By Jeffrey the Barak
In the United States, not long after several “bailouts” of financial institutions, we are being warned and prepared for a similar round of bailouts, this time with the auto-industry as the beneficiary.
- Do General Motors, Ford and Chrysler deserve to be saved by a government bailout?
- What would be the consequences of letting them cease operations and closing their doors?
- If the government offered to save them, but set terms dictating what they should and should not manufacture, is that too much government control for private industry, or does the government simply become the car maker
These are difficult questions to answer with yes or no.
It is all too easy for us to say “it serves them right” and pointing out that Toyotas have been chosen over Buicks because people think they are better, and it’s their own hard-earned money that Americans use to buy a car. But there are two sides to every coin. The number of businesses that depend on the big three to exist and prosper is considerable, and many American jobs are at stake, with not many vacancies at the factories that make so-called foreign cars on American soil.
Is the tradition of mass producing cars in the U.S. too valuable to turn our back on? Should we let the market forces give the big three what they deserve for failing to successfully compete? Let’s look over the borders and see. Canada and Mexico do not make Canadian or Mexican cars, they only have foreign cars, and like the Americans between them, they have foreign car makers operating their manufacturing within the countries of Canada and Mexico. So Canada and Mexico do not have to worry about bailing anyone out, and they can get all the cars they want! Fords, Nissans, you name it! If our own big three go away, there will be no shortage of cars, trucks or buses to buy in the United States
We all have our own experiences. I was always a lover of American iron and always bought American until it just became so obvious that they were simply inferior. Then for years I only experienced American cars if I rented them when traveling, and they were always beyond terrible and their designers always seemed to be having a cruel joke at my expense. But something happened. Around 2006, those Chevrolet rentals were no longer quite so terrible. Still not as good as Volkswagens or Hondas, but not quite so incredibly badly designed. So there is hope for GM, and Fords and Chryslers were always okay even at the worst of times. In other words, today’s American cars are not as terrible as we may imagine.
We have to be careful to examine the arguments appropriately. We cannot just blame the U.S. auto makers for being stupid for promoting S.U.Vs, because we were never forced to buy these thinly disguised, dangerous and dirty, old-fashioned trucks, and the foreign car makers also offered S.U.Vs to be used on the streets in place of normal smaller cars. And there is no evidence that medium sized American cars use more fuel than the same size Japanese, Korean or German cars. And we cannot beat up the big three for their bad designs, because design is a matter of personal taste. Away from the coasts, in middle America, people think Saturns and Mercurys look just fine. They simply do not see the same questionable aesthetic features that Californians or New Yorkers might notice in the very same, named-for-the-planets, plastichrome-adorned American cars.
If the argument is about pollution or using less gasoline, then we must remember that American cars are subject to the same laws, and are no dirtier and no more thirsty. Yes, some of the American hybrids use more fuel per mile than some non-hybrid imports with smaller engines and one battery, but at least they tried. If we want to legislate that car makers should only be selling clean and efficient vehicles, then the same laws will affect Pontiac and Audi and Kia alike.
So where is this argument going? It’s hard to say, because I’m a rambling old fart. So let’s get back to the three original questions and my personal answers.
Q: Do the big three deserve to be bailed out?
A: Only if it would cost Americans more money to let them fail. If not, then no bailout, bye-bye..
Q: What would be the consequences of letting them cease operations and closing their doors?
A: We would have to buy “foreign” cars, but those foreign cars would likely be made in America by Americans, who were members of the American Trades Union, and the car’s badge may say Hyundai or Subaru.
Q: If the government offered to save them, but set terms dictating what they should and should not manufacture, is that too much government control for private industry, or does the government simply become the car maker?
A: It’s not the American way to tell someone what they can and cannot do in business. We lost AMC and many other car makers such as Studebaker, Kaiser etc., so why not these three?
Conclusion. If Canada and Mexico can have all the cars they want but have no National brands, then so could we, and the big-three are asking for billions on top of the twenty-five billion dollars we have recently given them. It may be throwing money away to try to save them, and it may not make any difference, because they are not showing much promise of doing anything differently.