# Rescuing the automakers: A good thing or a waste of money? **URL:** \ **Category:** Great Debates\ **Created:** [November 16, 2008, 10:51pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046 "2008-11-16T22:51:55Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Euphonious\_Polemic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/euphonious_polemic/32/3002_2.png) [@Euphonious\_Polemic](https://boards.straightdope.com/u/Euphonious_Polemic)\ **Post date:** [November 18, 2008, 7:01pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/61 "2008-11-18T19:01:43Z")
> [@ralph124c](#): > > man, if i had the spare cash i would buy FORD-lock, stock and barrel! Fire 80% of the senior management, repudiate the UAW contract, and make good cars! Next on _How to Do It_, we’ll show you how to reconcile the Russians and the Chinese, and how to rid the world of all known diseases. but first, here’s Jackie to show you how to play the flute. “Well, you just blow in one end, and run your fingers up and down the outside” Thanks Jackie, that’s great! ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 18, 2008, 7:29pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/62 "2008-11-18T19:29:38Z")
On my way into work today I heard some congresscritter on the radio proposing propping them up not with loans or investments but by stimulating car purchases with tax breaks? Anybody have thoughts about how that would work? Could it be combined with a “feebate” program which coupled the magnitude of the cut with the efficiency of the vehicle to eventually be segued into a fee imposed upon less efficent vehicle purchases as well (at that point being theoretically budget neutral)? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [November 18, 2008, 8:04pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/63 "2008-11-18T20:04:25Z")
> [@DSeid](#): > > On my way into work today I heard some congresscritter on the radio proposing propping them up not with loans or investments but by stimulating car purchases with tax breaks? Anybody have thoughts about how that would work? Could it be combined with a “feebate” program which coupled the magnitude of the cut with the efficiency of the vehicle to eventually be segued into a fee imposed upon less efficent vehicle purchases as well (at that point being theoretically budget neutral)? This was my point: trade in your SUV for a new GM/FORD/Chrysler fuel efficient vehicle. The trade-ins get scrapped, and the glut of new cars is gone. GM/FORD/Chrysler have cash-problem solved. untill the NEXT recession. ---
**Author:** ![Merkwurdigliebe](https://avatars.discourse-cdn.com/v4/letter/m/74df32/32.png) [@Merkwurdigliebe](https://boards.straightdope.com/u/Merkwurdigliebe)\ **Post date:** [November 18, 2008, 8:12pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/64 "2008-11-18T20:12:52Z")
Does anyone here know what the deal would look like? I mean would we (the people) get some kind of equity out of this or is this a handout? Because if it’s a handout I’d say NO. If we got some kind of equity out of it then I could understand. ---
**Author:** ![Keweenaw](https://avatars.discourse-cdn.com/v4/letter/k/da6949/32.png) [@Keweenaw](https://boards.straightdope.com/u/Keweenaw)\ **Post date:** [November 19, 2008, 1:03am UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/65 "2008-11-19T01:03:40Z")
> [@Sam\_Stone](#): > > Toyota and Nissan and other auto manufacturers with U.S. plants are doing fine. Not by a long shot. [Nissan Says Second-Half Profit Will Fall to `Zero’](http://www.bloomberg.com/apps/news?pid=20601087&sid=aq9HDJ0wVP9I&refer=home) [October Auto Sales: Nissan sales plunge](http://www.forbes.com/feeds/ap/2008/11/03/ap5640629.html) [Toyota Cuts Profit Forecast 56%](http://www.bloomberg.com/apps/news?pid=20601101&sid=aXP94fKJOMAk&refer=japan) [Toyota’s quarterly profit drops 69 percent](http://www.bizjournals.com/cincinnati/stories/2008/11/03/daily46.html) Domestic automakers aren’t the only ones feeling the pain, or the only ones asking for help. - [Honda is begging for help from their government to intercede on the yen value.](http://www.reuters.com/article/usDollarRpt/idUST290920081106) > [@Merkwurdigliebe](#): > > Does anyone here know what the deal would look like? I mean would we (the people) get some kind of equity out of this or is this a handout? Because if it’s a handout I’d say NO. If we got some kind of equity out of it then I could understand. It’s a low interest bridge loan to keep operating while they restructure. Likely with some very aggressive requirements from the government. > [@mks57](#): > > Nobody said that people were going to stop buying cars and trucks. They just may end up buying them from someone besides GM. They’ll stop if they don’t have jobs. Or access to credit for that matter. The reason for the crisis is the loss of access to credit for buyers, suppliers dealers and the automakers themselves. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [November 19, 2008, 1:53am UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/66 "2008-11-19T01:53:19Z")
