Monday, December 1, 2008

American Auto Bailout

The question of the day: Should we bailout the American Auto industry, or let it go?

1) Sends American tax payers into more debt. Sure, the big three say that this is a loan that they will pay back when they start making money again - but will they start making money again?
2) Free Markets. If a business isn't doing well or is getting trounced by the competition it should change or go away. If it does try to change it needs to do so in a way that doesn't make things worse in the long run even if it looks like it could make a short term increase. The American Auto industry is getting trounced and has shown little change, and what they have shown in the last few years, more SUVs and lower mpgs, has  stunk. 
3) Their products stink. The reliability and quality of American autos has been terrible for most of my life. Given the economic recession we are in now and will probably be in for many years to come, which car would you buy to last - Honda/Toyota or Ford/GM? 
4) There is an American auto industry for workers building foreign cars. If the big three go away, many, though certainly not all, of their workers and factories will likely be picked up by foreign automakers wanting to cut down on shipping costs by building the cars in the US rather than ship them in from overseas. 

For the bailout:
1) The price of the bailout will be far less than the loss of the jobs to our economy. Less jobs = less money in the economy + more unemployment = taxpayer still getting screwed.
2) Auto manufacturers actually make something. Unlike all of the banks that are getting bailed out right now, the car industry has an end product that actually has some value. Rachel Maddow (an unabashed lefty) made an interesting observation that there seems to be a class warfare happening where white collar jobs are deemed to big to fail, while blue collar jobs are not important. The problem with this view is that it flies in the face of the above against positions where the blue collar jobs may be important, but their products are not selling. Still, the auto industry accounts for something like 4% of our GPD, and so it would be a pretty big thing to fail.
3) This one has a caveat  - the bailout must have a caveat or two or three. I would have thought that this was a no brainer, but then I heard Maddow's interview  on 11/24 (you can get it on itunes) with the head of the United Auto Workers Union who claimed that the American auto industry was innovative and green and forward thinking and I thought to myself, "If we rely on these bozos to decided what constitutes all of the necessary provisions such as alternative fuel, better mpg, and greener tech, we are going to get the same crap that put them in this hole and they're going to think they are wonderful and that it is the customers who are off their rocker." So what we need is a set standard that individuals who are not in that industry but are knowledgeable about the technology to set the provisions and not the industry itself. 

In the end, I think it should happen, and I'm someone who has never owned an American made car. The #1 reason on the pro side weighs heavier than the rest. But if someone doesn't get in there and kick those morons in the head until they start to get it, I'm going to stick with my Yaris.

The Rational Moderate

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