More Thoughts on the Auto Loan Bailout

Here are some more thoughts on the auto loan bailout, going a little bit further than my last foray into this subject did.

My students keep asking me where I stand on the auto loan situation, and it's a tough position to put me in- I don't want to bias their thoughts, and it's not really about me in my classroom, it's about critical thinking and thought. When pressed though, I tell them that I don't think that the auto companies should get a bailout.

First, I also don't think that the banks should have bailed out either, and by bailing them out, Congress created this whole auto loan mess themselves. Second, the reason I'm not in favor of the bailout is out of principle- it is not fair and morally right that some companies are allowed to go bankrupt by the government, and others are saved with loans. Why one company and not another? The only arguments I ever hear in favor of the auto loan is the the auto companies affect a lot of people- that's true, but if you gave out loans of $1 million to 25,000 small companies (total of $25 billion, same as auto companies), that would probably affect a lot of people too.

And also, why now? Why let past companies fail, and then come in and rescue one now? Were the other companies in the past less deserving- were their works less important than the workers now? My grandpa worked for a steel company, and the US government let it go under- why didn't it rescue that company and provide money for my grandpa's pension and healthcare? Why rescue GM now- because it has better lawyers and lobbyists? That's not how America works- that is how corrupt regimes work.

One more thought on the auto bailout- and that's the role politics play in this whole process. The media is making the Republicans out to be the bad guys for stopping the auto loan. Here is a connection that I just made though- the states that are hurt the most by the auto companies going under are Midwestern states where Democrats are thriving, and the main people hurt by the auto companies going under are Democrats as well, specifically the labor unions who donated $2 million to Democrats last election and only $12K to Republicans. Maybe the chickens are coming home to roost after all. For more on this line of thinking, read Daniel Howes good article today in the Detroit News.