In a unprecedented move, the Obama administration essentially fired TK Waggoner, the chief executive of General Motors. This is unheard of in American history-and sends an ominous signal to millions of shareholders for whom the auto maker is part of their retirement plans.
Little wonder that GM's stock sank by 25 percent on the news, a loss of over a half-billion dollars in wealth. While other factors undoubtedly contributed to the sell-off, the drop in the overall stock market today is hardly encouraging. Many investors worry which companies and executives are next. Turmoil is hardly the way to restore investor confidence while the nation endures one of the worst financial crisis in living memory.
President Obama claimed Monday that he has "no interest or intention" of running the auto industry. But that's just what he's doing. As we saw in Italy and France in the post-war years, when politicians pick corporate leaders or set company strategy, the profitability and even the health of firms declines. So Mr. Obama's boast that "my team will be working closely with GM to produce a better business plan" suggests a sharp veer in a failed European direction. There was little doubt about Mr. Obama's intent when he said he is "absolutely committed . . . to meet one goal . . . building the next generation of clean cars." The president doesn't seem to care that hybrid-car sales have plunged by two-thirds since April 2008, a much steeper decline than total car sales.
Mr. Obama is also micromanaging Chrysler's merger talks with Fiat - requiring in what country different engines will be built.
Industry analysts and Democratic lawmakers view Mr. Obama's approach with alarm. (They have noticed that shareholders vote too.)
Firing GM's CEO is may be politically popular with some. But cooler heads have noted that Mr. Obama has now taken political responsibility for one of America's most-troubled and vexing industries. Hardly seems like a political winner in the long run. Others feel sorry for Mr. Waggoner. Democratic Michigan Gov. Jennifer Granholm was right when she called Mr. Wagoner a "sacrificial lamb." Jeremy Anwyl, at the automotive website Edmunds.com, told us that Mr. Wagoner's firing was "political theater."
While Mr. Obama has forced the country on to the autobahn of the Old Europe, he ignores the lessons of contemporary Europe. The Continent has largely sobered up from such statist meddling. Take Sweden, which refused to bail out its automotive and other industries.
Mr. Obama already controlled much of American auto industry policy. It was at his insistence that the original auto company loans were granted. Yet, having the Obama administration determining GM's CEO and micromanaging Chrysler's merger talks with Fiat, are placing a big bet that politicians can do what decades of professional managers have failed to do. It will be the biggest miracle since the 1980 U.S. hockey team's victory over the Soviet Union if the government gets this right…and cause for more jubilation.