We have speculated in a previous post that one of the features of the New Normal would be a greater involvement of Government in the working environment (see post). Originally we thought that this would be through politically inspired lending criteria deployed by the banking sector of which most Governments now own a greater part.
It now transpires that Governments are willing to intervene in areas beyond the past boundaries of interference, to become active in matters that formerly they would not have. For example, the resignation (sacking?) of Rick Wagoner at General Motors serves as a good illustration of this point (see story). It seems that Mr Wagoner had become too associated with the failed GM business model and was too unwilling to adopt the new agenda that he became an unacceptible CEO of GM for President Obama. The story implies that Mr Wagoner's resignation was a pre-condition for further government assistance.
This raises an interesting point of company law. The CEO is normally appointed by and accountable to the shareholders of a company. It now appears that, if the company receives public bailout money, the political masters have the right of veto over the decisions made by the shareholders as to who the CEO ought to be.
One could argue that as public money is being used to prop up the company, the public - through their elected representatives - ought to have some say over how that money is spent. This argument has traction, but loses its force in a globalised world. Is GM an American company? It is owned by shareholders from all over the world. It operates on a global level. It is receiving public bailout funds from more than the USA. So ought the American President hold such an important veto?
For shareholders from outside of the US, this is a de facto nationalisation, only without the necessary legislation and, more importantly, compensation. It will be interesting to see how the Chinese stockholders of GM respond to this, as the US sends out the message that it is not open for business and that it can be quite an unreliable trade partner by not keeping to its own rules when they prove to be inconvenient. In many ways, this is a blow to globalisation and narrow victory for the Neo Nationalists (see post).