Here's a story that describes the effects of the near demise of the auto industry. It gives you a sense of just how many people are affected as the big three, especially Chrysler and GM, have gone through their big contraction.
I don't want the government running big businesses more than anybody else. I have often joked that the government is incapable of many of the conspiracies some people level against it because it can't even correctly administer the military's student loan repayment program.
That said, a complete failure of one of the country's auto giants would affect far more than the people directly employed by the factories. I think this is instinctively comprehended by people in places like Ohio and Indiana, where so many other businesses depend on the auto industry not only to employ their people, but also to buy things from other factories, as they used to say, if Detroit sneezed Ohio caught a cold.
Here's where it gets even more complicated: There are suppliers to the "big three," and suppliers to the suppliers, and companies who make parts for the suppliers to the suppliers, and companies who make machines who make parts for the suppliers to the suppliers and ... I could go on, but you get the idea. I didn't even mention the dealerships scattered across the country, and the parts stores that sell parts to their service departments. Those examples stay within the auto businesses.
Dare I continue?
Then, you have the communities losing tax revenue and laying off employees. Then, United Ways and other charitable organizations lose contributions that allow them to help the people who lost their jobs. Eventually, even the United Way people lose their jobs because there's no money to pay them.
That's the sort of thing the story tells us about.
Should the government bail out private industry? I don't know. I hope the government bailouts can stave off the worst of the effects, and the taxpayers can recoup some of the money we have invested.
I think it's hard for an elected official to do nothing, even when many people say they want to let GM and Chrysler fail. That may be even worse then watching Congress negotiate a new contract with the UAW. (Now that I think of it, those hearings might be really fun!)
For many years, the corporations and their workers paid taxes to keep the government running. With this program, it's just the opposite.
I admire the leadership at Ford for finding a way to negotiate the tough times without begging for bailout money. I suspect it will probably emerge from this mess the strongest of the three companies, if only because they won't have to repay some eleventy-billion dollars in loans.
(Now that I have wasted all these words saying the same things as the story to which I linked said much more eloquently, go read it!)
2 comments:
The federal government, as with other areas of the economy (banks) should have allowed GM and Chrysler to be sold ot fold. The workers should have been given re-training and unemployment. Capital should have been invested in former GM and Chrysler cities and communities to re-tool factories for different products. It is the workers and communities of GM and Chrysler, not the corporations or the auto industry, that should have been the focus of economic recoverty, just as direct payments and credit to individuals, not always processed through banks, in productive terms, is a lot better for the economy.
It is dissappointing to see top business managers and the group of mid-level managers not being swept completely aside for a new, or at least shook up and changed, group of business (and union) managers.
The economy now has a financial system that failed to work in distributing capital and can fail again as miserably. The economy has the same excess capacity in the auto industry, which can cause the same type of failure now being experienced in the industry in the not so distanst future.
JCarp
Sorry about those typos.
JCarp
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