I have been seeing and hearing conservatives screaming to high heaven that Barack Obama has “fired” the CEO of GM, Rick Wagoner… that the federal government has taken interventionism to a new level. We need to hold our horses for a second. The “firing” of the CEO was done by the market months ago, what the president “did” was make a symbolic move, albeit a wholly irrelevant symbolic move, in order to convince America that he was doing something about these failed companies and not simply handing them a blank check. Of course, the administration is handing them over a blank check, especially when you consider that the Wagoner’s replacement, Fritz Henderson, has worked at GM for 25 years and was the president and chief operating officer who stood alongside Wagoner during the whole crisis. In other words, nothing has really changed; the makeup of the GM leadership remains intact and I expect that the federal government will still find a way to hand over billions in taxpayer dollars to the company. John McCain said it best “Calling for GM CEO to resign is unprecedented window dressing. GM needs restructuring as part of pre-negotiated bankruptcy package.”

Next, as to the claims that the president “fired” the CEO, I demand this: show me the executive order forcing the CEO to step down. There is none. The administration asked the CEO of a company to step down in return for a better chance at receiving federal funds. Forget the fact that the CEO agreed to resign, the problem is that the government is going to be spending our money on a company that has been struggling to survive for years instead of letting the market run its course. To be clear, I’m not for laissez faire economics at this time because we’ve created a monster and we need to gradually step away from this mixed economy that has tipped towards socialism, but when conservatives kick and scream about the government “firing” the CEO, they are missing the larger point and are being a bit dishonest. The CEO resigned. With the irresistible incentive for companies to accept federal funds during this recession, the government can ask for almost anything they want and the companies in question will probably acquiesce. While I do agree that the state is becoming more powerful under this administration, we are not yet at a point where the president can simply rule by decree. With the liberal movement in full swing and the treasury’s printing presses set to maximum, it might be a reality sooner than later.

Now, why do I think that Wagoner should have resigned? Because billions of taxpayer dollars have already been burned on the auto industry and now they are asking for more. I doubt that they could have kept themselves afloat without the taxpayer bailout that Bush gave them and Obama supported, meaning that the market has already all but fired this CEO. Obama, in this case, happened to agree because it suited him politically. On the other hand, if the government were to bail out these companies, which I expect, then firing Wagoner makes no sense. So close to the finish line and we decide that they need to change horses? Obama didn’t really do GM a service by pressuring him to leave.

What GM needs to do is undergo restructuring under Chapter 11 bankruptcy, that would allow them to renegotiate union contracts and streamline. Of course, given the current crisis , the government should play a role to soften the blow, as I previously wrote. We just can’t become free marketeers overnight. Here is an article I just found from a site called Vox, which compiles “commentary from leading economists,” and outlines pretty much what I just said in more detail.

At the end of the day, the real unprecedented economic intervention is happening before our very eyes in the form of wealth redistribution, corporate socialism, and inflationary fiscal policy. Market or state, Wagoner’s days were already numbered.

-AG