Do you think that a sitting President effectively firing the CEO of a private company heralds the beginning of a new phase in the government takeover of free enterprise?

The bailout is the problem here; not the firing of the CEO. You can’t accept bailout cash without strings (you know, like actually spending it properly).

the President or is it the richest powers of the world taking over?

THE OBAMA DECEPTION on Youtube!

Yes. The government has little place in a capitalistic society.

Technically, Rick Wagoner resigned…albeit under pressure from the government. Which, in my opinion, is even scarier than the outright firing of a private business CEO.

Holding money over the heads of a behemoth corporation in order to influence its own decapitation is definitely unsettling in terms of how our government interacts with private business.

I like your colorful sensational way of phrasing the question, Horus, but honestly while this type of thing is scary and something that needs to be watched closely… it’s probably more of a distraction by the Fed than anything else to cover up the fact that they really aren’t doing squat to help right now.

Oooo everyone pay attention to GM now, bye bye Rick. What were we talking about again?

No, the beginning was when the government fished these companies out of the toilet. The dye’s already been cast. At least the President is acting in the best interest of his people and our money.

@ru2bz46, you’re right.

But this country never has been a purely capitalistic society. We’ve always been partially socialist.

No point in panicking now that we’re calling a turkey a turkey.

So the question is what do you prefer – by yourself (no neeed to answer this question outloud, jsut be honest):

Would you rather these companies fail and damage the economy?

Or would you rather have the government sponsor their reform and stick their fingers in the pie of business?

I’m not saying which is right or wrong. But those are our only two options.

“No point in panicking now that we’re calling a turkey a turkey.”

I love you. Preach.

@bananafish Another of my mantras is, “if it doesn’t kill you, it’ll make you stronger”. The government in this case is a crutch that will ultimately weaken/destroy our economy. Let the bloated, sick companies die off and make room for the stronger ones. It will hurt, but it will make us better in the long run. If not, and we fail, we’ll just be in the same state as if the government took over, anyway.

Let me get this straight.

If a company like GM is out of money, effectively bankrupt, and chooses to become a retainee of the government… when the government then exercises its control over this company, that’s OMG SOCIALISM?

So you guys think GM should have just filed for bankruptcy and not involved itself with the government and taxpayers?

When the State takes control of free enterprise, yes. GM should be allowed to file for restructuring bankruptcy just like any other private company. If/when they can be viable once more, they will be a stronger company. If not, Ford and Chrysler may be able to step in and fill the void left behind. Maybe Chysler won’t have to get in bed with Fiat, then.

Instead, Obama promised GM enough working capital to get through the next 60 days and Chrysler the next 30 days. The firms were sent back to revamp their restructuring plans, and the administration signaled clearly that bankruptcy, once unthinkable, is now an option for GM.

“We cannot and must not and we will not let our auto industry simply vanish,” the president said. At the same time, he cautioned that he won’t support “an unending flow” of tax dollars to bail out the firms. “These companies and this industry must ultimately stand on their own, not as wards of the state.”

http://www.miamiherald.com/news/politics/AP/story/975850.html

Just to be clear, why do you feel that GM is not “being allowed” to file for bankruptcy? Obama is threatening them with bankruptcy. It seems like GM would clearly rather take taxpayer money in retainership than file for bankruptcy.

No, I think private companies running to the government for handouts because they’ve finally reached the point of failure (a point, I note, that has been predicted for 20 years)—and getting them—heralds the beginning of a new phase of government takeover of private industry.

GM is asking for $18 billion. Its market value is $2 billion. When a private investor throws in nine times the worth of your company to keep it going, the expectation is that the private investor is going to get to suggest changes, and that those changes will be acted on. Why is it so shocking that when the private investor is the government, the government expects to have the same sort of leverage?

@Qingu Of course GM wants taxpayer money, instead of bankruptcy. With BR, they’ll lose a lot and have to work hard to rebuild in a more effecient way. With tax money, they can keep going as they are.

The president contradicted himself in those statements. He says, “We cannot and must not and we will not let our auto industry simply vanish”. Then he says, he ”...won’t support ‘an unending flow’ of tax dollars to bail out…”. Finally, he says, “These companies and this industry must ultimately stand on their own, not as wards of the state”.

If they won’t stand on their own, and he won’t let them fail, thereby giving them an unending flow of money, they’ll be wards of the State.

If they won’t stand on their own and can’t be wards of the State, and he won’t give them an unending flow of money, they will fail.

@ru2bz46, regarding not letting them vanish, first of all, he said “industry,” not GM in particular. Secondly, bankruptcy is not equivalent to “vanishing.”

Obama is rightly concerned that the American car industry represents a sizeable chunk of our economy. If it dies, it presents systemic problems to our country as a whole—so we, the taxpayers, have an interest in keeping this industry afloat to a certain extent and, barring that, helping along the transition from the industry’s current worthless state to whatever it becomes. Maybe you disagree, preferring a “survival of the fittest” style of laissez-faire governance that has worked so well in places like Somalia and, well, I was about to say “the Bush administration’s America” but of course they gave plenty of corporate welfare out.

