This is a situation of which I am definitely two minds. Really, it’s a choice of which evil you’re willing to swallow.
Solution A:
Let’s say the government lends (there’s an important distinction between a loan (even with an affordable 4% APR) and a bailout). The advantages are obvious and mostly immediate (which, of course, is why the government’s going with it. Because, frankly, a 4-year (or even an 8-year) term is a short-term perspective).
Advantages:
1) Not all of the 3 MILLION workers lose their jobs (and if you don’t think 3 million workers entering the job market (where jobs are already scarce) at once isn’t going to affect your job (regardless of your industry) or your nation (crime rate, unrest, etc), then I encourage you to cogitate some more).
2) We keep the American auto industry producing. Otherwise, their shells would be bought up by their foreign counterparts. While I prefer foreign cars for various reasons, this would astronomically destructive for our economy as a whole. When we spend money on American-made products, it stays in the domestic economy. However, if there aren’t really any domestic options, then the gross that we spend on cars every year (which is a disgusting figure, and makes you realize why maybe some of those people couldn’t make their mortgages) will all leave our country. In other words, instead of American CEOs making immoral amounts of money (but spending it on 5th & 6th homes that Americans get paid to build), it will be Japanese CEOs making immoral amounts of money, and NO American will really see that money
3) It will put the Big 3 in the figurative pocket (and the literal debt) of the American government which, as luck would have it, just became overwhelmingly liberal. And what is high one the liberal agenda? That’s right, green energy. So, in theory at least, by accepting this loan from the government, the government will be forcing the auto industry out of bed with the oil companies and into bed with themselves, bringing back technology that they already have (the EVs and other electric models) and developing plug-in hybrids (which are estimated at 125 mpg). that alone could be a major turning point in our addiction to foreign oil (our first “intervention,” if you will).
Disadvantages:
1) See the 3rd advantage! The federal government becomes even more of Hobbes’ Leviathan, slowly putting industries that were designed to be relatively independent under the government’s control. Unless, of course, you believe that these loans come string-free…
2) It undermines the very idea of capitalism-as-we-know-it. First anti-trust laws were set up, to put limits on capitalism and to keep the market free from inferior products simply because there is no choice. Now it almost seems as if we’re contradicting those ideas by putting these companies on life support (instead of letting them die a natural death), companies which (unless you haul lots of stuff on a weekly basis or off-road on a daily basis) do have inferior products for this day and age. Now, I’m not saying that capitalism-as-we-know-it is ideal (it’s been revised before, and I think it needs to continue to be revised), but going against a deeply-rooted cultural ethos is definitely a negative.
OK, on to Solution B:
The government leaves the Big 3 to Saints Darwin & Smith, and they unzip & collapse (hmmm… maybe the attack 7 years ago was more of a prophecy/warning and not the main assault… a fleeting thought…).
Advantages:
1) Each American citizen keeps the $81 that it would have cost them to keep the companies afloat
2) The Leviathan continues to grow at it’s normal rate of “fast” (instead of “light-speed”)
3) Capitalism-as-we-know-it is preserved. The collapse leaves a vacuum that, potentially, could be filled by more adaptable, flexible, consumer-conscious auto companies. That’s market evolution, and we know that it works (though, like normal evolution, it requires casualties).
Disadvantages:
1-3) Basically the opposites of the advantages in Solution A
Like most things in life, it seems to be a case of “pick your poison.” I’m still choosing, hoping that I’m just overlooking a third option. Who knows, maybe we’ve built up an immunity to iocane, and so we shouldn’t worry!
And I know that, even though we Americans outwardly seem to be cynics, we are all inwardly optimists. But we shouldn’t fool ourselves into thinking that, just because it all has been OK for as long as we can remember, it will continue to be so. At this point, whichever path we decide to take will have lasting, negative ramifications (the unfortunate consequence of putting an ambulance at the bottom rather than a fence at the top).