THE BUSH administration’s Wall Street bailout may be a prelude to a sweeping government intervention in the auto industry–even before Barack Obama takes office January 20.
The blocks keep falling. First the housing sector. Then the financial sector. Now the automobile sector. The clear failure of neoliberal capitalism shows us the need to modify how the United States does business.
And if the government does step in to rescue General Motors, Chrysler and Ford–a move backed by top Congressional Democrats–it will raise pressure on Obama to offer government aid to more big companies threatened with bankruptcy and underwrite the restructuring of entire industries.
Capitalist theory tells us that these companies should be allowed to die. The problem is that each of the big three automakers is ailing. Who would have thought it possible, but the spectre of the US’s automobile manufacturing base’ disappearance seems to be real.
CEO Rick Wagoner said that GM can’t file for bankruptcy to get protection from creditors, since consumers are unlikely to buy cars from a bankrupt company. If the company were to go out of business altogether, it would send a wave of job losses through manufacturing and car dealerships that could eliminate 2.5 million jobs and wipe out $125 billion in personal income in just one year, according to the Center for Automotive Research, a think tank with close ties to GM.
Perhaps GM should spin-off several of it’s car lines. Independent ‘new’ auto companies could push new technologies and better cars. The other two choices are nationalization or bankruptcy.
“Letting GM go is a terrible idea,” Wagoner said on CNBC. “Look at the effect of Lehman Brothers.”
GM is ‘too big to fail.’ The bosses who’ve run companies into the ground now have a refrain to pitch to Congress. Don’t think that GM, Chrysler and Ford will be the last to do so.
Shuster makes a good point with his last paragraph:
It’s time for organized labor and the left to raise the stakes, especially when the incoming president has been elected on a promise to make the economy benefit working people.
Allowing the bosses to paper over their failures with taxpayer cash is bad for the US. If the US is to pay for these companies’ lives, then the current management should be thrown out. Perhaps it’s time to try the worker run company model as part of the price for saving these companies.