Government BailoutsShould the bailout include money for General Motors?  Why or why not?  What are the advantages/disadvantages?

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enotechris's profile pic

enotechris | College Teacher | (Level 2) Senior Educator

Posted on

Thank you everyone, for your responses.  GM did so much good for so long, but for the last 40 odd years, with a few notable exceptions, they made crap for cars.  And the Japanese have eaten them alive.

I don't believe in big government.  I don't believe in government bailouts, no matter what the industry.  GM had all the resources in the world to do the right thing (even designing and building a car for the Moon!) and for years has squandered it.  In addition, they've acted like a coercive monopoly and destroyed the public transit system in the US in the early half of the 20th century. They've ignored the market demand for innovative electric cars, but worse, engaged in a program to shut down production of the fully electric car that they could have easily mass produced (watch the documentary "Who killed the electric car?") The reason Toyota and Honda now have hybrids is because GM came out with the EV1 back in the 1990's, and it scared the Japanese! (This was an all-electric vehicle -- the Japanese couldn't make that at the time,  so they did the next best thing, and created the now ubiquitous Prius hybrid. Look whose got the car market now?)  In short, GM should die an honorable market death.  It's regrettable, but giving them money just encourages the same crappy management to continue to make the same crappy cars and they can all pat themselves on the back while taking big bonuses.  This is YOUR tax money!! Giving them your money puts the government in the business of car manufacturing, if you're going to claim they should oversee how our hard earned tax dollars are spent.  This is a lose-lose situation -- crappy cars, and intrusive government.  So what's the answer, then?  Check out the link below.  It's innovative, It's fast, it's sexy, it's environmental.  And it's very very expensive.  But so was the Model T until Mr. Ford got the production numbers up.  We don't need government incentives, bailouts, or moribund companies.  We need new blood, we need new car companies.  We need true market competition to keep production of the best cars happening.  This is one of them.  We need these mass-produced.  But if you're going to give money away, give it to these guys. I'm sure they'll be hiring soon! These cars SOLVE the problem!

http://www.hulu.com/watch/31453/attack-of-the-show-tesla-electric-car

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Jen Sambdman | High School Teacher | (Level 1) Assistant Educator

Posted on

If we let our biggest industries fail, it is only perpetuating a cycle. Okay, you may have seen that the pornography industry had their hand out and had the audacity to ask for some of the bail out money. They are not a staple of the American economy. The workers in the industry (no offense) do not directly produce a product that is used by almost everyone in society and an intricacy to the daily lives of most people. It is a luxury. The automobile industry on the other hand produces a good that we can export, we rely on, we all use and that is a major component to our economy. Just like if we had let AIG go under, where would those people be - my father included - without insurance?

We cant just think about this in terms of money and just giving it away. The companies should have to make drastic changes to their upper-level management and pay the government back WITH INTEREST, but we cant just say "You messed up, here's your lesson, better luck next time Scooter". The economy doesn't work that way.

The car industry is huge in the U.S. and although we SHOULD get away from foreign oil dependence, we cant do it over night. There has to be market for these "green cars" in order to convert the plants and it costs way more money to convert the plants than these guys can pull in with the sales of cars. I know I personally wouldn't buy a hybrid until the cost of the batteries come down or they make something that is atheistically pleasing to me. Right, wrong or otherwise, I am a red blooded American. I like my loud muscle cars, pick'em'up trucks and classic cars. I don't want to drive a roller skate down the highway. You couldn't give me a Ford Focus - I prefer my Dodge Charger with a Hemi that gets a whoppin 17 mpg when I drive 32 miles round-trip to work every day. Yes, I understand I am part of this 'problem' but you know what, I am not the only one. And WE are the people who will NOT be buying the lil green cars from GM and whatnot and WE are the reason they will go in debt again.

