President Barak Obama has forced the ouster of General Motors chief executive Rick Wagoner. He has also pushed out Chrysler towards a merger with Italy’s Fiat SpA. He has threatened both with bankruptcy.

All this clearly marks an increasing involvement of Government in an apparent effort to rescue the faltering economy.

While some people lauded these efforts, there are scores of others who have criticized these moves.
While GM shares tumbled 30 percent on the news, the Dow Jones Industrial average.fell by nearly 4 percent.

This looks like the most important presidential intervention in the private sector since Harry Truman’s measures to take control of the steel industry during the Korean War in 1952. He was then rebuffed by the Supreme Court.

“I don’t think the president should be running the economy. They should have let the company go bankrupt. The guy would have lost his job anyway,” said Edward Prescott, a 2004 Nobel laureate in economic sciences.