A first impression of the auto industry’s plea for a bailout may be that it is just ridiculous. One might get a sense that the automakers are whining “but President Bush, you gave all your banking buddies government money, can’t we get some. PLEEEASE!” And as offended as we are by corporate welfare (an institutional structure with a long and egregious history in American “free market” economics) this situation demands a little more attention than one might originally perceive. Firstly, Corporate Welfare is a fundamental flaw in our “Democratic” society. It consists of socializing the costs of major corporations while privatizing the profits that those companies earn (it basically amounts to McDonalds workers and truck drivers paying General Motor’s executives’ bonuses).
The irony of the situation is that these same executives are most likely to complain about socialism. While what they are really complaining about is not that government money is going to private use, but that it is not going to their private use. So when the auto industry asks for a bailout, naturally we should all be at least skeptical, if not justifiably outraged.
Secondly, this is not a simple situation. The Nation reports that if the auto industry were to collapse, an estimated three million jobs would be lost. The socio-economic catastrophe this would cause is hard to imagine. Of course the poor will feel it first, jobs lost would include factory workers, sales forces, managers etc., then, eventually -when enough of their investments fail- the super-rich (the economic top 1 percent of Americans) might have to start selling off their second yachts. The latter of these two should be our primary concern.
Thirdly, some environmentalists are concerned about whether the GM engineered, energy-efficient Chevy Volt will being released if the auto industry collapses. If the collapse is not stopped, then this energy-efficient car will never make it to market.
Lastly, it is interesting to watch Paulson react to these crises. The former Goldman Saachs executive seemed to have no problem trying to give $700 billion to his friends in the financial industry (while Goldman Saachs executives are reported as still having received 7 billion British pounds in salaries and bonuses). Not surprisingly now that there are working class jobs on the line he is ready to put his foot down and say “no government money for you.”
So there are a lot of things going on here. Do we care about our precious, diluted notions of “free markets”; how should our government make sure that tax money does not go from the poor to the rich; and what will happen if three million Americans lose their jobs. There exists here a complex set of problems that we are faced with, and we need to let our congress-people know what we want them to do. If we don’t inform ourselves on these issues and express ourselves to our legislators, you know that our friends, the K-street lobbyists will.
Nate is a student at West Chester University. He can be reached at NC611367@wcupa.edu