Query:
I'm slowly but surely making my way through Alan Greenspan's "Age of Turbulence" and I am at the end of the Internet Start-up boom where he talks a lot about creative destruction. The good ideas survive, while the bad ones must die (even if some jobs/wealth temporarily do too because in the long run we are putting a strain on productivity). I love Ford, my family has been buying its cars for years. But, I am also a hard-core advocate for free markets. Why can't they bail themselves out with better business decisions rather than asking for tax-payer money?
Why:
Because in order to continue to operate, because of the recession, they would have to operate at a deficit for a while, which BTW it does make business sense to do for a while IF (1) in the long run you can be profitable again and (2)you can get loans. And that is the difference in the current economy. They can't get loans because of the financial crisis. Businesses without bail-outs would destruct even though they could in normal situations stay alive, even during a recession, and be profitable again in the long term.
Like I said, I am a pretty hard-core advocate for free markets. Unfortunately, however, the world is not a free market, so I can't analyze it as one. It seems that little steps toward free markets do not work all the time though because of all the rest of things in the economy that aren't free. Many people are asking, is this financial crisis the fault of Capitalism? Let's clear this up once and for all: THIS is not Capitalism. I am saddened by peoples' inability to understand the economy. It is so important, why isn't it taught in primary education? Another thought, The US government has been running at a deficit, are we being destructed for this now?
W/o knowing the text of the current bailout bill, except that the companies are getting money. What should I support?
Raw Answers:
Support a Bailout - if you think American car companies can be profitable in the long run again, then you should support a bailout because you believe that these three companies will pay us back eventually.
Against a Bailout - if you believe that ultimately American car companies are inferior to foreign car makers and won't catch up in price or innovation, then you would likely be against a bailout and all about creative destruction of American auto makers.
Protectionism - if you think ultimately American car makers are inferior to foreign car makers and won't compete in the long run but still think they should be bailed-out, you are advocating protectionism. (Protectionism is the economic policy of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign take-over of local markets and companies. This policy is closely aligned with anti-globalization, and contrasts with free trade, where government barriers to trade are kept to a minimum (wiki))
Alternative - if you think that American car makers could be profitable if they just put their heads together then you may support a merger. I believe this is a great way to ease the short term pain and end up profitable in the long term. I think this would make American car makers competitive with foreign ones and, in the end, create jobs.
Yes, this is very raw and you are probably thinking, what about jobs, or anything else but I stand by my basic option summary.
No comments:
Post a Comment