Saturday, January 24, 2009

Why Bailing Out the Auto Industry is a bad idea.

In the midst of the current economic downturn, many businesses have called for bailouts from the government to save them from their dire circumstances. Admist the top of these to make the news as of late has been the auto industry. Their bailout proves tragic for not only will it fail to address the fundamental issues behind their poor performance, but also give congress leverage over on how to dictate the future activities of the industry.

The fundamental root problem behind the American big auto workers have been their cost structure, which is choked upon by obligations to unions. The high wages companies such as GM must pay for their workers, combined with the numbers of retirees who they are obligated to, has made such a company more of a retirement home first, and a auto producer second. Until these companies can be permitted to shake off such archaic union concessions in order to compete with the cost structures of their foreign competitors, no amount of taxpayer money can truly "resurrect" the industry.

What we have instead of a ressurection will in fact bear closer resemblance to necromancy; a zombie company that cannibalizes on taxpayer rather than healthingly sustaining its own self based on the merit of their products.

~David Morris~

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