If you don't know why it's a bad idea to accept "free" money from the government, why don't you ask now former General Motors CEO Rick Wagoner. He begged the government for money and now it's time to call in some of the debt. How so? The Obama administration has asked (more likely demanded) that Wagoner quit.
Was Wagoner really that bad of a CEO? I doubt it, he had more than 30 years of experience at GM and eight were spent as chairman. GM got into trouble due to union contracts that finally caught up to them (along with the other automakers). When times were booming it was no problem to honor the contracts, but when things slowed down the company simply ran out of money. Was this GM's fault. Of course! But getting in over your head with labor contracts and just running a car business poorly are two different things.
In an article at the Politico by Mike Allen and Josh Gerstein claims that Wagoner brought the company down because he became focused on large trucks and SUVs "at the expense of the hybrids and fuel efficient cars that have become more popular in the last couple of years." I think this should have been written as hybrids and small cars since people will always go for the most fuel efficient car they can get, but they won't always trade efficiency over roominess and safety. Even so, this is just bogus. Trucks and SUVs were the most in-demand vehicles until gas prices rose to four dollars (thanks to government restrictions on drilling and building refineries), and since gas prices have come down again trucks and SUVs were good sellers again until the economy soured.
I think the whole popularity of hybrids and small cars has been mostly made up too. There's a certain demographic of people that these types of cars are popular with, but the vast majority of Americans will take a truck or SUV over a Smart Car any day. Small cars have been made to look popular in the hopes the rest of us will believe it and then actually buy those cars. I think it was an executive at Ford that was advocating higher gas taxes to keep gas prices high so they could actually sell their tiny cars they have a backlog of. High gas prices are the only way they do sell!
Actually it wouldn't surprise me that Obama got rid of Wagoner precisely because he was pushing larger vehicles. What is part of Obama's agenda? To become "environmental stewards" and "more European" which means smaller cars. Obviously a lot of auto makers aren't simply just following suit (because they can't sell them) so a government takeover is the perfect chance to finally force us into small cars. Sound radical? It shouldn't, we're already forced by the government to do a lot of things. Heck, California is even planning to ban black cars in that state because the use more air conditioning in the heat than lighter colored cars.
So now the government is forcing CEOs out of a private business. Yes, GM did take our money, just like AIG, but this is a dangerous precedent that is being set. It will start with companies that took federal money but before long it will be ALL businesses the government disagrees with. The only way a CEO should be removed is when the share holders say so. It's their business, not the governments!
The lesson here is never accept "free" government money. There will always be a cost associated with it, and it will usually be more than just repaying the money. It will be more regulations, more control, and the government deciding who will run the business. Ask Rick, I'm sure he can tell you the real cost of government money.
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