Why Did Bodidharma Go To China?

Tyler Cowen wonders why Obama fired Rick Wagoner, and offers a pair of tendentious theories:

Theory 1: President Obama replaced Wagoner with Fritz Henderson as CEO of General Motors because he is convinced that Henderson will be a better corporate leader.

Theory 2: President Obama replaced Wagoner with Fritz Henderson as CEO because the A.I.G. public relations debacle taught him not to appear "soft" with corporate leaders receiving government money.

Which theory do you vote for? Which principles do you think should be governing the disposition of leadership in major U.S. corporations?


There are more things in heaven and earth, Professor Cowen, Than are dreamt of in your philosophy. The principal reason for firing someone ought to be failure to carry out their duties. Wagoner had come to the country, asking to be bailed out with taxpayer dollars. The government gave him some money (many billions!) on the condition that he come up with a plan to restructure GM that would return it to profitability. He failed, either by clinging to unrealistic hopes, lack of imagination, of by simply hoping to take the taxpayers for a ride. That's why he was fired.

The other reason was to send a message to all those others seeking federal bailouts. Sometimes you need to hang an Admiral every now and then, just to encourage the others. Obama needed to demonstrate that those who got the bucks would be held to account. This is less a political decision than a matter of leadership.

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