A Dose of Political Apathy: Should We Bail Out The Auto Industry?: "I completely agree. I could go on a long rant about capitalism and how the free market is a large reason we became such a world power. But that aside, I agree. Why should our government pull large companies out of their self-dug economic graves? Times are changing: gas is becoming more expensive, cars are becoming more efficient, smaller. And China and Japan are just making better cars more cheaply. In addition to that, the American economy has always gone through phases of prosperity and poverty. Inflation and deflation. This 'recession' we're in is just a valley that we'll soon be out of, but that doesn't mean there won't be casualties. But for our government to try to keep afloat the dying auto companies, that if left to themselves would disintegrate because of their own inability to keep up with the global auto industry, is foolish to me. It also begins to reek a bit of communism. That would be a different topic however.
Yet, I wonder: if the government WERE to bail out our American auto companies, would that get them on their feet so they could actually produce competition for the auto companies of China and Japan? If so, it could be quite a useful investment for our government to make...although it is quite hard to predict such things..."
4.24.2009
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You have raised some interesting points, and i agree that maybe bailing out the auto industry is not our best option. While I do not believe we should have just handed off billions of dollars to the auto industry i do think simply allowing them to wither and die would be a death nail in our economy.
ReplyDeleteThere are a few reasons why allowing the companies to die would hurt us deeply first as you have mentioned the japanese automakers have done a great job in creating efficient and cheaply produced cars, you will notice I have excluded mentioning chinese automakers, that is because there is no major chinese auto industry (toyota, nissan, honda, and Hyundai are all japanese. If we shift all of our car buying needs to foreign companies there is no difference than relying on foreign oil, we will be slowly bleeding the country of assets and create a much bigger problem in the future.
Another point I must disagree with you on is the "reek of communism" you have mentioned. I could define communism here but I think we all know what it means, and handing money out to automakers is the exact opposite, where communism amputates any weak sector like a gangrenous limb and we are supporting companies that have simply over extended in credit. Our government will never change from democracy and at the moment democracy has decided to shell out the cash, thus we must accept this until we can vote a new power if we need to at all.
Where I would have gone different in the bail out terms would have been a series of loans that charged interest on the companies bailed out, such that we(tax payers) as investors should see a return and the companies themselves must be more responsible with spent funds as they all must be repaid.