Ryan ChartrandThis year has been one of government bailouts and it’s also been the year of economic uncertainty – both on the larger scale of the market, and on the more personal scale of lost jobs and cutbacks.
Our government gave the banking industry a check for $700 billion, an astronomical figure, and the kind of money that we simply do not have to lend out. It didn’t fix anything either; our market is very unstable, and we still haven’t reached the bottom of this recession.
Republican Congressman Ron Paul’s opinion on the Wall Street bailout was that if we allow the natural capitalistic process to occur, which is to allow the banks in question to be bought up by other banks, the market will correct itself over time and eventually we would reach a sort of equilibrium. I found this to be a reasonable idea, and in retrospect I think that this is what should have been done.
Increasing inflation might result because of the Wall Street bailout, too. We’re printing a lot of money and increasing the currency in the system, especially during a down economy, can lead to greater inflation.
At any rate, I think that Americans are against bailouts in general. I’ve heard arguments on the news, mostly from conservatives, that government intervention into the private business sector has never been positive.
On a limited basis I agree, and I was generally against the idea of the Wall Street bailout because I thought that larger banks would simply take over the banks that were struggling. We saw this happenign when JP Morgan bought out Washington Mutual and Bank of America bought out Merril Lynch.
For the past couple of weeks a second bailout has been proposed, though its necessity is still in question. The House held hearings to decide whether they will bail out the automotive industry, specifically the Big Three: General Motors, Ford and Chrysler.
The CEOs of these companies have said that if the government approves the bailout, they will take an annual salary of $1 – which is quite a progression from the bank CEOs who received approval for the bailout, and then took a relaxing resort vacation and continued to travel in their private jets.
This new situation with the automotive industry also has more factors to consider than just the buying up of businesses. Our automotive industry, specifically the Big Three, are leagues behind other companies such as Toyota which have focused their efforts on electric cars and fuel efficiency.
General Motors produced very large vehicles, such as the notoriously gas-guzzling Hummer and other SUVs. They are also very expensive cars, and in these more trying economic times, I don’t see the average family person buying an expensive vehicle that does not get good gas mileage. In short. America’s automotive industry simply failed to anticipate America’s needs, and their business has suffered.
Toyota, meanwhile has been progressive with their vehicles and although the whole industry is suffering, they are not before Congress asking for a handout.
Conservatives on the news, such as Republican Congresswoman Marsha Blackburn on Hardball with Chris Matthews Monday, have made the argument that because of all the factors I mentioned, a bailout of the automotive industry would be a bad idea.
She makes a valid point, but I support this bailout because of the repercussions of not bailing out the automotive industry. There’s a personal side to the decision of whether or not to bail out the automotive industry that should be weighed. While the banking industry would have been bought up by bigger companies if they had not been bailed out, the automotive industry would be facing an even greater loss of jobs than we have already seen.
Not only do I think the loss of jobs would be detrimental to our economy, I think that the workers in these industries would rightly harbor resentment toward the government for not at least trying to save their jobs while they gave a blank check to the bank CEOs.
And these companies are an important aspect of American industry. I think it’s worth saving these companies. The list of products America manufactures is getting small, and if we lose these automotive industries the list will be even smaller.
Barack Obama’s slogan on the $700 billion bailout was that government needs to bailout main street just as they have bailed out Wall Street. I think that the Big Three bailout moves closer to achieving that ideal.
As I considered the implications of these two bailouts on a broader scale, I thought about how easy it has been for the government to hand out large sums of money. It seems to me that the precedent the government is setting is that if there is a need in the market, the government will fill that need to salvage that industry.
However, it occurs to me that there are other pressing matters on which the government does not so easily spend money, like health care. If there was an initiative for universal health care, I do not think that the government would put in extra money just in case it was needed, as they did with the $700 billion bailout. They would be misers, only funding what is absolutely necessary – as they did with No Child Left Behind.
Government is not “for the people” anymore. I think that’s one reason Barack Obama was elected. People saw that Obama’s focus was on the average person’s needs and giving us a leg up, not only on insuring that big business and the wealthy get their tax breaks or keep their cushy jobs.
As we enter 2009, none of our economic uncertainties will fade away. However, in Barack Obama’s administration we will have new ideas, new direction, and a fresh perspective on how to fix our problems, and that is certainly a giant, hopeful leap in the right direction.
Stephanie England is an English junior and a Mustang Daily political columnist.