by Judge Napolitano
GM Chairman and CEO Rick Wagoner is forced out of his job by the government. Here's what I think - The government cannot order GM to fire anyone and it knows that. The Constitution prohibits all government from "impairing the obligation of contract". Since GM and Waggoner obviously have a contract, the Constitution prevents the government from impairing in.
Thus, the government "bribes" GM, by saying that if GM fires Waggoner, the government will give GM government loans. If a private person approached GM and said words to the effect that if you fire Waggoner I'll buy your bonds, that person would be arrested for blackmail or harassment or attempted commercial bribery. The same clause that prohibits the government from impairing contracts also prohibits the government from imposing conditions on loans that interfere with the basic freedoms that the recipient of the loan possesses and which are guaranteed by the Constitution. One such basic freedom that GM, and all persons and entities enjoy, is freedom of contract. If persons and businesses cannot rely on contracts, if the government can violate the Constitution at will and impair any contract it hates or fears, then the free market as we have known it for 230 years will disappear. No one will enter into any contract without the government's prior approval.
The statute under which the government told GM to fire Waggoner is the TARP statute. That statute authorizes the government to purchase toxic assts from banks. The very name of the statute connotes that activity: Troubled Asset Relief Program. There is simply not only no authority under the Constitution to fire CEOs, there is no authority to do so under TARP.
The government knows nothing about running businesses. It ran the Post Office at a $6 billion deficit in 2008 and it has not fired that CEO. It ran Amtrak at a $2 billion deficit in 2008 and it has not fired that CEO. It bought 77.9% of AIG and it (a) attempted to confiscate property from it, and (b) at least in the House voted to "condemn" it, and (c) has publicly trashed it. Instead of driving its value up, so AIG earn enough money to pay back the $200 billion the government has invested in it, the government hates it own creation and has devalued it. This will happen to GM as well: The government will make decisions about its fate based on a political model, not a business one.
GM Chairman and CEO Rick Wagoner is forced out of his job by the government. Here's what I think - The government cannot order GM to fire anyone and it knows that. The Constitution prohibits all government from "impairing the obligation of contract". Since GM and Waggoner obviously have a contract, the Constitution prevents the government from impairing in.
Thus, the government "bribes" GM, by saying that if GM fires Waggoner, the government will give GM government loans. If a private person approached GM and said words to the effect that if you fire Waggoner I'll buy your bonds, that person would be arrested for blackmail or harassment or attempted commercial bribery. The same clause that prohibits the government from impairing contracts also prohibits the government from imposing conditions on loans that interfere with the basic freedoms that the recipient of the loan possesses and which are guaranteed by the Constitution. One such basic freedom that GM, and all persons and entities enjoy, is freedom of contract. If persons and businesses cannot rely on contracts, if the government can violate the Constitution at will and impair any contract it hates or fears, then the free market as we have known it for 230 years will disappear. No one will enter into any contract without the government's prior approval.
The statute under which the government told GM to fire Waggoner is the TARP statute. That statute authorizes the government to purchase toxic assts from banks. The very name of the statute connotes that activity: Troubled Asset Relief Program. There is simply not only no authority under the Constitution to fire CEOs, there is no authority to do so under TARP.
The government knows nothing about running businesses. It ran the Post Office at a $6 billion deficit in 2008 and it has not fired that CEO. It ran Amtrak at a $2 billion deficit in 2008 and it has not fired that CEO. It bought 77.9% of AIG and it (a) attempted to confiscate property from it, and (b) at least in the House voted to "condemn" it, and (c) has publicly trashed it. Instead of driving its value up, so AIG earn enough money to pay back the $200 billion the government has invested in it, the government hates it own creation and has devalued it. This will happen to GM as well: The government will make decisions about its fate based on a political model, not a business one.
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