Wednesday, June 03, 2009

The Demise Of GM - Is It Time To Transform Capitalism To Reflect Democratic Ideals?

Very interesting video highlighting a time line of remarks starting in 2006 from GM's CEO.

It's nearly impossible for me to remain objective about the failure of GM even if we have talked about the possibility for years. I have so many friends & family and friends & families of friends & families tied directly or indirectly to the auto industry that the pain and suffering I know will take place is very difficult to digest. Mostly because this was all avoidable. In fact, much of this entire crisis was avoidable. I have nothing against Rick Wagoner. Unlike the thieves on Wall Street, he was simply a product of a failed economic ideology and poor management practices. We wrote back in 2006 that Wagoner was not the CEO to pull GM through their crisis. And, it's quite obvious now he wasn't. Four years of precious time wasted when a new CEO could have possibly averted this crisis. Were oversight at GM more active, maybe we would have seen much of this averted.

So, do we just keep moving in the same direction or does crisis yield to reflection and present opportunity for change? Will society eventually contemplate a new economic paradigm in this time of crisis? It won't if the decision making process is left up to elitists responsible for this crisis. It will only happen if we exercise our democratic rights.

Our publicly-traded companies are run more like dictatorships than anything representing a democracy. And, because we are bailing out these firms, our government appears more like these companies than like a democratic society.

How is freedom defined by mega-firms with the ability to wreak so much economic and social destruction without any voices from a democratic society? Should CEOs of publicly-traded companies be allowed to wield nearly unlimited power without any seeming checks or balances as is the case today? Should boards be held legally accountable to fiduciary responsibilities and independence as our political leaders are? Should shareholders have a more direct voice in the management of a company as is the case with a democratic society? Ditto, should employees be given mandatory representation on the board of directors as happens in a democratic society?

Crisis creates change. And, I'm not so sure that by the time this is all over that we won't see some very profound change. Do we embrace democratic ideals in publicly-owned companies or do we keep companies operating on the limited abilities of a chosen few? Especially given what we now see is the extreme fallibility of placing our economic future in the hands of a very few. A very few with no seeming regard for anyone other than themselves or with extremely flawed business strategies or both. Remember, the leaders of publicly-traded companies are not the idea generators of society. Nor are they the job creators. That has always been the role of the entrepreneur or risk-takers. Nor did they take any risks by creating their own companies. Nor did they have the vision or creativity to create their own businesses. They are simply managers. And most often, poor ones at that. Democratizing the management process has substantially more upside potential through checks & balances and accountability than any possible downside.
posted by TimingLogic at 7:41 AM