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Dunce caps

April 13, 2012 - Harry Eagar
The gummint, senior debt holder of General Motors, tells the company to cap the pay of its executives, and, as expected, they whine.

CEO Dan Akerson pulled down only $9,000,000, and he says that isn't enough to recruit necessary talent.

We have heard this con before, but since nobody else will state it, Restating the Obvious will: When GM was not restrained in the compensation it was able to offer its management, it hired incompetents. GM hasn't had competent management since 1953.

Like a lot of nonsense that free marketeers spout, it might seem self-evident that competing for talent by way of offering loot would be the most efficient way to do it; but the history of business proves this is not the way the world works.

As RtO pointed out long ago, 1953 was the year when GM replaced engineering management -- guys who actually liked cars -- with financial management -- guys who didn't care. Chandler, who put together the original management that turned GM into a dominant sector company, notoriously said, "Gentlemen, we are not here to make cars. We are here to make money." But he hired guys who wanted to make cars anyway.

The Los Angeles Times published a list of the "10 Worst Cars Sold in America." 6 of 10 were GM: 2001 Pontiac Aztek, 1971 Chevrolet Vega, 2003 Saturn Ion, 1982 Cadillac Cimarron, 1979 Oldsmobile Cutlass Supreme Diesel, and 1917 Chevrolet Series D. That didn't scratch the surface. My mother bought a 1959 Chevrolet Biscayne on which the transmission failed as she drove it off the dealer's lot.


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