Yet again the county faces another possible bailout, this time for the big three automakers in the United States. I believe that they are asking for an amount close to 25 billion dollars and have yet to provide a business plan that indicates how they plan to spend that money. The Wall Street Journal has indicated that it is actually GM and Chrysler that will be accepting funds; Ford will not be accepting the money in this case but is advocating on behalf of its competitors. The Wall Street Journal has also indicated that GM is expected to use the monies as operating income through half of next year. This brings me to my position, I am opposed to the bailout for the Big 3 and would like to know how you all feel about the bailout. I am not saying that my position is the right one but let me inform you of why i stand by my position.
First i think it is important to note that an economy performs better when the government has little interference and allows the market to decide which companies fail and which prevail. Basic macroeconomic theory explains that recessions must always reach rock bottom before they can translate into a boom period. I believe that these bailouts are simply prolonging the inevitable and that the government intervention is not allowing the economy to take its natural course. These bailouts are causing the United States national debt to increase at an exponential rate that will leave not only my generation deep in debt but very possibly my grandchildren as well. Paying down this debt will only result in a substantial increase in taxes Americans will surely face. I simply do not understand why we need to bailout auto makers for making poor investment decisions ans poor management decisions. The bailout check will only keep GM afloat it will not allow GM to become profitable; the money they collect will provide them with the means cover operating costs. In other words by mid next year GM will still have the same fundamental problems they now face.
These Big 3 automakers have dug themselves into such a deep hole. They continue to manufacture vehicles will not purchase in the long run. the American auto industry has reacted very slowly to rising demands for higher fuel efficient vehicles and the Big 3 have failed to keep their costs down compared to foreign auto makers. The United Auto Workers have played a huge role in the rising costs and the profitability of the three auto makers, through high wages, benefits, and pensions the auto workers union has eaten away any profits for these companies. How can the American auto industry compete with foreign auto makers when it costs American auto makers close to 2000 dollars more to produce each vehicle compared to foreign auto makers. The Big 3 have union contracts that pay employees 35 dollars an hour while in foreign countries employees are earning 4 dollars an hour to do the same task. I am not advocating a drastic cut in wages simply that these Auto makers renegotiate contracts with UAW so that they can cut costs, become profitable and remain a high contributor of GDP in this country. How is it that American society allows jobs to be shipped overseas but as a society we do not allow the American auto industry to do away with unions. Companies like Honda and Toyota have their manufacturing plants in the south of the United States where unions do not exist. As a result these companies are able to keep manufacturing costs low and employ many jobs with competitive wages to American auto makers.
I oppose this bailout because it does not solve the fundamental problems that the Big 3 face. I feel that bankruptcy is the best option for these auto makers to truly stay in business for the long run. First by declaring bankruptcy, it would permit the companies to shed excess labor, pension, and real estate costs. The second most important issue that must be met is the termination of all high management positions, these are the mangers that drove their companies into the ground and clearly they do not have the vision to move forward in this changing global economy. Bankruptcy is the only way that the American auto industry can restructure from the ground up and revive by creating new innovative products that American consumers will purchase. Through bankruptcy the three auto makers will be able to restructure how they operate and keep costs low. I know that many are worried about all the jobs that may be lost if this bailout is not approved but no one can provide a definitive answer of what will actually result in an open market system. For all we know foreign auto makers could further infiltrate the auto industry in the United States thus creating employment for many of those who may loose their jobs. Another basic macroeconomic principle states that in periods of recession unemployment will rise but in the long run levels will decline until we reach full employment with the exception of those that are structurally unemployed. These are the reasons for why i stand by my position and oppose the bailout for the Big 3, I welcome anyone to respond and provide feedback.
