This is a little dated, but it's a topic I brought up on my twitter as it came out.
I'm extremely interested in the recent GM situation. Check out this article: http://www.nytimes.com/2009/06/01/business/01auto.html?_r=2&hp.
In order to save GM, Obama took a 60% stake in the company. Although he assures critics that the government will take a silent backseat when it comes to corporate decision-making, the fact remains, that GM has been virtually "nationalized".
Is this a slippery slope, as conservatives are calling it? I wouldn't take it that far. But it certainly questions the face of capitalism and government-involved as undertaken specifically by Obama (yes, the bailouts began under Bush, but direct stakes in companies only began this year). Michael Useem, a professor of management at Wharton says in the article that this decision would "mean a new chapter in the history books on American capitalism." Indeed, silent backseat or not, we're facing heavy government involvement....maybe in a place that we don't want or need it.
As Robert Reich, a noted liberal economist, Professor at Berkeley, and the Secretary of Labor under Clinton, has said, this bailout is a waste of taxpayer money and pointless. (Ref: http://www.businessinsider.com/robert-reich-the-gm-bailout-is-a-waste-we-need-a-post-manufacturing-economy-2009-6). This is somewhat true. Although GM, in its new strings of advertisements, are assuring potential consumers that it's being reborn, simple research is proving otherwise. One research group estimated that GM's market share is going to go down to 17% from a slipping 19% (GM predicted a healthy 18.5% in its own research). GM automobiles have more breakdowns and have a higher MPG usage than any Japanese car. Young consumers go straight to Japanese dealerships now instead of even considering American cars.
So, what kind of precedent does the government's involvement in GM set for corporate responsibility and financial strength? And, more importantly, are we trespassing a fine line that American capitalism was not set up to transgress?
Hmm. Political economy at its finest. Thoughts?