I've been watching the Sunday talk show videos about the looming bailout of the auto industry, and been trying to figure out what I think about it. Generally speaking I agree with what conservatives (and most liberals not from Michigan) say, which is that we should not be in a situation in which the government is keeping alive a handful of giant corporations that otherwise would go out of business. At the same time though, General Motors is gigantic, employing just by itself millions of people, with many more millions of jobs (parts suppliers, dealerships, etc.) directly dependent on it. Were it to go under, it would be an incredible shock to the industrial economy.
Ordinarily, in a normal economy, I think I would advocate letting the big car companies go bankrupt (which would mean filing for Chapter 11), but soften the blow by 1) boosting unemployment payments and providing assistance for relocating to a different region, 2) making sure health care is affordable or free, especially for children, and 3) investing massive amounts of government money into infrastructure improvements and green industries in the devastated regions. But the problem now is that we're not in a normal economy: we're in a crisis economy, where the financial sector nearly imploded and the real economy is headed towards a severe recession. And so I don't think anyone knows exactly what would the effects would be of these gigantic companies failing, especially in the midst of rising unemployment and a collapsing retail sector--it could trigger even lower consumer confidence, causing the recession for everyone to be much, much more painful than it otherwise would be. It's a timing thing, and the timing is right now is bad.
Of course, these are all just tentative thoughts--I'm not any kind of economics or finance person, after all, so maybe I'm just wrong about some things. But I think I have the outline right. I think maybe the prudent thing to do is give Detroit the bailouts it needs until we get out of the crisis--and then, once out, have the political fortitude to tell Detroit that it's on its own.
Sunday, November 16, 2008
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2 comments:
In the case of the auto-makers' bailout, it's a relief to have a national issue that is so straightforward: American cars tend to suck therefore people are not buying them. If GM and Ford don't want to go out of business, they should start making decent cars. To bail them out would be to reward their terrible manufacturing standards.
I agree with media boy. There are SO many problems with any kind of Auto bailout. I'm in the extreme minority, so I won't talk about my personal ideological problems with the bailout, but from a more mainstream perspective:
1. Conservatives/Libertarians - For the markets to be efficient, they must succumb to market forces and government intervention must be minimized. Anything else makes the market inefficient and actually hurts long-term generation of wealth and public well-being.
2. Liberals - Tax payer money must serve the greater good, and not reward ineffective corporate elites. The corporate elite should be as liable as possible for their failed investments, and the tax payer dollars, public funds, should be used to support public projects (like the ones you listed in your post - health care, etc). To do otherwise is to participate in corporate welfare which is one of the most vile abominations of our political-economic system currently in play. Corporate socialism? WTF?!?!?! So our government's primary concern is the welfare of the corporation? Talk about divorce of means and ends!
Obviously, the government is concerned with avoiding an economic tailspin. But let's please be progressive with our solutions. Let us avoid the trap of binary thinking. It's not as simple as: A. Bailout and avoid economic collapse or B. Economic collapse. Our new president-elect is supposed to be this bipartisan, intelligent, calm, even-handed savior. Show me a solution that supports the people and does not bailout the corporate elite. Find ways to stimulate confidence in the market w/o supporting corporate welfare and inefficient monolithic business practices. Bailout is the lazy, short-sighted man's solution to this problem. Let's be rational, progressive, and inventive. Please.
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