> [@Keweenaw](#): > > Not by a long shot. And German Opel (GM owned) is about to go under, and have asked for 1 billion Euros from the German state. Swedish Volvo (Ford) and Saab (GM) are close to bankruptcy also. Volvo just announced it’s going to lay off about 25% of the workforce. French automakers Renault & Citroen are also hurting – although nowhere near the US automakers. German Mercedes is also scaling back. And I bet Fiat is just close to bankruptcy again. But they always are, so that’s back to normal. The companies making it through the crisis should be able to profit nicely from fewer competitors once the market picks up again. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [November 19, 2008, 3:42am UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/67 "2008-11-19T03:42:26Z")
Has anyone seen the full-page newspaper ads that GM’s put out? (At least, it was in one of my local major city paper… twice!) It’s basically a lot of dire warnings (American car output reduced to nothing!) and begging for people to let Congress bail them out. It’s got an accompanying website (whose URL I’ve forgotten). Do they really think this’ll sway enough constituents to make a difference? I can’t imagine it will, but they must be either confident or desperate to have spent their RAPIDLY DIMINISHING funds to buy the ads and make the website… ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 19, 2008, 4:13am UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/68 "2008-11-19T04:13:29Z")
Business Week article says the Japanese Government paid 100 percent of the cost of development of the battery and hybrid development for the Prius. So they do help their industries out . ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 19, 2008, 3:37pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/69 "2008-11-19T15:37:55Z")
We have sent our manufacturing bases abroad,mostly India and China. During WW2 ,the auto industries changed over to making tanks,planes and weapons. If we mothball our factories do we make ourselves vulnerable ? ---
**Author:** ![Palo\_Verde](https://avatars.discourse-cdn.com/v4/letter/p/65b543/32.png) [@Palo\_Verde](https://boards.straightdope.com/u/Palo_Verde)\ **Post date:** [November 19, 2008, 4:11pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/70 "2008-11-19T16:11:38Z")
While going to Congress to beg for money, all CEOs of the big 3 automakers fly on their privates jet. That costs about $20,000 each for the flight. It’s a drop in the bucket, but when asking the public to shell out 25 billion, I think it would be nice to show a little humility. Fod alone has layed of 51,000 workers, yet they have 8 private jets. They says they’ve cut expenses to the bone, but the CEO of Ford lives in Seattle and commutes in his private jet every week to work in Detroit. Do these guys just not get it? > **[Big Three CEOs Flew Private Jets to Plead for Public Funds](https://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1)** > > The CEOs of Ford, GM, and Chrysler all flew private luxury coporate jets to Capitol Hill to plead before Congress for taxpayer bailout money saying their industry is burning though cash. ---
**Author:** ![Troy\_McClure\_SF](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/troy_mcclure_sf/32/4150_2.png) [@Troy\_McClure\_SF](https://boards.straightdope.com/u/Troy_McClure_SF)\ **Post date:** [November 19, 2008, 4:19pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/71 "2008-11-19T16:19:37Z")
> [@ralph124c](#): > > This was my point: trade in your SUV for a new GM/FORD/Chrysler fuel efficient vehicle. The trade-ins get scrapped, and the glut of new cars is gone. GM/FORD/Chrysler have cash Step 1: Give out new, expensive cars for old, unsellable cars Step 2: ??? Step 3: Profit! Seriously, and do forgive my ignorance, but I don’t see where the first sentences result in the last one. What are the auto companies going to do with a bunch of used, non-hybrid SUVs? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2008, 5:09pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/72 "2008-11-19T17:09:28Z")
> [@John\_Mace](#): > > Besides, it’s a terrible idea to bail these guys out. Let them go bankrupt-- someone will buy the assets, get rid of the management and run the company better. The alternatives aren’t a bailout or collapse. A chapter 11 bankruptcy would allow GM to restructure to become profitable again. That might mean dumping some dealerships, renegotiating labor agreements, etc., but it would be better than closing down shop. I think there should also be a change in management at GM, since from reading the Times articles their CEO has totally lost touch with reality. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [November 19, 2008, 5:29pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/73 "2008-11-19T17:29:07Z")
> [@gonzomax](#): > > I am not arguing that auto companies are involved in child labor do. I am arguing that if allowed ,some corporations will do that. An example is our tennis shoe manufacturers. But moving our manufacturing to Mexico involved low wages and pollution. I worked directly with a manufacturer who took advantage of that. It was an auto supplier company. So why you mention Child Labours when you know it does not exist in the Auto industries, except to try to make disgusting implications about all people except North Americans? Of course wage are lower in emerging markets, living is cheaper too, and there is not the same efficiencies. You are just seeking protectionist Mercatilism arguments, and smearing poorer countries with some bad practices. Pollution, the big producers done by multinationals are known to be standard setting in emerging markets. ---
