Posted by: Staff | 04.08.2009

Max Flashner on the Bailout

MAX FLASHNER ’10

My name is Max Flashner and I am a junior. I have been following the status of the American auto industry bailout, and I feel that this is the exact type of situation that hinders the average American’s ability to believe in their government. The automotive industry has tried to bully the government by demanding money that it doesn’t deserve, and so far it has succeeded, thanks to government cowardice. Giving these companies bailout money would hinder the ability of average Americans to show confidence in their government. It is imperative that this bailout doesn’t pass, because allowing it to do so will be going against everything that this country stands for financially.

The first reason that I disagree with this bailout is that it would support irresponsible spending in the automotive industry. The automakers inside the United States produce more than what is demanded, creating an excess of cars. The automakers also waste money on employees. The employees at Ford make approximately 47% more than those of Honda, Toyota and Nissan. At this point in time especially, I believe that many people would be willing to take pay cuts in order to keep their job, especially with the current state of unemployment.

In addition to wasting money through spending on car creation and overpayment of personnel, American cars simply aren’t worth the price. In general, cars made in America tend to be more expensive. They have also been known in the past to have electrical and wiring issues. Non-American companies are making cars that come without the hassle and; in addition, are sold cheaper. As a consumer I am left with the question: Why should I pay to keep a company that I don’t support open, a company who refuses to make an effort to help itself?

Charles Darwin had a compelling point when he formulated his theory of evolution: that only the fittest survived. This theory directly applies to the situation of this automotive bailout. These companies are failing, proving that they are not built to survive through this economy. Why should we have to pay to keep a company in business that made irresponsible decisions? This type of action would directly contradict what Darwin was getting at. Picture this situation as a game of Monopoly: we the citizens are players in this game. The heads of the American automakers are also players. About half way through the game, the executives run out of money and the citizens must pay an additional tax to keep them open. How does that make sense? We, the tax payers, should not be left out in the cold to take care of irresponsible industries because when we run into financial instability, when have we had their financial backing? By letting the current American auto companies go under, the American government and taxpayers would provide opportunities for fledgling American companies to seize the opportunity.

One of the most obvious reasons that the American automotive industry is in need of this bailout is that it has failed to keep up with the times. It offers almost no hybrid models of any type, and the cars it sells don’t appeal to the average American’s greatest desire: fuel efficiency. The American-made cars get mediocre gas mileage at best.

In economic times like these, executives of these companies have no right to be taking any type of bonuses. In 2008, the CEO of General Motors, Rick Wagoner took a salary of $2.2 million, compared to his 2007 salary of $1.65 million. It is beyond me how a CEO of a company can live with himself having taken more money in such a difficult economic year than he did when business was profitable. This issue has a lot to do with the ability of the average American to achieve the American Dream. A large part of that dream is the ability to own one’s own business. Especially in financial times like these, when money is scarce, it is hard for a person to keep his or her business running. The message that providing a bailout to the automotive industry would be sending is that it is okay for large companies to make poor choices because the government will always be there to fix the situation. However, I have never seen the government help small companies, often referred to as the propeller that keeps the country’s economy spinning. If these small companies, owned by the average Americans, don’t get a bailout when they have done nothing wrong, why should the automotive industry be bailed out when they have? I would implore the government to revisit this situation and recognize that if anyone should be bailed out, it should be the small companies who are trying to make an honest living, not companies who are being greedy and taking advantage of their situation.

When the CEOs of the American automotive companies came to Washington D.C. for a meeting regarding the possible bailout, they all came in their own private jets. When asked if they would be willing to give them up and fly together in first-class seating, they refused. This type of selfishness is the underlying cause of the whole economic recession. I’m sure there are many people who could do these executives’ jobs much better and would be willing to do it for a lot less.

In my opinion, it is the responsibility of the United States government to handle this situation in the correct manner. The government must realize that bailing out the American automotive industry is not the correct way to solve the problem. In order to fix the situation, we must let these companies know that they have made terrible mistakes and that the average American will not be left to make up the difference. If it requires these companies going bankrupt to get the message across, so be it. There will be other auto producers, hopefully ones that make better decisions to ensure their security.

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Responses

  1. Great article! You make a great case against bailouts to the auto industry by using Darwin’s survival of the fittest theory.


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