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It’s All Management

By ThinkProgress

"It’s All Management"

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Megan McArdle says we shouldn’t blame bad management from GM’s staggering $15 billion loss:

The company is scrambling to retool for small cars, and I’m sure we’ll hear a loud chorus of voices saying that GM did this to themselves by becoming so dependent on light trucks. Well, they did, but I’m not sure it’s fair to blame management. GM’s historical pension and healthcare obligations, and the vast difficulties they have in permanently laying off workers, mean that the company had to maximize cash flow as best they could.

But look: This is all management. GM could have struck a different bargain with its workforce that entailed higher salaries and lower long-term pension obligations. Its management thought it would be wiser to strike a different bargain, and the results have wound up being non-pretty. Running a large enterprise is difficult which, I think, is why the executives make the big bucks. But when decisions don’t pan out, you take the blame. Meanwhile, car company management could have strongly backed the Clinton administration’s effort to get health care under control back in 1993.

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