**Author:** ![Palo\_Verde](https://avatars.discourse-cdn.com/v4/letter/p/65b543/32.png) [@Palo\_Verde](https://boards.straightdope.com/u/Palo_Verde)\ **Post date:** [November 19, 2008, 7:20pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/74 "2008-11-19T19:20:02Z")
More hearings today. Congress seems quite sceptical about the wisdom of bailing them out. “Maybe you can tell us what you’re actually going to do to sell cars people want,” [Gary Ackerman, D-NY] said. “Somebody heard that we’re giving out free money in Washington. They’re showing up from all over the place. But you don’t want to put your last tourniquet on a dead guy.” ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 19, 2008, 8:26pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/75 "2008-11-19T20:26:30Z")
> [@Ramira](#): > > So why you mention Child Labours when you know it does not exist in the Auto industries, except to try to make disgusting implications about all people except North Americans? > > Of course wage are lower in emerging markets, living is cheaper too, and there is not the same efficiencies. You are just seeking protectionist Mercatilism arguments, and smearing poorer countries with some bad practices. Pollution, the big producers done by multinationals are known to be standard setting in emerging markets. Because we compete with companies that do. NAFTA was supposed to level the playing field. I guess you can argue that it has since our wages are dropping to meet the rest of the world. The lack of pollution control is a known. It is not a smear. I worked on a GM line a few years ago that moved to Mexico. They built a new plant. Starting from ground zero building a plant will give you the cheapest chance to include pollution controls. They ignored them totally. They had no intention of wasting money on that. They are not trying to be good citizens and look toward the future. They are trying to make money as fast and furiously as possible. They will go from country to country shopping for the cheapest deal.They will poison if it makes money. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [November 19, 2008, 9:19pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/76 "2008-11-19T21:19:11Z")
> [@Troy\_McClure\_SF](#): > > Seriously, and do forgive my ignorance, but I don’t see where the first sentences result in the last one. What are the auto companies going to do with a bunch of used, non-hybrid SUVs? Put 'em in the chipper and recycle the bits. It’s not like it was a free car to the consumer; they get a generous rebate from the government, but they still have to put up some cash. The car makers get needed cash from sales they would not otherwise have made. The old cars are not part of the equation; just grind 'em and recycle the remains. ---
**Author:** ![maladroit](https://avatars.discourse-cdn.com/v4/letter/m/f475e1/32.png) [@maladroit](https://boards.straightdope.com/u/maladroit)\ **Post date:** [November 19, 2008, 9:34pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/77 "2008-11-19T21:34:14Z")
It’s not just the Big Three that will be impacted. All the people that work at all the fabricating plants that make all the little components of cars will be out of work too, then all the service industries these unemployed used to patronise. No one will be unaffected. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [November 19, 2008, 9:39pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/78 "2008-11-19T21:39:59Z")
> [@autz](#): > > I’ve got to say I usually agree with the Democrats, but I think they are wrong on this issue. Businesses that can’t compete deserve to go out of business. Well, I’ve come up with two options: 1. We bail out Ford, Chrysler, and GM infusing the capital that is needed for them to survive and to design the cars for the future. 2. We let the Big Three collapse and the put the government in the business of desiging and selling cars of the future. Unlike most of the posters here, I live in Detroit and I am probably a bit biased. I think its very important that the U.S has its own auto industry - in some form - that doesn’t depend on the innovation of other countries. - Honesty P.S. I prefer option #2. 🙂 ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [November 19, 2008, 9:42pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/79 "2008-11-19T21:42:22Z")
> [@Honesty](#): > > 1. We bail out Ford, Chrysler, and GM infusing the capital that is needed for them to survive and to design the cars for the future. Do you have a figure in mind that will preclude them from coming back every six months and asking for more? ---
**Author:** ![Palo\_Verde](https://avatars.discourse-cdn.com/v4/letter/p/65b543/32.png) [@Palo\_Verde](https://boards.straightdope.com/u/Palo_Verde)\ **Post date:** [November 19, 2008, 9:42pm UTC](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046/80 "2008-11-19T21:42:55Z")
How about option 3? 1. We let another American car company naturally emerge though its production of superior cars [Previous page](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046.md?page=3) [Next page](https://boards.straightdope.com/t/rescuing-the-automakers-a-good-thing-or-a-waste-of-money/473046.md?page=5)