Why is the federal government providing $25 billion dollars to an American industry that has been on the brink of bankruptcy for years? Does no one in Congress understand the concept of capitalism? If an entire industry is going under it is because there is not a demand for their products. If GM, Ford and Chrysler can’t compete on the global market, they need to stop making cars or increase efficiency, not borrow money to cover the discrepancy between supply and demand. This $25 billion amounts to nothing more than dead weight loss. Now, the manufacturers will have to replace that loss in addition to getting their supply and demand curves back in line.
Although I have not been briefed on the economic forecast for the “Detroit 3,” I do know that people are not buying cars they days. This means manufacturing cars is ill advised and cutting back production is the answer. Unfortunately, this might mean people will lose their jobs but it does not make sense to continue pumping money into an industry that is not taking measures to operate in accordance with the demands associated with their consumer market.
If they are going out of business, they need to go to a bank or they need to close their doors. That’s what capitalism is all about. It is inappropriate for the Federal Government to “loan” money to whoever asks. What happens if the auto manufacturers go out of business? How will the American people get their $25 billion back? The answer, if we are concerned with helping the American auto industry, is finding a way to stimulate the economy so that people can buy cars, not giving businesses money to make a product no one can buy!
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