US Automakers: to be bailed out or not?

There is a lot of debate on whether US automakers should be bailed out?For the motion believe that these automakers employ a number of people and a collapse at this point would worsen the economic situation. Against the motion says these companies are not producing cars no one wants and should be left on their own.

Here are a few resources to understand the issue:

  • House Committee on Financial Services had a hearing where academicians and automakers presented their views.
  • Mankiw points to views from Gary Becker (no) and Jeff Sachs (yes)
  • Matt Slaughter (of Dartmouth) presents his views and is against bailout (He also testifies at the House Committee on Financial Services
  • Mankiw points to huge cost differences between US and Japan automakers
  • Luis Zingales and Joshua Rauh say Chapter 11 is the best way out

8 Responses to “US Automakers: to be bailed out or not?”

  1. » US Automakers: to be bailed out or not? « Mostly Economics Says:

    […] This entry was posted on November 25, 2008 at 12:37 pm and is filed under Economics – macro, micro etc, Economist, Financial Markets/ Finance, Policy, Speech / Interviews. You can follow any responses to this entry through the RSS 2.0 … Original post […]

  2. Christian Says:

    No more handouts (bailouts)! Like the old adage… give a man a fish he will feed for a day… teach him how to fish… Same goes for economics and politics. C’mon common sense and less fancy talk. I am for what mayor Lansing from MI said on c-span on 12-04-08. The workers are always the last priority for corporate America and will be because this county is becoming a country of less values and greed.

    Ask why companies go abroad? Simple… they get more incentives than here nationally. They still pay fewer wages but these other societies have other weapons like “broken healthcare systems” that at least work, instead of having “solid healthcare systems” (solid for the shareholders) that don’t work, they impose less tariffs, handout huge tax exemptions that span for decades, etc sure it hurts their locals too and they are putting a fight too but it DEFINITELY ATTRACTS FOREIGN INVESTMENT WHICH IS WINNING THE HEARTS AND “SOULS “OF CORPORATE AMERICA/EUROPE/CHINA/JAPAN, ETC (is this right?… no but is business and business/capitalism does not have to do anything with righteousness and political correctness values… is it?). Americans have always been afraid of the word “socialism or social democracy” well this is the strength of this other countries attracting investors and letting jobs flee the US. The greed of the rich and powerful will demand their nature to sustain their quality of life… and riches… at whatever expense.

    Who in their right mind after having had so much wealth will let it go? … Nobody! They will even kill for this. How is “Corporate America” (the white elephants) survive sustain their liabilities/assets without exploiting the middle and lower classes. This is not a matter of the US only… its economics and greed… its human nature SADLY or HAPPILY FOR A FEW. Nobody wishes to spread the wealth anymore, simple said. Its all about doing more with less… and less means less employees (human resources, less costs, less overhead, which ever term you prefer to use!)

    The key to start solving this hard economic times lies in family, principles and remaining COMPETITIVE not anymore locally/Nationally…. but worldwide. Stop blaming the outsiders (other countries) start blaming the locals for only caring about themselves and their interests. It takes a man/woman to succeed… but it takes a HUMAN BEING to rise and make change and set standards and examples… we are loosing that “human” condition… and becoming more animal like (older than times… romans, greeks, Chinese dynasties etc…)


    Bailouts = slap in the face of 90% – 95% of Americans/humans, it only benefits the wealthy… pleeeeease… they will never get paid! When will “Joe the plumber” get a bailout… haha please!

    He/she who has ears… listen!

  3. Elizabeth Cunneff Says:

    As I listen to the hearings on MSNBC, it seems to me we taxpayers have a bit of leverage for a change. I would like some of the reforms to include an end to usurous practices at the dealerships and the service bays. Few people approach the purchase of a new car, or a costly repair, without trepidation if not outright fear that we will be taken advantage of by super slick sales people and obfuscated fine print in our warranty contracts, etc. I wish Christopher Dodd would speak to this. It seems that he is speaking directly to many other green and otherwise practical concerns of the public. I think we need some protections put in place, and this might be the time for it.

  4. house financial services committee Says:

    WASHINGTON — The Senate will take up the $25 billion auto bailout bill on Monday, with a procedural vote expected Wednesday to see if Democrats have enough support to overcome Republican roadblocks. Sen. Majority Leader Harry Reid said

  5. chris dodd Says:

    Hamlets, towns and cities — all across America — have Big Three dealerships. At each one a dozen or more people usually are employed. One in 10 American jobs is directly or indirectly related to the auto industry. So it is disturbing to

  6. dave Says:

    Let them burn!!! Is it the tax payers fault The big three can’t effectively manage their companies in a down market? Who didn’t see this thing coming? I say it again let them burn!! Most cars purchased in usa are made in the us, The numbers sold won’t change who cares what Companies name is on the trunk as long as it’s made by Americans!!! Those who stand to lose are the only onlys who will benefit from the bailout


    12 Dec 08 at 10:23 am

  7. WJ Dennis Says:

    Before I would approve of any auto company bail-out, I would like to see a plan for the auto company dealerships to start treating customers like human beings, not like sheep waiting to be fleeced (i.e., deceptive sales practices, hidden rebates, add-ons, etc.).

    Customers should not have to go into a dealership armed with a “Consumer Reports Auto Buyers Guide” to protect themselves from the dealer’s practices in order to buy a new or used car!
    Thank you

  8. Daniel W Says:

    I do not think that the auto industry should be bailed out. If the government bails out the auto industry, then what message does that portray about our economy? If a company cannot sell products, then get off the market to allow other companies to meet consumer demands. The consumer should have the ability to vote on the bail out. It is the American citizen, the taxpayer, that will have to pick up the tab for the auto companies. What does the taxpayer receive in return? Nothing. Honda, Nissan, and other car companies operate and produce vehicles here in America, and they are doing fine. I say that the auto industry should be allow to fail if they cannot properly manage and/or sell products. If people loose jobs, then that will give people incentive to apply at other auto companies.

    ****My last words are sell or get off the market. Bailouts kill competition and the desire to meet consumer needs.

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