Why should we bail out the American auto industry, since the industry has clearly made wrong choices? The auto industry wants corporate welfare, because the industry claims it needs low interest rate loans from the American government to retool manufacturing plants to produce smaller cars. Haven’t environmentalists been arguing for smaller and more alternative/fuel efficient cars for a long time? These companies shouldn’t be bailed out. In this case, nature should be allowed to run its course. There are several new progressive car companies, which are starting to offer smaller fuel efficient and electric cars. These companies are early adopters, and these new automakers should be rewarded for taking advantage of markets that companies like GM have denied existing for some time. Furthermore, we can be using this money for education and environmental initiatives. From the Washington Post, United States:
General Motors chief executive G. Richard Wagoner Jr. has been selling cars for a long time, but his pitch today in Washington will be one of his most urgent. He will try to convince lawmakers that the country’s homegrown automakers deserve help from the government as they prepare to build more hybrids and other fuel-efficient cars for a radically different market.
Wagoner is scheduled to address a Senate energy summit today. In addition to the loans, he is expected to ask lawmakers to approve new drilling, streamline emissions regulations and subsidize alternative-fuel development, according to those familiar with Wagoner’s remarks.
He and other Detroit executives wrap up a week of lobbying Washington at a time when the landscape of the U.S. auto industry is far different from three decades ago and even a few years ago.
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The problem is that the import plants in the United States are not very covertly financed at a loss by their national governments to avoid Congressional threats on import bans. If the Big Three die out, the Imports will close their plants and export cars here from overseas or Mexico. They did the same thing in Britain. Therefore, if Japan funds Honda, then GM must look to the Feds for aid. Further, other than the big US three, none of the imports have the retirement legacy burdens. Finally, the Big Three tried building small cars in the USA from late 1976 until the early 1990s. People hated them, and the Japanese started building large cars, starting with Lexus. Detroit followed. The subsidies The Big Three are asking for are to instal new production equipment at old plants and to design smaller cars with new materials such as carbon filament fibers, and later with carbon nanotube thin sheet, while still making them meet US safety standards. This would be highly risky even for the Import firms, much less the Big Three due to the greater lawsuit threat environment here. GM and Ford do make hile mileage cars overseas, but they have to redesign them for US Govt standards and add 300 more pounds of safety equipment to them.