Yash Gupta, the dean of the The Johns Hopkins Carey Business School, is crying himself a river over the ouster of General Motors CEO Rick Wagoner. Need I remind you that General Motors has lost more than $80 billion over the last four years of operation? Here’s Gupta:
This was a poor way for the president to send a message that drastic change was needed. When the government takes the enormous step of asking a top CEO to resign, there has to be an immediate explanation of how the move will prove beneficial. The president hasn’t really done that. He hasn’t articulated how things are going to be better with Rick Wagoner out and a new executive in.
Perhaps this is largely a symbolic move. Sometimes, symbolism is fine, but change for its own sake carries the risk of appearing capricious. That’s not very good for the morale of the workers, the auto dealerships, the consumers, or the markets. Also, it signals to other executives of companies that received TARP money that they’re equally vulnerable. The overall effect is a deeper mood of instability and uncertainty.
No. The overall effect is to send a message that at long last there is going to be some accountability for CEO’s that run their corporations so poorly that they put hundreds of thousands of people’s jobs at risk and require taxpayer dollars to even keep their doors open.
You want to know what hurts morale? When that beloved employee in the mailroom or the cafeteria or the payroll office gets a pink slip. And even though Wagoner won’t be receiving the typical golden parachute severance package, the game is so rigged in his favor that his retirement package alone is worth approximately $20 million. I very much doubt that any employees or dealerships are going to be confused or upset that this incompetent just lost his job. Most people will wonder why we can’t confiscate his pension and deferred compensation. After all, his company lost over $80 billion over the last four years and plans to fire almost 50,000 employees this year alone.
The Republicans’ response?
This is a major power grab by the White House on the heels of another power grab from Secretary Geithner who asked last week for the freedom to decide on his own which companies are ‘systemically’ important to our country and worthy of taxpayer investment and which are not.
In other words, this is fascism.
