Upon hearing that the Obama administration forced the CEO of GM to resign and directed the execs to re-do their plan to get more bail-out money by the Obama administration, a friend of mine said it's about time big business gets put in line.  I'm not going to argue the virtues of big business.  I will argue, though, that this is definitely not an example of a big business getting put in line.  In fact, I predict that GM will have a significant competitive advantage thanks to Obama's intervention.

 

Counter-intuitive?  Well, let's look at what Obama said during his press conference this morning regarding the auto bailout.  He said that in order to help auto makers, the federal government would purchase more fleet vehicles.  Will the federal government purchase from the low cost provider?  Or perhaps from the provider of the most fuel efficient vehicles?  Of course not.  After giving billions of dollars to GM, do you think the taxpayers wouldn't be in an uproar if at least the vast majority of these fleet vehicles weren't purchased from GM?  Of course they will.  And the Obama officials want to stay in power, so they will bow to the will of the people - of course in the taxpayer interest.  So GM gets more business, without having to compete for it, and without having to provide the best product.  And let's not forget the billions in taxpayer money GM will receive to shore it up.  (We all know that now that Obama has taken over, whatever plan that is produced in 60 days will meet his requirements for further funding.)

 

What about the former CEO of GM who was just asked to resign?  He walks away with over $20 million and no longer has the long days and nights of worry.  My guess is he'll be okay.  Is it right for the President to force a CEO of a private company out?  No - it is fascist.  But I can understand the argument that once a company takes money from the government, the government can tell them what to do.  (Remember that, all of you who receive the so-called "Earned" Income Tax Credit.  And those of you who want the government to pay for your healthcare.  Do you like this scenario, soon to come to a DMV-style hospital near you?:  Sorry, but you have been refused for this life-saving operation.  You already used more than your fair share of healthcare over the last 10 years.  Plus, you're retired and not producing.  So go home, take these two pills, and die quietly in order to decrease the surplus population.  Next in line, please...)

 

The bottom line is that the Obama administration is picking winners, and those winners will receive substantial advantages over their current customers and potential new, innovative customers.  So what's the answer?  We have a system in place to deal with failing companies - one that has worked for decades.  It's called bankruptcy court.  Bankruptcy judges and their staff are experts at helping companies to reorganize or divest their assets.  They have the training and tools at their disposal, not to mention the experience.  Would GM survive?  Maybe and maybe not.  Either way, they would not be given the best end of an uneven playing field on a silver platter.  Now that, to me, is fairness.