STEAMWAGONING RICK

Yesterday we all received the news that Rick Wagoner, a man who knows as much about the car business as anyone except, perhaps, his soon to retire deputy Bob Lutz, was effectively fired as CEO of GM by Steve Rattner, Preppy Timmy Geithner, and Barack Obama, who, collectively, know nothing about the car business. As one of Mr. Wagoner’s fans, I was dismayed but, of course, not surprised by this development. Mr. Wagoner had accomplished much in turning around GM, perhaps nothing so much as hiring Bob Lutz as product czar. While Ford has always been my favorite among the Big 3, as loyal readers know, Mr. Wagoner has brought GM to a point at which it is certainly fully competitive with Ford and, by most measures, fully competitive with anyone, including Toyota. In terms of styling, “quality” (whatever that means), durability, fuel economy, drivability, and myriad other factors, GM is now as good as anyone, and a large measure of the credit belongs to Mr. Wagoner and his star hire Mr. Lutz. Even the decision for which Mr. Wagoner gets the most abuse, laying a large bet on mammoth, gas guzzling SUVs and pickup trucks, doesn’t look so bad as gas prices have fallen, small car sales have dropped off the table, and the only things moving seems to be big SUVs and pickup trucks. The man knew his market, certainly far better than the Obamacrats who are striving mightily to force Americans into cars they don’t want. And Mr. Wagoner’s emphasis on overseas growth, primarily in China, will prove to be the ultimate savior of the General. But Mr. Wagoner was unable to do anything about the collapse of the economy and the credit markets.

All that having been said, I would be the first to contend that the above is a hard argument to make. How does one justify keeping a CEO who has seen his stock price fall from almost $80 when he got the big job to a warrant on the beneficence of the government? One can argue until one is blue in the face that such a CEO did a good job, but, in the face of the devastation that has been wrought on GM stockholders, bondholders, employees, and retirees during his tenure as boss, a responsible board (Note the emphasis; it will become important later in this screed.) would have little choice but to let the big guy go.

Two things came immediately to my mind, and to many other observers’ minds, as well:

--So when is the government going to fire the heads of all the banks it has bailed out, many of whom were closer to collapse than was GM when the Bush/Obama administration rode to the rescue? So far, only the heads of Fannie, Freddie, and AIG have been shown the door. How about Pandit and Lewis? One cannot help but think that the draconian terms demanded of GM and Chrysler for their share of the bailout bonanza have their origins in the utter disdain the yupocrats who inhabit the Obama administration (and most of official Washington) have for people who work with their hands, and even for people who don’t even personally work with their hands but merely work in those old, stodgy industries that seemingly repel anyone who went to an Ivy League school after Mr. Wagoner graduated from Harvard. The car industry, or any metal bending industry not located on one of the coasts are, as our betters would say, is “so yesterday.” The people who work in Washington do not aspire to go to work in, say, Detroit or Cleveland when they want to cash in the influence they have amassed in Washington; they want to go to work in Washington or New York.

--The rationale that our oh so tomorrow President gave for firing Mr. Wagoner was laughable. This morning, Mr. Obama said that we needed “new vision, a new way of looking at things” in the auto industry. So he installs Fritz Henderson, who has worked for GM (and nowhere else, I believe) for the last 25 years? To call Mr. Henderson a protégé of Mr. Wagoner may be overstating the case a bit, but just a bit. And this is not to denigrate Mr. Henderson; he, too, was part of the team that was indeed leading GM out of the pit until the economy and the credit markets fell apart. Clearly, Mr. Obama was talking through his hat, if he ever wore a hat, another one of those at least venial sins for men of tomorrow. He just wanted Mr. Wagoner’s head and Mr. Henderson, who represents no change at all (again, probably not a bad thing) was next in line. One wonders how long he will keep his job.

But the larger point is that none of the above matters. We are no longer dealing, in GM and Chrysler’s cases, with a responsible board. Once one takes the man’s money, one plays by the man’s rules. Since GM and Chrysler took the government’s money, they put the government in charge. And the Obama administration has put a cast of characters with little or no experience in the auto industry in charge of that industry. The utter absurdity of this arrangement boggles the minds even of those of us who harbor deep skepticism of anything the government does. I realize that GM and Chrysler had little choice in this matter, but they, and their stakeholders, had better realize that Big Brother is now completely in charge.

And, on a larger scale, what we are seeing here are the opening salvoes of a massive realignment in our economy toward greater, if not nearly complete, government control.