Auto Bailout

Brief Thoughts On An Auto Bailout

1. The automobile industry should be condemned not only for its historic incompetency–way behind the curve on fuel efficiency and reliability, among other problems–but also because it has opposed governmental efficiency standards. They really deserve to go broke. Nonetheless, justice aside, if we do not bail out General Motors (and Ford and Chrysler, if needed), there will be huge costs to the public at large, the same argument being made for the financial bail out.

2. The costs will primarily be the vast increases in the numbers of unemployed–millions–since the American automobile industry still is a major force in what is left of our manufacturing base. And it will be devastating to certain areas, such as Michigan, especially Detroit. Having these auto firms go bankrupt will only make recovery from the disastrous recession we are now in that much harder.

3. If Toyota, Honda, Hyundai or others eventually take over what remains of our auto-making facilities (and "build" cars here), such a take-over will take time, when time is of the essence, and even then, much of the creative design of the cars will remain in Japan and (one assumes) South Korea and Germany. Moreover, much of what goes into their cars will be built in those countries and to a considerable extent what will take place here is simply "assembling," (the reason for quotes around the word, build, in the first sentence of this paragraph).

4. If we are to flourish economically, we must have industries like the automobile industry, especially one which uses the best technology and is in the forefront of being fuel efficient. This implies that any agreement to bail out any of these companies, but especially the largest, GM, must force on them conditions that require it to do what is needed for a globally endangered 21st century. These conditions should require that these automobile companies not only work with the government in making cars, which use less and less (and finally no) gas, but that include clauses that their executives do not get paid salaries in the stratosphere.

5. If I had my (socialist) druthers, I would pay the stockholders what these firms are worth now, (to prevent investors from gaining a windfall), and have government own and run the companies, and, by doing this, creating firms which use the latest technology. Presumably, this will also mean that the government would create a system of electric car recharging stations. Then, in 10 years or so, my socialist proclivities satisfied, I would sell the newly successful companies to private investors at what the market will bring, hoping that the sales price will in effect reimburse, or more than reimburse, the tax payers for the bail out.

6. Finally, if (5) is unavailable, as I am sure it will be, part of my aid program–always conditioned on forcing the companies to utilize the latest non-polluting technology (and even helping them to develop this technology)–would be to offer to select buyers of cars, that are genuinely made in America, and not just assembled here, buyers whose incomes are less than $100,000, vast rebates–say, $5000 per car, maybe on some kind of sliding scale, along with government payment of normal upkeep for a period of, say, 5 years.

ps Alabama’s conservative Republican Senator, Richard Shelby, is absolutely opposed to aiding GM and the other auto firms, since Mercedes-Benz, Honda, and Hyundai have plants in his state and have them there because Alabama subsidized them.