Should We Bailout General Motors, Ford and Chrysler? Or Let Them Go Bust!

You must have heard by now. The government is bailing out the financial institutions and now pushing the bail out of the Detroit Big Three; General Motors, Ford and Chrysler.

The statement has been made, “THEY ARE TOO BIG TO LET FAIL”. It’s true; these companies employ millions of people, and about 10% of all American businesses are tied to the Auto Industry. Think about it, dealerships, used car lots, insurance, car repair, auto parts, custom accessories, the list goes on. If the Big Three went bust, it could throw this major economic recession, into the greatest depression we have ever seen. It is estimated that at least another 2.5 to 3 million more people will loose their jobs if these companies were “permitted” to fail. But, should Congress rush to bailout these Big Companies just because they are Mega Employers? There definitely is some logic to this argument. But is this the only, or even main reason, President-elect Obama and congress are in such a haste?

I don’t think so. Let’s look at the situation. Why have these companies been closing factories all over the United States in the last several years? It can’t be the recent raise in fuel prices and the collapse of the SUV market. They have been doing this before the SUV became such a status symbol. While the Big Three are closing plants, other companies like BMW, Toyota, Hyundai, VW and Nissan have been opening new factories in the US. It’s not they have such a superior product but more so a better business model. For obvious reasons, these foreign car companies discovered that it could reduce costs if they produced their vehicles near there largest customer. If these foreign companies can do it profitably, why can’t GM, Ford and Chrysler who are based here?

In order for these companies to pull this off, they are building these factories in states like Tennessee, Alabama, Georgia and South Carolina. They are building in states where they can employ Non-Union labor. This fact alone reduces costs, and increases productivity and quality. They can pay their employees based on the merit, not the tenure or status in the Union. Production labor costs are reduced, while the workers can earn and keep more of their money. The workers don’t have to give a large percentage of their income to the Almighty Union. This is the same Union that spends millions of their dollars to sway the opinions of, or should I say buying, politicians. The same Union that tells the laborers who, or what, to vote for. The same Union that makes laborers so dependant on them by discouraging free speech, silent vote, and even individuals expanding their talents into other non-union industries.

Union laborers typically do not have a secondary education, and are skilled only in one trade. They are discouraged by the Union from doing their best, or over achieving. After all, if they do their best it will result in fewer workers. Fewer workers result in less money for the Unions. The Unions would have to raise membership dues, resulting in less take home income and more work for the laborer. As long as they are good loyal union members that are promoting membership, their pay and benefits will grow. What a vicious cycle!

I think this is the reason why the leftwing wants to bail them out so bad. They are using this economic down turn as an opportunity to appease one of their largest lobbyists. The same philosophy of social dependency, used by these lobbyists to increase their power and profitability, is exactly what the democrats and leftwing thrive on. If GM, Ford and Chrysler go into Chapter 11, it will allow them to reorganize and change their business model, in which Unions will lose, or at least have less influence. When they emerge they will be stronger and more competitive. They will produce a better, more fuel efficient product, whose value will increase demand, and thus they will expand to employ more Americans.

Don’t get me wrong, Unions did have their time and place in history. They did help end what was little more than slave labor, but that part of our history is past. Instead of protecting the laborers from big companies, they are promoting a dependency on big unions. I say, let General Motors, Ford and Chrysler reorganize. They will still need skilled workers, but on a more competitive level. Any money that should be spent in this area should be to train displaced workers in other skills.

Let me know your views by posting a comment. I will reply to defend my opinions, or admit defeat.