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Irrationality of Canadian GM/Chrysler Bailout
While I stand ambivalent on the controversy of Canadian government bailing out two privatized auto companies (American, no less), I must question the rational of the populous that support it.
It is obvious why employees or retirees of GM or Chrysler support the bailout, and I certainly don’t blame them. Yet, for the rest of you Canadians standing tall for a bailout, do you really know what you are fighting for?
Supporters of the bailout echo no more than one argument: “The Canadian economy would tank if the companies collapse!” Or to silence opponents, they could use the more rhetorical alternative: “You would stand idly by to watch the Canadian economy tank?”
This statement usually prevails, as rarely would a brave soul concur with blissfully standing idle while watching a disaster transpire.
The argument is typically reinforced by doom-and-gloom statistics of the chain of suppliers, suppliers of these suppliers, and the supplier of those suppliers that would collapse like a house of cards resting on the pillared by the two auto companies. The imagery is dark, and the statistics are frightening. Hmm… I suppose they’re right, we don’t want all those chains of suppliers collapsing.
By now, the argument seems indestructible and bailout advocate is happy. Certainly, one must agree, every word of the statement is valid and true. If the companies collapse, the Canadian economy will suffer, long and hard. The doom-and-gloom scenario will probably be realized. Many of those dealerships and suppliers relying on them would fold. Those affected extend past the employees of these organizations, but to their families, and the all companies that provide the products and services that they subsequently use.
So why shouldn’t everyone be in line with the bailout, to pitch an effort (or dollars) to collectively rescue the Canadian economy?
If one were to suggest if we don’t implement a “National Brocolli Day”, the Canadian economy would continue to fail, would you support it? This statement is true to the very last word. If we don’t implement a “National Brocolli Day”, we will suffer the failing economy. That is not to say that if we did, we could avert the same destiny.
This is what is lacking in the argument of most auto-bailout supporters. We are bombarded by arguments of what would happen if we don’t act, yet we are provided with little evidence that the action could actually alter the outcome.
There are some crucial questions that auto-bailout supporters should consider:
- Could the amount really sustain the operations of the two companies?
- Would maintaining their operations means maintaining the welfare of its employees?
- Would the chain of suppliers not face the danger of collapse otherwise?
My sense is that no one can answer these questions with any degree of confidence, including the so-called economic experts.
Seeing how GM Canada has already vowed to cut over 5000 employees by 2010 and slash benefits and pension plans if bailout is granted, it becomes questionable how many Canadians would actually be protected and how many would receive nothing from the bailout at all.
The root cause of their failures was attributed to the credit crisis leading to consumers not being able to afford cars, causing a drop in sales. Understanding that being the problem, do we see how sustaining car manufacturing could somehow make them more affordable to people who are becoming broke? I certainly don’t see the relation.
What get overlooked are alternatives. $4 billion from December 2008 and an estimated $8 billion this time in February 2009 handed over to two private companies; could Canada do anything else with these billions of dollars to protect Canadians and its economy if the companies should fail? More importantly, where the hell are these billions coming from? Aren’t taxpayers collectively poorer so we are even less likely to purchase a car?
This is already the second time in three months that GM and Chrysler have asked Canadian government for aids. Can they utilize this doom-and-gloom threat every time they need cash?
Ironically, the flawed argument does seem to stand no matter how large the amount, and how many times it is used.
If we don’t bail them out, Canada shall suffer.
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