“We’re The Big Three. We Don’t Need to Compete”
I was trying to stay away from the financial/auto bailout–I really was. However, I just couldn’t resist any longer after seeing a friend of mine battle it out through Facebook comments with his high school teacher. I hope that maybe I can convince just one more person out there that we have some issues in this country that need to be taken care of…
The graphic pretty much sums it up–American cars are inferior and because we won’t by them, the government stepped in to save the companies. What right does the government have to give these failing companies MY money? Who made the government an expert at running an auto company? If a company fails to perform, it should go out of business, plain and simple. If you (as an individual) are not good at something, do you just keep going on failing at it or do you try to find something else that perhaps you can do better? I am terrible at designing an aesthetically pleasing website so I stay way from the aesthetics of web design at let someone else do that. Rather, I will find something I am good at such as the mechanics and behind-the-scenes aspects of web sites. Don’t give these companies money to keep doing something they suck at! If another company can do it better, domestic OR foreign, then they should do it and we should free up our labor force to do something else that they can do better.
“In a truly free economy, profit and loss is a market’s objective measure of the value a business is creating in society” (Koch 102).
In other words, if your business is losing money it is because people do not see the value in what you do!
And another thing! Although this post is about the auto bailout, why is it that these employees get so angry when they are asked to take a pay cut for a job where they are making twice what they should be in the first place. Take a pay cut and keep making some money or don’t take a pay cut and lose your job as the company goes under. You can’t keep asking for more money when the company is doing well but not go the opposite way when the company is doing poorly. You can’t have it both ways! I guess I shall return from this sidebar and get back to the point of this post, the bailout. Time to switch gears from the auto industry to the financial sector.
Bailing out a failing company is just a bad idea. Why incentivize bad behavior and poor decision making? How about AIG. Some AIG executives makes some really bad decisions and the company starts plummeting. Uncle Sam steps in and tosses some cash their way to keep them afloat. AIG accepts the money and proceeds to hand out huge bonuses to top executives. Wait, what? The very executives that drove the company into the ground are getting bonuses for doing so? I think I’m going to open up a new business. My only purpose would be to get hired into a company, run it into bankruptcy, collect a huge bonus, and dodge out of town. But I digress… Because of this moronic spending, Uncle Sam stepped in and put a few criteria on the money AIG received (one criteria dealt with the handing out of these huge bonuses). As a result, Robert Benmosche, C.E.O of AIG, threatened to quit and stated that he could not “retain top talent” if he did not have control over compensation. Are you kidding me? What “top talent?” These people drove this company into the ground! You have no “top talent!” It boggles my mind to think that anyone believes their executives are “top talent” when they make such poor decisions that they can literally ruin an entire company.
This post has been more of an incoherent rant than I would have liked but this stuff just irritates me and I wanted to get my thoughts out there somewhere (you know, like a website that nobody will read). This post won’t change anything and I realize that. All I can hope is that someone will read this and at least start asking questions about how the government is spending tax dollars.
Koch, Charles. (2007). The Science of success. John Wiley & Sons Inc.
Tags: AIG, bailout, Chrysler, GM
This entry was posted on Saturday, April 24th, 2010 at 11:26 pm and is filed under Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
6 Responses to ““We’re The Big Three. We Don’t Need to Compete””
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April 25th, 2010 at 12:56 am
A few comment if I may.
The big three is not entirely accurate, Ford did not receive any bailout money, and has been able to keep their shit together for the most part, and is still doing relatively well.
GM and Chrysler on the other hand, yes were bailed out. However, GM has already started paying much of it back, and many expect the government will actually make money on the investment. Chrysler was just bought out/ partnered with Fiat. If they had not, they would of fail despite any bail outs. The government, if I remember correctly would not give them any more money useless the deal went through with Fiat, because at that point Chrysler was a waste of time and money. Both GM and Chrysler got in that position by not perparing for our new ideal American car, which is getting smaller, and more fuel efficient, and not to mention there quality was crap yeah. No disagreement there. Also, Both GM and Chrysler in the late 80s and 90s started this stupid idea where they would make the same car in different lines of their own company, making them pointless, thus the reason why GM just cut out half of its brands.
