Reagan on Gov’t Control of Manufacturing
On this auspicious day, when the Obama White House has decided to finally use their extensive community organizing expertise to dictate Board of Director decisions at a major US Corporation, I am reminded of a story often told (apparently) by President Reagan.
One of Reagan‘s favorite stories concerned a man who goes to the Soviet bureau of transportation to order an automobile. He is informed that he will have to put down his money now, but there is a 10-year wait. The man fills out all the various forms, has them processed through the various agencies, and finally he gets to the last agency. He pays them his money and they say, ‘Come back in 10 years and get your car.’ He asks, ‘Morning or afternoon?’ The man in the agency says, ‘We’re talking about 10 years from now. What difference does it make?’ He replies, ‘The plumber is coming in the morning.’
Thanks, Historynet.com for making this available to us.
I have to wonder–are we heading down the road not only to socialism (which most people thought Barack would bring) but also towards the miserable life we saw in the Soviet Union? As rumors are starting to circulate that the White House is forcing the CEO of GM to step down, and putting further direct guidance attached to the loans the government is providing. one cannot help but wonder who in the White House has the background, and the skills, necessary to make decisions–business decisions–to dictate how a major auto manufacturer should operate.
Don’t misunderstand me–I am in favor of accountability for those who spend government dollars. I believe that when the government loans money there should be a viable plan in place to demonstrate that the money will be repaid. I just am not convinced that government is best suited to manage business. Certainly not “private” business.
I am left to wonder if the government has not only exceeeded their authority, but exceeded their ability.
I don’t blame you, as I also think that governmental influence on business is pretty much always bad. However, I think that in this very specific case, i.e. firing Wagoner, the current administration has a point. This guy has been one of the worst CEO in the auto industry ever. Arguably, one could say he was not alone at the helm, but it is clear someone had to pay, especially after the AIG chaos.
I don’t like government interventionism or protectionism, but let’s not forget that this is nothing new. The previous administration was one of the most interventionist (and budget spending) ever. Although they chose another field to spend billions (namely military and para-military spendings)…
As for Reagan, we all know he ad Alzeihmer… 😉
” . . . but it is clear someone had to pay . . . ”
Agreed.
“Someone” as in “union thugs and fat cats who drove the price of their labor well beyond the value of their labor.”
Hmmm . . . wonder what a “labor bubble” * will look like?
OBTW, guess who is going to be left holding the bag for the difference between the $10/hr value and $100/hr price GM was paying?
The 20% of us left (20%- you heard me- do the math) who are actually foolish enough to pay our taxes, that’s who.
Steve
* “Bubble” of course being a situation where, through manipulation (usually governmental), market realities are distorted and the price of something traded is inflated beyond it’s worth. See “Dot Com Bubble,” “Housing Bubble,” etc.
Alphast:
Thanks for continuing to read this blog!
I suppose I would agree that it appears the White House “had to act” to remove a poorly performing CEO. That just begs the question though. The question is:
“Why didn’t the Board of Directors act to remove him themselves, since GM is a ‘for profit’ corporation?”
I am afraid the answer to that question once again lays at the feet of the government. Rather than force GM to respond to market forces, the government held out the hand-out. GM found themselves in a position to take money rather than earn it, and thus rewarded the CEO that brought home the bacon.
Perhaps there are organizations that are so large we cannot let them fail. Perhaps GM is one of them. On the other hand, I believe there are other corporations that would be willing to step in, use those facilities and their workers, and be quite productive.
In fact, (one of) the founder(s) of the Tesla automobile company actually put forth that argument, saying that they could “probably” bring their high-performing, all electric cars down to around $30K if they had access to those facilities.
Dinosaurs died–not because of our stupidity but because of the call of nature. GM may well be a dinosaur that deserves to die.
And Steve: Insightful as always. Thanks!