Autobailout Case
Essay Preview: Autobailout Case
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Different Viewpoints
Opposed: Problems related to the issue:
Large companies will not feel a sense of accountability of their actions if they are “too big to fail”. The government should not interfere in a free market system and if the government does get involved the taxpayers will lose lots of money. Labor Unions would be emboldened to extract large concessions.
Effects of problems: Companies will follow suit and expect a government handout when they run out of funds. The treasury could lose billions if the bailout does not work for the companies. Fuel efficient cars will not be produced by US automakers.
What students can do to help? They can contact lawmakers and urge them to oppose any government funded bailout.
Possible solutions:
Let GM and Chrysler go through a structured bankruptcy and take outside loans to try to keep them going while breaking the contract with the Labor Union to dramatically cut costs. Let them go out of business.
Supporters: Problems related to the issue:
Hundreds of thousands of workers would become unemployed if the companies fail. The effect of the dramatic loss of jobs would sink an already depressed economy. National security would be at risk due to the disappearance of the countrys manufacturing base. Hundreds of thousands of older people depend on pensions from GM and Chrysler also.
Effects of problems: The economy would be in depression, the government would have even less revenue than if they had given the bailout, the manufacturing base of the country would be decimated and imports would rise creating a trade deficit.
Possible solutions: Government loan to keep the companies running and save thousands of jobs. Block importation of vehicles until domestic industry builds itself up again. A bailout is necessary because the cost of keeping the Big Three operable is cheaper than the supposed hundreds of billions it would cost the economy if they failed.
What students can do to help? Students could contact their senators and urge them to support an auto bailout, they can try to inform the public on the importance of the auto industry in the United States.