However, our car companies were not the only ones that received government funding. Other international companies did as well, just not form our government, from their own. Toyota, the largest car company in the world got a large bail out from the Japanese government.
April 25th, 2010 at 12:56 am
I think a large problem is that if we had let GM and Chrysler go, no one would really have been in a position to buy the companies. Leaving a massive gap in our economy, esp. in Michigan. GM had a hard enough time attempting to sell off some of its extra brands, mostly unsuccessfully, and Fiat was very skeptical about picking up Chrysler.
However, If we had let them fail, they would not have disappeared. they would for a few months, and then reopen, after cutting all their over paid workers, benefits, and more of their brands; all under new management. This would be nice, if it did not completely wreck havoc on our economy in the time being, I can’t even imagine what the unemployment would jump to in this state.
In addition, I think that if the government had let the companies fail, we would instead be complaining about that. How our government is suppose to look out for its citizens, depending on your political alignment granted. In conclusion, while I don’t really like seeing my government in our business, literally, I think in this case it was necessary, the consequences I think were to high to leave it be. However this is just my opinion and that’s what you get for getting into the car company bail out discussion.
April 25th, 2010 at 12:56 am
Some very nice points made Caleb. First off, my apologies for any reference to Ford. Yes the image included does mention for and you are correct in that they did not partake in the doling out of bailout funds. Also, GM has indeed started “paying back” their loan a full 5 years ahead of schedule… by using other TARP funds to pay off the loan–they aren’t paying the loan back from profits, they are paying back the government loan with another government loan.
I will agree that GM and Chrysler going under would have caused issues for our economy and a great deal of innocent people would be affected. This is where it gets hard to defend my point–punish thousands of hard workers (not the janitor making $140,000, but the office clerk working 60 hrs a week making $20,000) because upper management messed up. But just as you said, no one would really have been in a position to buy the companies. If nobody else is willing to take the risk, there is a reason for it. Don’t take my money and blow it on a bad deal.
I know I’m not touching on all of your points and you make some good ones. I did want to mention your comment about how if we had let them fail people would be complaining instead about how “our government is suppose to look out for its citizens” which is at the root of this and every other problem people end up fighting about. Define “look out for.” To one person the government looking out for it’s citizens means keeping us safe from foreign and domestic threats. The another person it is government forcing businesses to limit the amount of salt added to our food to make us healthier. I, for one, am not ok with the government taking that role of “looking out” for us. If I want to eat a big basket of fries with tons of salt, I should be able to. This is, after all, a free country, is it not?
Overall, I think my biggest gripe is the dangerous path this puts us on as a country as a whole. When a business fails, we bail them out. When people stop paying their mortgage, we pay it for them. The government is giving away cell phones too. Where is the accountability? I went to college, earned good grades, and found a good job so I could do well for myself. I don’t need anything handed to me. What is the point in doing all of that and actually hard working for something if the government will just take money from those that did work hard and give it to those that didn’t?
America has an entitlement problem–too many people feel they are entitled to things that they are not. If you want something, work for it. Don’t stand there with your hand out waiting to be bailed out. I’m tired of picking up other people’s slack.
April 25th, 2010 at 1:01 am
As a side note, Caleb, thanks for the comments. I always look forward to our discussion that will inevitably ensue when I post this type of rant.
April 25th, 2010 at 2:17 pm
The government bailing everyone out from their bad decisions most likely won’t help them learn from their mistakes. I agree when you say there is no accountability. It’s like trying to preserve an endangered species. The fittest will survive, and the weak are on their way out for a reason. If you can’t adapt on your own, you won’t make it.
April 25th, 2010 at 2:49 pm
However, when it comes to the car industry, they are learning from their mistakes. Chrysler is completely redoing their entire line, and mixing it up with Fiat. GM, has cut the fat from its lines, and is starting to produce higher quality cars again. The government gave them this money, and expects it back. So the only way that the Government would have done this is if the car companies had made radical changes to its management, and its car lines.
I am not arguing for Wall Street, that is completely different I think. I think however that the car companies were in need of it, and I think Bush was smart to do what he did. The government did not give them the money with out stipulations, and I think we would vastly regretted not have doing it.