that they provide the work force for, the Auto Union is allowed under Federal law to act as a monopoly and control the cost of labor within an entire industry by using tactics that can only be described as legalized extortion.

While many on the left like to blame the economic woes of the Big 3 on health costs and use this argument to promote socialized medicine, the reality is that it is the unions that have pushed for the cradle to grave medical policies for its members that have  led to the inflated medical costs of these companies. Ultimately, if medical was such an anchor to business, every company that offers medical would be asking for bailout money. Without being restricted by inflated union contracts, U.S. auto makers would be able to do what every other business does and simply cut these benefits back as necessary to make ends meet and provide more lucrative benefits contracts when times are good.

It is more than a little unjust that it is the unions that helped put the auto makers in this mess and it is the unions who helped elect Obama who ultimately ended up blaming and firing GM’s CEO, Rick Wagoner for doing the best job he could running his company with it’s legs stuck in bureaucratic, unionized mud.

Ultimately this problem can be summed up by answering one simple question; what is it in the market that the U.S. Auto Makers have had to deal with that foreign companies have not? As I said before, if only one was failing we might be able to blame corporate greed or mismanagement. Where all three are failing we have to ask; what is affecting them that aren’t affecting foreign auto companies? The only answer must be the government and its constant meddling in the industry standards and labor. I say let these companies go bankrupt and re-organize. In doing so they can toss out all old labor contracts and start on an even footing with their competition. Then step back, take our hands off and let the market drive the direction of these companies.

 While GM may have a new CEO in Fritz Henderson, everyone now knows who is really running the company now… In the end it seems that even the presidency of the United States isn’t a big enough office for a certain charismatic leader.