No matter. The point is that I think it’s a bit silly to get all paranoid about government takeover of private industry when the private industry is asking for a government takeover to ward off bankruptcy.

@Qingu Letting GM go into restructuring bankruptcy is what the auto industry needs to wake it up that there is a price to pay for incompetence.

Like I said in my earlier post, “GM should be allowed to file for restructuring bankruptcy just like any other private company. If/when they can be viable once more, they will be a stronger company. If not, Ford and Chrysler may be able to step in and fill the void left behind.”

Government (taxpayer) money is not required for that.

Do you have any reason to believe that America will be better off if we let the auto industry fend for itself instead of giving them aid in restructuring—apart from your belief in free market ideology? (which would not technically be a “reason” but rather something more like “faith”)

I think it’s a tough choice.

Nothing will get the magnitude of the consequences across to the senior executives like being required to deal with restructuring bankruptcy. This will very effectively punish them for 30 years of stupid decisions. I mean, really—whether you believe them or not, the believers in peak oil have been banging the drum since the 1970s’ energy crisis. Japanese carmakers have been eating the American auto industry’s lunch by making small, reliable, efficient cars, and lately, by offering hybrid and high-efficiency diesel cars as well. They consistently failed to respond to the demand for the cars that the Japanese carmakers took advantage of, and they bet on eternal cheap oil and lost.

As a result, nothing will make sure that the reborn Big Three (if they survive bankruptcy) will be responsive to the actual market demands and as profitable as they can be like leaving them to fend for themselves.

That said, there will be a lot of collateral damage. The Big Three pay a lot of people, and since dealerships are often independent local businesses, their collapse will really hurt a lot of people nationwide, and that will cost a lot more than $18 billion to ameliorate.

Basically, if we the taxpayers sign a check for $18 billion and get a revitalized auto industry, it will be money well spent. If we sign a check for $18 billion and get more of the same and a request for more bailout money in six months, we’d be better off letting them go bankrupt and using the $18 billion for healthy unemployment packages for everyone who lost a job because of the Big Three.

@Qingu They built themselves because they had the freedom to do what they wanted and they had to compete against each other to make more profit for themselves while still making affordable products for us to buy. When you throw in a bunch of regulations that interfere with innovation, product quality suffers. That opens the door for outside manufacturers to come in and take away marketshare from them all. Unions, though they occasionally have their place, also get in the way here by guaranteeing wages and benefits for employees regardless of the prosperity of the company or the quality of work put out by those employees. Capitalism is very Darwinian. Survival of the fittest works for industry just as it does for evolution.

Here’s the problem with using evolution as a rubric for your ethical/political system (and I say this as an atheist). 99% of species are extinct, and most of them live miserable lives.

Also, this idea you have of some hypothetical unregulated economy is a myth. Economic systems have always, always relied on regulation. “Thou shalt not steal” is economic regulation. Markets have never functioned without a governmental structure punishing theft, enforcing contracts, and protecting buyers and sellers.

The question has never been “whether.” The question is “to what extent.” It is amazing to me that someone can sit here and claim that regulation is inherently a bad thing after the collapse of the financial system due to lack of regulation. See also unregulated banks before the Great Depression, unregulated trusts before the various recessions and depressions of the late 1800’s, etc. Survival of the fittest does not work for industry. It leads to corrupt oligarchies and systemic failures.

@ru2bz46

At the current state of the union, I can not believe that somebody would still hold to these views…really.

@Qingu The surviving species are the strongest ones, or they are on their way out; same with businesses. New entities appear to take the place of any niches left behind.

As to a lack of ethical regulations, I said, ”...regulations that interfere with innovation…”. Of course ethical laws must remain in effect to prevent theft, murder, etc.

Then to you and @TaoSan, I am talking about industry here, not banking.

@ru2bz46, again, evolutionary theory does not correspond to the ideal moral state of a human civilization or its economy. First of all, “strongest” is not some objective state—it does not mean “best,” it means “best adapted to the particular environmental conditions in which it lives.”

Secondly, ecosystems are not usually inhabited by populations with ideal levels of cooperation and productivity. Rather, they are inhabited by “evolutionary stable strategies,” which are often quite inefficient.

Thirdly, industries do not exist in a vacuum. There are what economists call “externalities.” For example, an industry may save costs by dumping toxic chemicals into the water supply or into the air. Car manufacturers can make cars with faulty airbags to save costs, and then lie about it in advertisements to gain marketshare. Agrobusinesses can genetically engineer new strains of tomatoes that look vibrant and red months after harvest but may or may not give you cancer. Should such actions be regulated?

I don’t understand how you differentiate between so-called “ethical regulations” and “regulations that interfere with innovation.” Perhaps you can give some examples?

some views expressed here are utterly simplistic….