Loading ...What Should We Do About General Motors?
The word on the street is that if General Motors (GM) does not get a cash infusion they will be bankrupt in 3 to 6 months. Over that last few days, many top level executives from the Big 3 (Ford, Chrysler & GM) have been lobbying hard for a government sponsored bailout plan. Be glad that you and I don’t have to make this decision. After pouring over a few articles and newscasts I have broken out reasons for and against. In the end I would give my vote and why:
For the bailout!
- Jobs, Jobs & more Jobs – It is said that the auto industry makes up 10% of our workforce. I’m not naive enough to think everyone will lose their jobs but I do believe a healthy amount will and will ultimately make Citigroup’s 53,000 layoffs look like nothing.
- You could pay now or pay later – What I mean by this is that if there is mass layoffs, the government is going to be paying unemployment benefits at a historic level. Will it equal $25 billion dollars? Not sure if I want to find out.
- We need to show that we are not pandering to Wall Street – If we are willing to help out those with white collar jobs that are in trouble but then turn around and alienate the blue collar workers, we will end up having more problems than a bailout on our hands.
Bailout? No way!
- Where does it end? – The line for troubled industries on Pennsylvania Avenue will be long; all looking for their own bailout money.
- Let them file bankruptcy - There have been numerous companies that have come out of bankruptcy protection much leaner. Besides, if ABC Contracting couldn’t afford its bills they would have to file; why shouldn’t GM?
- Why save a company that is drastically losing its market share each year? Why postpone the inevitable?
In my opinion, GM is worth saving and here is why: If we let all these huge mega companies fall we could be in for a prolonged recession (7-20 years). Does it set a dangerous precedent? Absolutely, but I would have a tough time saying, “Hey, Wall Street! We’ll fix your mistakes, but Detroit, you’re on your own.” I always thought of myself as a capitalist, but maybe I’m a socialist at heart.
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I’ve taken a middle ground on this. First off, I’m not sure bankruptcy is necessarily that bad, and your point about other companies successfully reorganizing should not be minimized.
Yet whether we talk about the big three writing off some of their debts or acquiring new debts from the U.S. Government, we aren’t really addressing the underlying issues.
It seems like there are a few important issues, like the cost of health care, the cost of pensions, and the cost of retooling for the 21st century. I believe that instead of loaning more money or seeing them write off current debts, we should look at these issues.
I go into more details on my blog
http://www.orient-lodge.com/node/3302
Aldon
Another issue for the against side:
If the government bails out General Motors out of its financial dip (with our tax money) what will keep other struggling businesses from requesting the same assistance?
Finally, why should General Motors start using wise practices with their money if the government is there to give a hand when they stumble?
Thank you both for stopping by!
@Jade- You make a good point in regards to how these companies handle their money. Unfortunately, the precedent has been set I just hope the government will turn the spicket off soon.
Since I work for an automotive supplier, I say yes to bailout. Since my wife works in the fast food industry and automotive employees, automotive supplier employees eat at her restaurants I say yes to bailout.
Even though I don’t consider myself a socialist either I do find it hard to except the devasting number of jobs that will be lost. And to your point why is it okay to help out “white collar jobs that are in trouble but then turn around and alienate the blue collar workers.”
It’s such a complicated matter, it’s hard to take a position.
@Double- It’s going to be astounding how many jobs could be lost by not bailing out the auto industry. Even the one’s not considered under that umbrella.
@Karen- That’s the problem our leaders are going to have a take a position and stand up to the criticism involved. Let’s hope we elected the right people.