Now here’s a conundrum: Do you allow the use of taxpayer dollars to bail out General Motors, Ford and Chrysler — to the tune of $25 billion?
Philosophically, the easy answer is “No.” That was also the easy answer as financial institutions had their hands out. But, as they say, the devil is in the details — in this case, the details of what happens if we do or do not pump fresh capital into the automakers.
Without help, General Motors is expected to run out of money. Its collapse would have huge ramifications, perhaps leading to the demise of the other two automakers as well, causing the loss of 3 million jobs. Don’t forget, it’s not just the manufacturing of vehicles at stake; thousands of companies that sell supplies and tens of thousands of dealerships are also at stake. The ripple effect of the failure of the Big Three automakers could be an economic tsunami.
The flip side — approving the bailout — is largely seen as a stopgap measure. Detroit is characterized as a dinosaur unable to adapt to market conditions in which Toyota, Honda, Kia and others are taking increasing shares of the market. A bailout might buy time, but would not delay the inevitable. In the free market, businesses that can’t survive should not be kept on life support at the expense of the taxpayers.
For those in Congress who must say yea or nay, it’s a terrible dilemma. The effects of the loss of the American automakers can only be speculated, but it would quite likely greatly deepen the current recession. It could even turn it into a full-scale depression as job losses trickle down to all parts of America.
But just as the $700 billion bailout of the financial industry has done little to curb economic fears, there is no guarantee that pouring money into Detroit will cause measurable improvement in the economy. Prolonging the life of a terminally ill patient is not always the best course of action.
It’s easy for the talking heads, the columnists, bloggers, editors and others who opine to speak strongly for or against a bailout, but none of them will feel any responsibility for the outcome should the demise of the domestic auto industry topple the teetering economy into another Great Depression or if another $25 billion fails to save the Big Three or prevent further losses of jobs and investment values.
These are the “tough decisions” politicians talk about. It’s a lot easier to say they need to be made than to actually make them when millions of jobs and a nation’s economy are at stake and when there is no clear indication that either course of action will be beneficial.
Damned if you do — damned if you don’t.
The only thing that will save the auto industry is if consumers have money available to buy cars, period.