Grandstanding we can believe in.
One really has to wonder what crimes against humanity warranted Rick Wagoner’s ouster from his post at General Motors. Troubled as GM has been in recent years, it is a company that actually produces fungible assets that add utility, function and convenience to people’s lives, that employs American workers, and which has compensated those workers--- many hundreds of thousands of them over several decades---with livable wages and decent benefits. You know, an exemplar of the American manufacturing sector that Obama says he wants to expand and rejuvenate.
And we’re not talking about just any good paying jobs, but good paying union jobs---which, if I understand correctly, the administration claims it wants to create more of, not less.
It should also be mentioned that GM, like all automakers, operates in one of the most heavily regulated business sectors in America, with state and federal mandates governing vehicle safety, worker safety, emissions, mileage, dealerships, warranties, lemon laws, you name it---all of which affect its long-term profitability. Yet for a small fraction of the money that we have already shoveled down the sewer of AIG, the executive board of General Motors is told it must offer up its CEO as a sacrificial lamb and shake up its executive board.
Now, compare and contrast to the Lords of Finance on Wall Street, investment firms of vague jurisdiction that have manufactured little of enduring value over the past 10 years but billions of dollars in compensation for a few thousand employees and high-buck investors---and hundreds of thousands of foreclosure notices, and trillions of dollars in toxic paper for the rest of us. All this despite being largely unburdened of any government regulation of their myriad CDOs and default swap schemes. Yet the executive boards of Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo, recipients of hundreds of billions in taxpayer largesse, and over a trillion dollars in future loan guarantees, are asked to sacrifice nothing. Except for those taxpayer-subsidized bonuses, of course, if they'd only be so kind as to give them back because we can't really force them to, now can we.
But hey, at least Citigroup laid off 65 janitors. Everyone's gotta sacrifice these days, eh?
New directors will now make up the majority of GM's board. Fritz Henderson, GM's president and chief operating officer, became the new CEO. Board member Kent Kresa, the former chairman and CEO of defense contractor Northrop Grumman Corp., was named interim chairman of the GM board.
So let’s see: One career GM guy replaces another. That sure oughta shake up the corporate culture.
And this Kresa fella: Surely he was picked as chairman because he’s got a proven track record of spending taxpayer dollars wisely, no?
Northrop Grumman has had to deal with multiple scandals during its history. The company was sued in 1999 for allegedly knowingly giving the Navy defective aircraft. This suit seeks $210 million in damages and is ongoing. Then in 2003, the company was sued for allegedly overcharging the U.S. government for space projects in the 1990s. Northrop Grumman paid $111.2 million to settle that suit out of Court.
Okay, so everyone makes mistakes. At least we’ve got a terrific new spokesman for GM’s latest generation of clean green cars, right?
Based on year 2002 data, researchers at the Political Economy Research Institute of the University of Massachusetts identified Northrop Grumman as the 17th-largest corporate producer of air pollution in the United States; according to their study, Northrop Grumman facilities released more than 520,000 pounds of toxic chemicals into the air in that year. The corporation has also been linked to 52 Superfund toxic waste sites. In 2003, the company was among 84 parties with which the United States Environmental Protection Agency, the U.S. Department of Justice, and the state of New York reached an estimated US $15 million settlement for the rehabilitation of the Mattiace Petrochemical Company Superfund site in Glen Cove, Long Island; in the same year, Northrop Grumman agreed to pay $33,214 after EPA inspectors found hazardous waste violations at the Capistrano test site.
Toxins we can believe in! You really can’t make this stuff up, can you?
What’s really galling about the administration’s ultimatums to GM today is that they still ignore the root cause of Detroit's current troubles. It's the same problem that has crippled Toyota, and Honda, and every other automaker, and their suppliers, and their dealers, for the past seven months. When the Masters of the Universe chose to gamble away your 401k on million-dollar mirages in Riverside County, credit dried up and buyers couldn't get car loans. Now, even with credit markets beginning to thaw out, we're losing a million-plus jobs every 60 days, financial stocks have lost 90 percent of their value, and two trillion dollars' worth of equity have been sucked out of the economy. Is it any wonder that folks are postponing big-ticket purchases like new automobiles? In the current economic climate, you could summon the ghost of Alfred Sloan to man the helm, and Harley Earl to design the cars, and sales would be little changed at GM now.
Look at it this way: when a company that’s been as successful as Toyota has been for the last 20 years suddenly decides that it needs to ask the Japanese government for $3 billion in emergency loans because they're not selling enough Priuses in North America to turn a profit, you know the problem affecting the auto industry is systemic in nature, and not the cause of any one guy on GM's senior management team.
Maybe Rick Wagoner was a bad fit at General Motors. The company was in trouble when he took it over, and it's in trouble now that he's stepping down. There are plenty of good and honest accounts of his failings across the Internet today, such as this one from our colleague Todd Lassa at Motor Trend. And whether or not the federal government should be involved at all in rescuing failing businesses of any kind is certainly a valid subject for discussion.
But given the stiff demands being placed on GM and Chrysler for $30 billion in loans, versus the staggering amounts of federal money that have already been poured without question into the financial-services feeding machine, one has to ask: Just what the hell are the administration’s priorities here?
Over at the lefty blog Escathon, Atrios sums it up:
I don’t have strong opinions about what should be done about the US auto industry, but apparently the real economy is less important than the paper one.
Moreover, by cherry-picking scapegoats in secondary industries while allowing the
crooks investment geniuses whose recklessness triggered the meltdown in Motown (and Tokyo, and Munich, and Seoul) to run free on the taxpayer dime, the Obama administration has shown, more troubling yet, that it's just as capable of cheap populist grandstanding as any other administration. And for a gang that was elected on an agenda of change, that's a bitter pill to swallow.
Update: I have officially ceased to shed tears for Rick Wagoner now that we know he's eligible for $20 million in retirement benefits. But the unions and the bondholders still need to make more concessions, sigh.