GM: A new name and new logo
03/30/09
With yesterday's announcement that President Obama demanded and received the resignation of General Motors CEO Rick Wagoner, we can now brace for the inevitable government-dictated "change of course" at the big automaker. First step, they'll need to reposition their brand relative to new chain of command. Fortunately for them, they won't need to change waste any money reprinting anything that carries only their acronym.
From now on GM will stand for Government Motors. (Subsequent hat-tips to the myriad of other folks that thought of this before and around the same time I did. I don't claim to be completely original.)
And of course, with that name change, they'll need to modify their logo. At his Powers That Be Blog, Doug Powers has an excellent offering:
Outstanding.
Subsequently, following a my Tweet/Facebook update yesterday musing that I has heretofore unaware that we had elected an extortionist-in-chief, fellow blogger Jordan Snow and I had what I thought to be a very insteresting exchange on this event and what it means. It's posted below for your enjoyment.
Snow: So, arguably one of the least successful companies in America's history, too large to fail, that asked for government money should not be touched by the government?
"We need your money to keep making shitty cars and expect no outside interference after we run with it." I just don't see that happening. Call it extortion, that's fine with me, but if they didn't want to be controlled maybe they should have tried a successful business plan on for size while the going was good.Illinois Review Editor Fran Eaton: The question is -- who does Obama find acceptable to run GM? Can you imagine? If it can happen to GM, it will happen to Ford, AIG, any company with a government contract ...
Snow: I can imagine that, and I love it. The very people who made the decisions that have tanked the global economy are being taken to task for it. We should not shed tears for them but focus on trying to make it better.
And don't gripe about "What happened to CAPITALISM?" because most of the money promised to the auto companies and financial sector came from our last administration. If it can happen to GM I HOPE that it happens to AIG and Ford. Fran, these companies don't have government contracts, they have taxpayer money for their terrible decisions. Big difference.Me: Jordan - A couple points.
Calling GM "one of the least successful companies in America's history" is wholly disingenuous. For decades, it was one of the pillars of the American production economy. It's recent decline has been precipitous, disappointing and unfortunate, but it marks only a portion of it's history.
To your other point, this represents the dangers of these "too big to fail" companies accepting government funds: they'll come with big strings attached to them. In this case, government command and control of private sector business.
And while you're correct that much bailout money was promised and delivered from the last administration, you're making a straw man argument in making out the Bush administration to be some Milton Friedman-esque promoter of pure capitalism. They were a Republican administration. That doesn't de facto make them capitalists.Also, that gas-guzzling rolling bunker that's moving Obama around is custom made by Cadillac, a brand model of GM. Most government vehicles are GMC Yukons. They are all produced through contracts with GM. So, they're getting taxpayer dollars to make cars for the government, and getting more taxpayer dollars in these unconscionable bailouts.
This is merely a harbinger of things to come in terms of government exerting it's will on private sector companies who either begged for or accepted bailout money. And those kind of partnerships have a history of ending very, very poorly.Snow: Least successful was probably a bad choice of words. Recently unprofitable might have been better? I'm not sure. I am sure that I am in complete agreement with you that both rounds of failouts (Bush Fall '08 and Obama Winter '09) were ridiculous and undeserved. I would have much rather seen one tenth of that money recycled into school programs and just let the companies themselves realize, "Hey, if I don't change something I'm probably not going to make money ever again, shoot."
The unfortunate but unavoidable side-effect of these companies accepting money from the government is that they will have to answer to those who gave them their money. It is no different from a investor/board relationship traditionally seen in market economies. The main difference is that the "investor" party has the force of law behind it and can't usurped by flimsy by-laws or increased dividends.
The bailouts were unfortunate (necessary? I don't even know anymore) but to let all of that money go and turn the other cheek would be something far worse than "extortion". I would rather see failing CEO's extorted than taxpayers fully fleeced and not even given a chance to have the companies they have unwillingly invested in make them some money back.Me: I'm glad we agree that we shouldn't be in the business of dumping tax dollars into private companies that are allegedly "too big to fail". Nothing is too big to fail. Failure is a necessary part of life and economics. I don't agree that dumping down the vacuous black hole that is public education would be a more successful or wiser use of the money... Read More. We continue to pour more and more money into the same broken system, year after year, with out any introspection as to whether the construct of the system is the problem. But, I digress.
Having to accept the strings that come with the bailout money they begged to receive is an expected condition of the evils that are these bailouts. But these are not like normal investor relationships as this is the government providing funds that are conscripted from the taxpayers. These aren't private benefactors choosing to invest their private funds in the rehabilitation of company. The latter is part of the American free market economic design.The former is the another step down the same path of government controlled economics that has repeatedly doomed nations to stagnant productivity and halted profitability.
If these incident serves to accentuate the tribulations and inherent dangers of accepting or begging for this bailout money, they it will a sad situation that serves a good end. But the simple concept of an American president demanding the resignation of the CEO of a private company as a condition of federal aid is most certainly a bridge too far. And it's a very dangerous precedent to set.