With the forced resignation of GM CEO Richard Wagoner, President Obama is channeling Ronald Reagan. I bet it will work.
There’s a lot of nattering over the Wagoner putsch, Is this socialism? Is Mr. Wagoner just a “sacrificial lamb“? Why GM’s CEO and not AIG’s numero uno (Edward Liddy), who has certainly done nothing to applaud? What about the banks? Who’s next?
Let’s not shed tears for Mr. Wagoner. He’s had the job for nine years, too long to shirk responsibility for lots of the bad decisions the company has made. He’s made oodles of money. Are the problems facing the car industry — labor costs, retiree benefits, competition, bad products — intractable? Well, they have been for Mr. Wagoner. No reason not to have someone else try.
But, taking a leaf out of the book of the Great Communicator himself, Obama has used this opportunity to communicate with everyone in the country, and the world. This moment reminds me of Reagan’s firing of the air traffic controllers who went on strike in August 1981, just seven months into the Reagan presidency and in violation of their contractual pledge never to strike.
Reagan put their rear ends out on the street. I never admired Reagan very much. I flew in a lot of planes in those days, so I worried a bit about the safety of the skies after the firings. But I remember watching Reagan’s announcement of that decision and thinking, “Good.” The air traffic controllers made a pledge and then broke it. That’s not acceptable. Reagan said so, and made them pay for it.
Reagan won tremendous credibility — in this country, and with foreign countries — by taking that single move.
- It tells the recipients of government bailouts that patience is not infinite.
- It tells investors that the government will not be entirely supine when it takes a position in support of a company.
- It tells the “stakeholders” for the car industry — principally, the bondholders and the unions — that they are not too big to fail.
- It tells the taxpayers that their president has a backbone, that he is not there simply to say yes.