Automotive Bailouts

Anybody who reads my blog fairly regularly realizes that when it comes to politics that I tend to lean to the left fairly strongly. So it is odd to me that I am here blogging about a subject in which I apparently am being conservative on. Because honestly when it comes to all these bailouts, I just don’t believe they are the best of ideas, and somehow Democrats seem to love the idea. Even though I understand that if too many of these companies begin to fall, our economy is in a world of trouble, I can’t help but think that the money is being handed out with little thought and little responsibility.

The latest round is the automotive industry, you know those companies who have been struggling for years because over the last 20 years they have consistently ignored the needs of their customers, decided not to innovate, charged too much, and made mistake after mistake. Yeah that one. We are deciding that we should bail out THAT industry? Really? I mean usually when a business continuously screws up, shouldn’t it die?

The Chevy Volt at South StationI may be odd in this particular philosophy, but I can’t help but think that perhaps Japan actually earned their lead on the marketshare. I mean Toyota in particular has really been innovating with their Hybrids over the past several years all the while the American Automakers scoffed at the idea of a fuel efficient car and continued to make more and more SUVs. Big surprise that decision bit them in the asses.

Not only that, but if the big American automobile makers went away, then maybe there would be an opportunity for smaller automotive makers to rise up and start producing in their stead. Already there are several smaller developers creating fuel efficient sports cars in California. There is also an Xprize for anyone who makes a 100MPG car, perhaps whoever builds that can bring it to market and make a fortune, that is part of the reason that contest is out there after all, to drive innovation which is what Detroit really lacks right now.

Yet, I do understand the importance of the auto industry to this country and what the loss of it would mean to our workers. If they left, millions of workers would be out, and it would be years before the above innovative smaller developers had an opportunity to become big enough to fill in. It would be devestating at a very bad time for the country, so for this reason something has to be done.

I just don’t think that the plan that they automotive industry put forward is really all that detailed. Instead of coming out saying they will push the envelope they came out with PR cuts ($1 a year CEO job and selling corporate jets is all well and good but isn’t a solid long-term plan). The main portion of their “plan” was to cut 25% of their workforce and to put out hybrids, increasing their MPG of their fleet by something like 19% in the next 2 years.

First of all, the MPG can be raised that much by doing nothing but stopping production of half the SUVs they build that aren’t selling right now anyway. This doesn’t necessarily show they are doing a good job at pushing the boundaries. They are just saying they will catch up to where the industry is NOW in 5 years. Not a good start. Then they say they will CUT the workforce by 25%? The whole reason why they are worth keeping around is for the employment they have. Or do they mean cut foreign workforce by 25%?

Maybe if these car companies would stop following the crowd and start pushing the crowd forward they wouldn’t be on the verge of collapse in the first place. This is what capitalism is supposed to be about after all. The more bailouts this country gives to the various corporations the more it looks like our capitalism has failed horribly. In a free market economy, these companies should die.

2 Replies to “Automotive Bailouts”

  1. I’m totally with you on this one. Heck, spend the money directly on extending unemployment benefits for the people who actually get laid off and training programs for those people to update their skills. Anything but write a blank cheque to these companies so that their management can continue business as usual. Eventually some other car company will come along, buy up the assets of these companies and rehire all those skilled workers.

  2. Exactly, and now there is talk about automakers from other countries like KIA are planning on opening plants here in the U.S. that can help pick up the slack.

    Personally I think if we have all this money to jump start the economy, one of the better plans I can think of is to do what they did in the 30s and get people back to work. Let’s start some government funded programs to get the infrastructure better. High-Speed rail connecting New York to Miami and Philly to Minneapolis. We could get mass amounts of wind farms and solar farms built which would require a whole lot of parts that could be built in closing down auto part plants. Put funding into Medical schools to be the first step into national medical plan (this would do two things, increase the number of doctors that we have, and decrease tuition bills for those doctors which is the biggest complaint they have against a national health coverage). Etc.. There is a lot we could do to make this country better and all of it would increase the amount of jobs in the country. And all of it would just take a portion of the money we are throwing at these failing companies.

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