There is a growing debate in the halls of Washington, whether to bailout the ailing auto-industry. Some interesting columns have come out in the mean time.
Some are for the bailout with conditions and others are saying – “hell no”. Auto industry in US is one of the largest, next to oil and gas industry. Jobs in the industrial mid-west are mostly connected with this industry. This industry is so big, that nearly 1in 10 workers in America are connected in some manner with this industry.
The – “hell no” case:
American cars are gas guzzlers. The market space for fuel efficient cars is taken by the Asian cars, such as Honda and Toyota. The Honda’s and Toyota’s are cheaper, low maintenance , consume about 1 gallon for every 15-20 miles. So the question arises- why is Detroit making gas guzzlers ? Simple answer- that’s all they know, Probably? The management and the Unions are locked in battles , the designs have not changed over time to adapt with the new times. Why help them , when we know they are going to fail down the road? When will bailing out industries stop. Who is next, Chinese panda express?
The “No” case arguments by Brooks, Megan McArdle and Krauthammer are the best.
The yes Case: These times are not ordinary. The economy is very fragile, more like on thin ice. The economy might not able to width stand the shock of this magnitude and could lead to dire consequences not just in the US but abroad as well. But should we just give the big 3 automakers 25billion? No. We could certainly impose conditions. But conditions have to be imposed both on the Unions and the management.
The yes case is articulated best by Robert J. Samuelson and Sachs.
I am for the Yes case.
November 18, 2008 at 6:23 pm
It is funny how we rushed blindly into shelling out $700 billion to companies with few jobs to and are not going to help protect hundreds of thousands of jobs in the mfg. sector which is where the middle class with and without college degrees live and breath. The only reason I can think of for not helping them is that if they file Chapter 11, they can break the back of the union and end their contracts in court as part of reorganization and offer them their jobs back as less pay. My vote is to help them out now. I think $50 or $75 billion is better spent here and than $700 billion was previously. Here is a sample letter I found and a site to locate your representatives as well to support bridge loans to the auto industry. They loaned Chrysler money years ago and they were a strong and growing company until Daimler bought them raped them and they threw them out with little to nothing. Oh, I am sorry that was a merger of equals. Ha.
November 18, 2008 at 6:39 pm
I think all the auto companies will fail or at least they will not grow into auto power houses in the coming 5-10 years. I think in the fragile economy it is better if they fail a few years from now than today.