More On Auto Bailout

-- by Dave Johnson

The auto companies -- are they just getting what they deserve?

Where we use "they" in discussions like this I actually see something else happening, and I think it is something worth pointing out in our thinking about companies. We should be clearer in our wording and thinking about which "they" we mean. It makes a difference in the conclusions we reach. The individual executives who make these decisions can have different interests from the companies they work for. They are often overly rewarded for quarterly and yearly results regardless of long term results and make decisions accordingly.

So when we talk about what companies should do, and we say or think things like "if they had done so and so this wouldn't have happened" we're missing that the executives making the decisions might have done just fine for themselves while damaging the longer-term interests of the company. We often express that "they" got what they deserved when the company later faces the consequences of such decisions. In fact the particular executives may have made millions and all be working (looting) at some other company at that point while Bob in Accounting or Mary in Sales takes the hit.

The auto companies didn't lobby against CAFE, executives at those companies took advantage of their access to corporate resources to lobby. Who knows where they are now -- we shouldn't punish the companies and communities in which they exist because of a misinterpretation of which "they" is responsible for the bad decisions.

Posted by Dave Johnson at November 14, 2008 9:39 AM