There is no easy out to this problem and everyone keeps complaining about the solutions proposed but until there is a FOOL-PROOF PLAN, which will never happen, we just have to figure out which is going to be the best idea in a crap situation.

linda-allen's profile pic

linda-allen | High School Teacher | (Level 3) Senior Educator

Posted on

I agree with Amy Lepore. Why is it that only the "big three" auto makers are begging for a hand out from Congress? Could it be that people don't want to buy their products? In a capitalistic society, it's survival of the fittest. The problem, though, is that too many people would lose their jobs if those companies were to go bust. So what do you do?

amy-lepore's profile pic

amy-lepore | High School Teacher | (Level 1) Educator Emeritus

Posted on

I am definitely opposed.  What's to stop them from using up the money and then coming back with their hands out every time the "bailout" money is gone?  It's along the same as the old adage, "Give a man a fish, he eats for a day.  TEACH a man to fish, and he eats forever."  We need to make them learn to solve their own problems and fix their own messes. 

dbello's profile pic

dbello | High School Teacher | (Level 1) Educator

Posted on

This is not the first time the government has financially intervened of behalf of private enterprise. The banking industry, the automobile industry, Amtrak, Lockheed, Chrysler (1970's) are just a few examples from the past however this financial intervention is the largest. The bottomline is this, there are several industries in this country that make up a substancial portion of the G.D.P. (gross domestic product) the automobile industry is one of them, the airline industry is another. What that boils down to is the nation as a whole cannot afford to let them self destruct, hence the assistence (currently known as the bail out) Although not as much money, the federal government assisted the airline industry after September 11,2001 why? because fear consumed the American consumer.  The impact of a bankrupted American airline industry would effect many other unrelated aspects of the economy. It must noted that the strategic use the of language 'Bail Out' hammered to the public by the media does suggest notions that nothing like this has never happened before, and frankly has more negative connotations than positive. The language alone will no doubt influence opinions, why do you think F.D.R. called what he did a 'bank holiday'? Something to think about.

One thing I totally disagree with is the fact that some of these corporations in dire straits actually believe those in charge still deserve raises and their yearly perks. Talk about a slap in the taxpayer's face !!!!  Accountability must be rules # 1,2,3,4,5........The reorganization of these corporations by the grace of American taxpayer dollars must be held accountable for every single action it takes, in other words the American taxpayer has just become a 'Member of the Board'.

 

timbrady's profile pic

timbrady | College Teacher | (Level 1) Educator

Posted on

I think I am opposed to the bailout.  It's a complicated problem.  I do not want to see workers (in the auto and support industries) even if they are, by my standards, overpaid lose their jobs.  I think they could give a lot back and still have a better standard of living than many of us.  The same is true for the administrative staff; I think they should work for the same salary as their workers until the company returns to profitability.

GM has produced the wrong cars for a long time BUT they have produced the cars that WE wanted.  If they had been selling small electric.or.otherwise cars during the wonder years of the SUV, they would not have been profitable.  Although it is popular to blame them for making the wrong cars, I think it is us.

On the other hand, I think being forced into bankruptcy would allow them to reorganize their debt, renegotiate better contracts with the unions, and eventually return to profitability.  I am also concerned about all the other companies that have started to look for bailouts.  If you say yes to some, how do you refuse the others.  Already we see the bill that is Congress today (1/29) LOADED with favorite programs that seem to have nothing to do with economic recovery ... I think we should make access to this money very difficult ... you should have to show that the money being spent will 1) have some positive effects and 2) has the possibility of being paid back.  This goes for bailouts as well.

I think that only the marketplace will lead to the cars that scdaniel talks about.  When WE want them, and WE will buy nothing else, they'll make them.  As longs as we buy cars big enough for 8 people and drive them with just the driver in them, that's what we'll get.  WE decide what THEY build.

 

litchick2011's profile pic

litchick2011 | High School Teacher | (Level 1) Assistant Educator

Posted on

I would be more prone to agree with bailout money if GM was forced to make energy efficient and environmentally friendly automobiles (hybrids, electric cars, etc.). We have to get to a point where we do not rely on foreign oil, and making car company's adhere to this standard would be a step in the right direction.

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krishna-agrawala | College Teacher | (Level 3) Valedictorian

Posted on

Though bailout packages may invole direct aid to some companies, their central and only purpose is to protect and promote the interests of people in general.

Bailout package to General Motors is justified only if it contributes to revival of whole economy,and not just bebefit the shareholders of the company.

 

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