Saturday, December 6, 2008

To bail or not to bail?

That's the question that's been creeping around the back of my head as Congressional leaders met with the heads of the "Big Three" American automakers in DC this past week.

While I'd normally only watch C-SPAN to induce sleep, I found myself attentively following the proceedings a number of times over the past several days, debating the merits of the issue back and forth in my head while keeping Jack busy and attempting (largely in vain) to actually get some productive work done.

To put it bluntly, my initial thought was to let them fail. Sounds a bit harsh I'll admit but business in a capitalist society is built on a relatively simple foundation of survival of the fittest. Ultimately, it seems the American auto companies just don't have the teeth to really contend… so why should taxpayers keep the doors of presently failing businesses open?

On principle alone, I'm still inclined to say let them go. And yet I won't. I have a vested interest in this.

Letting the Big Three go under would put quite a few people out of work, adding further fuel to a fire that's already seen it's worst flames since the year I was born, and one of the people who could potentially lose their job as a result is my wife Tami. She, like millions of others, doesn't work directly for any of the Big Three but works in one of the countless related businesses that rely heavily on the auto industry for revenue. And having grown up in an old Midwestern manufacturing town, I've seen what happens first-hand (via close friends) when an industry packs up and moves away or shuts down altogether.

Should the worst happen, the saving grace for her is that she has a skill-set and resume with which she could easily find reliable employment elsewhere, though few with quite the same perks and amenities that she's fortunate enough to enjoy with her current job.

So naturally I'm a bit conflicted. As I write this, it seems that Congress has reached a tentative deal for the time being, but who can say what good that'll do in the long run. Given how out of step these manufacturers have been, it's hard to think that we're at the start of some miraculous comeback. Should we even bother?

It's been argued that it would be unfair to bail out the auto industry when Congress did just that on the banking/investment industry's behalf barely two months ago. After all, the Big Three is only asking for $34 billion, a mere fraction of the $700+ billion we doled out to the collective crumbling edifice that is Wall Street.

Frankly, it's an apples and oranges comparison IMO. Propping up a number of ailing manufacturing companies is a drop in the bucket when compared to the potential total halt of cash and credit through our economy as a whole. Let the banks fail and then see how easy it'd be for *anyone* to finance a home or a college education much less a new or used car.

I hate to be a pessimist, and for the sake of Tami's job (and the jobs of everyone else that relies on the industry) I hope I'm wrong but I can't help but think that we're just putting a Band-Aid on a major knife wound. One can hope that something positive comes out of this tentative auto bailout, but it's difficult sometimes to think that when considering the less-than-impressive resume the industry has had. I mean, people have raved about their old Toyota or their new Accord for years now. When's the last time you heard that about a Mustang or a Cavalier?

- M

1 comment:

EvaSoul said...

First I'll say I wish your wife and you all the best. Thanks for opening this up for discussion. I can relate to your article on so many levels. I'm in Detroit and that's all anyone can think about these days. There's no right answer, and I don't know if going in either direction will be the solution. My grandmother keeps telling me to keep my monies close and hold tight, because there's no telling how these next few years will pan out. That's about the only truth. My biggest concern and my biggest question is with this bailout money will they begin to bring people back to work? Or are we just giving these highly paid execs more money to keep operating without consideration for anyone else. I also feel they've known this was coming for a long time - why weren't they thinking about this for the last few years. I know I for one wouldn't miss a few less commercials if they were to decide to cut their ridiculous marketing budgets and put that back into the operations. I've closed my eyes and am holding on for the bumpy ride I guess. In the end, if certain individuals wanted to "help out" the financial industry before the ending of a particular term and didn't think anyone else would notice the hand-out and wouldn't come asking also, well you know, you can't stop now. Funny enough the auto execs were giving alot of slack for their method of transportation to Washington the first time, but no one has taken responsibility for the ridiculous relaxing vacations taken by some of the financial beneficiaries. We'll see won't we. Nothing changes the fact that it's the regular people that are suffering and the ones in desperate need of help, since they think for the holidays and to improve the market they only need only to build our "confidence" to get us spending again. I laugh, spend what? What should feel confident about? Where's our bailout, where do we turn for help? Lord knows anyone who's dealt with these credit card companies in the last few years will tell you how ridiculous and extreme they've become. All we get is that we'll pay off our debt in maybe the next 30 years. Oh, perhaps mortgage our homes to pay off that debt, oh but we'll lose that sole means of security, so really we don't have anything and we shouldn't of bought cars, homes or anything else. I don't think there's and ending Maybe someone has the answers...