Thursday, November 13, 2008

the auto industry? really?

OK, I'm no economist. I'm no policy expert. I'm no auto industry employee. I've been listening to NPR this morning talk about the potential bail out of the "big 3" car makers in the US and, while my Detroit born father will probably get pissy with me for saying this, why the hell would we do that?

Isn't that the point of capitalism? Risk? The more you risk the more you stand to gain and loose?

I understand that millions of people could loose jobs if all of the car companies go under. I understand that those people have families and that it is a really really hard time to find a new job, especially in a city like Detroit. I also understand that "long unemployment lines" can lend to the national freak out about another depression. I also understand that we are potentially going to give, in the form of grants and loans and stock buy ups, BILLIONS of dollars to the auto industry. The government actually bailed out Chrystler already - a few decades ago, by guaranteeing some big loans to them. And now we are being asked to do it again. Really?

Again, not an econ0mist. But couldn't we take those billions of dollars and spend it on a year or two worth of pay and health care for all the people who lost their jobs (with incentives to find jobs in the interim, etc.) and let the failing businesses, well, FAIL? If they are FAILING doesn't that mean that they should no longer operate? Maybe the US just isn't going to have a viable automobile industry anymore. Maybe there is something else that we are really, really good at that could sustain itself, provide jobs, bear risk and reap reward and whatever that is should be allowed to come forward and thrive.

I have no doubt that the above is an oversimplification, but I do believe that free market capitalism contains a relatively straightforward stipulation that investors and entrepreneurs must be willing to bear risk, take chances, be willing and allowed to loose, and loose big, in order for the system to work.

I am really interested in what everyone thinks about this. Does all this bailing out make sense? If you were in charge of all those billions (that we don't actually have but are borrowing) would you do what the government is doing? Why or why not?

I promise this blog isn't about to turn into a soapbox for my (admittedly lefty) ideas about the economy and health care and social safety nets. I've just been thinking about this a lot lately. So there it is. Input? Thoughts? A cute picture?


Anonymous said...

I tend to agree. Although I think a simple "fair trade" policy has the potential to solve so many of our national problems of competing against slave labor.


Divide recent bailouts of banking, auto, mortgage, insurance industries by the adult population of U.S. How much would that be per person? Foreclosures would go down because people would have money, car sales would go up because people would have money,...
Yes, another drastic oversimplification but isn't giving money to the wealthy, albeit failing, corporations simply giving money to the wealthy. Give the money to the middle class and below and let them give it to the wealthy if so choose, and yes some auto companies, insurance companies, etc. will fail, but that is CAPITALISM.
I can't even tell at this point where left and right political leaning applies to this economy. The whole theory is it's going to fail, let's just keep it slow, so it doesn't cause a 2nd Great Depression. Fail quick, recover quick? Fail slow, Recover ????
Reminds me of the dog tail cut off question. Cut your dog's tail off in slow 1" increments until it's gone, or chop the whole thing off at once? Same effect, less time and pain (For the record I do not believe, nor understand, why anyone would chop their dog's tail off).
Thanks for letting me rant on your comments.

anymommy said...

Grrrrrrr. It is simple, bailing out a dying, dinosaur industry hamstrung by unions with taxpayer money is wrong. Put that money into programs to help the workers and families retrain and relocate. It will work, it can happen. Societies change and evolve and free markets adjust.

This post sounds pretty darn fiscally conservative to me.

And finally, and yes, I know this won't be a popular sentiment. I am saddened and disenchanted that this is the first big policy decision that PE Obama is pushing. It seems a kowtow to big union and big money to me. More of the same as always.

Anonymous said...

I agree....why are we bailing them out? Wrong, wrong, wrong. (don't tell my dad I said that )