Twitter
Facebook
Reddit
Digg
Tell us what you think!Send a letter to the editor about this or any other article in The Maine Campus.
Earlier this semester, I wrote an article calling for the disembowelment of America’s major financial institutions. My main point was that we should not be rewarding the “multi-billion dollar companies who so thoroughly screwed the American people,” but I also called our major banks “bloated,” and I might have said something to the effect that the bailout wouldn’t actually – you know – work. Turns out it didn’t, evidenced by the fact that the DOW has fallen 2,000 points since the bill was made law.
I’m not gloating, I just want to make clear that I still believe the congressional bailout was the wrong course of action. Here’s the kicker, though: the money that shouldn’t have been spent on the bank industry is now needed by the auto industry. The reasons are numerous, and I don’t have the space to go through all of them here, but I’ll touch on the most important, in no particular order.
First, the auto industry is irreplaceable. My plans for the banking industry involved, in essence, breaking up huge banks and giving the pieces to smaller, more local banks. If the Detroit automakers meet their impending doom, there is nobody to pick up their slack. Small startup automakers, mostly making electric cars and based in California, have had little to no success. No current American car company has the resources to break quickly into the market and take over the market share of even one, much less all three, manufacturers. A failure of the three major car companies would mean an end to American auto production.
Second, the number of jobs provided by America’s major car companies is estimated to be between 2.5 million and 14 million jobs. (The discrepancy is caused by whether the number includes auxiliary fields supported by the auto industry). The failure of even one of the companies would mean a massive number of unemployed workers who would be unable to get new jobs. It has been reported that the unemployment rate has reached 6.7 percent, for a total of 10.6 million people unemployed. Well, that sucks, but imagine if that number doubled overnight.
Here’s another one: our $195 trillion trade debt deficit with China, the world’s third-largest automobile manufacturer, and some $56 trillion deficit with Japan, the world’s largest automobile manufacturer. Want to guess who’s the second-largest manufacturer?
So, here’s an idea. Instead of killing a huge industry accounting for a sizable chunk of our GDP, let’s help them out a bit. Keeping the industry alive will allow millions of people to keep their jobs, at the same time ensuring our massive trade deficits don’t grow any larger. I can’t imagine anybody consciously killing a whole industry, especially when it would mean handing a giant check to the Chinese.
Congress would rather waste everybody’s time focusing on things like the transportation mode used by the executives to get to Washington than attempt to come up with a real solution. Don’t get me wrong – I would’ve loved to see those CEOs drive to D.C. rather than fly, but it’s a long trip, and traffic sucks. I can understand them flying; they’re busy men. Besides, if they ever actually get around to debating the merits of a bailout for Detroit, there’s a good chance they’ll reject it.
There’s hope yet, though. The new Congress, coming to town in a little more than one short month, seems much smarter on the issue. Our new president-elect does, as well. I guess all we can do is hope the companies will still be around by the time the new government takes office.
William P. Davis is Web editor for The Maine Campus.
Bangor Daily News