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Automaker Bailouts
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Automakers are seeking $50 billion in low-interest government loans.
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Government Bailouts for Automakers - Time to bail?
BY CHARLES KROME
Okay, I can no longer resist weighing in on whether the government should help out U.S. automakers.
The Big (?) 3 are trying to drum up support for some $50 billion in low-interest government loans. They need the money, they say, to finance a quick switch to producing more fuel-efficient vehicles ... they’ve got all this great technology, etc., they just need some help getting it to market.
| Plus, the U.S. auto market is not a free market in which all the manufacturers are competing on a level playing field. I mean, it’s not like Toyota doesn’t get help from Japan.
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I say give it to them. Beyond all the usual reasons about how important the auto industry is to the U.S. economy, here are a couple of things to keep in mind.
Yes, it sounds naïve on my part, but these would be loans. The government and the taxpayers, in theory, would get paid back. And the money is going to companies that are truly struggling. So this is different from, say, government subsidies to oil companies that are already racking up huge profits.
Plus, the U.S. auto market is not a free market in which all the manufacturers are competing on a level playing field. I mean, it’s not like Toyota doesn’t get help from Japan.
On the same point, the U.S. automakers have to wade through a river of federal regulations before they even get to the market. I’m not saying this is necessarily bad. But I am saying that if the government wants the U.S. auto industry to operate in a certain way, I don’t see a problem with it financially helping to achieve its own goals.
Finally, the auto business is kind of the baseball of the U.S. economy. Neither exactly started here, but we made them both “our game.” Eventually, manufacturing cars and trucks dominated the country’s business sector the same way baseball dominated U.S. sports.
Then, the same way sports like football and, ironically, NASCAR, surpassed baseball in popularity, other industries became more “popular” than the auto industry. And to a significant extent, both baseball and auto making brought their woes unto themselves.
But did you know that baseball gets government protection through a special anti-trust exemption that prevents the formation of competing leagues?
Now, I’m not calling for anything like that in the auto industry. But some federal support for our other national pastime is a good idea.
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