The U.S. economy continues its unstable wavering despite the election of a potentially competent future president in Barack Obama. The $700 billion bailout has given way to individual requests from companies like AIG, Citigroup, and GM for bailout packages of their own. As a Toyota owner and a firm believer that the American auto industry is simply inferior to its foreign competition, I am not significantly moved by GM’s pleas for help. However, ethics is never as simple as how we feel about something, and it’s worth taking a moment to think about what the moral implications of an auto industry bailout might be.
Let us first consider an argument in favor of a bailout. Approximately one in six American jobs is linked in some way to the American automobile industry. GM itself employs 136,000 people, but the estimated job losses if GM were to fold stands at approximately 1.7 million. In addition, many retired autoworkers rely entirely on UAW pensions, and taking over the financial support of these individuals would likely become the burden of the American taxpayer. Finally, the potential ripple effect of such a massive corporation failure might take the American economy full speed into another Depression. The consequences of letting GM fail are simply too great, and they should receive a bailout payment to avoid the negative consequences of not bailing them out. Its not something we want to do, but we have no other realistic option.
On the other hand, GM’s struggles can be traced directly to two causes of their own making. First, they are crippled by ridiculous agreements with the UAW, whereby they pay their workers an average of $73 per hour including benefit costs. Toyota pays about $48 per worker, but the UAW remains unwilling to negotiate this despite GM’s impending collapse. In addition, GM has paid about $12 billion in retirement benefits in the past ten years. Those funds might have been helpful in the development of fuel-efficient vehicles that people actually want to buy. This is GM’s other major problem: their cars suck. Part of the explanation for their struggles is that they are making an inferior product. The market dictates that they should fail, and the argument against the bailout is essentially that we should let market forces run their course, whatever this may mean.
It is not really my intent to offer the reader with a clear and obvious solution to the ethics of the possible GM bailout package. Rather, I wish to point out an interesting dichotomy in the American psyche, one that has deeply significant ramifications in our ethical decision-making. For some reason, the question of bailing out corporations that have made bad decisions is a matter of serious policy debate, yet the possibility of bailing out homeowners who have made poor choices is one that few people take seriously, even now. Why is it that we can accept corporate welfare more easily than individual welfare? Why are we so forgiving of corporate America, yet so uncharitable to our own neighbors?
I wish to offer one final though in pondering this question. My fear, which I leave the reader with as simple food for thought, is that our own selfishness motivates us to aid the corporation, but not our fellow citizen. If Joe’s house is foreclosed upon, this probably won’t lead to a collapse of the Dow Jones, and if it does, this impact will be the result of a pattern of foreclosures, rather than a single foreclosure. But if GM goes under, we may not get our Christmas bonus, and that’s a consequence that affects us personally. So whatever your economic and political views, ask yourself if your feelings about corporate or individual bailout plans aren’t really about your own self-interest, and whether that’s the place you really want to make your ethical decisions from. I suspect that for most people it is not, making it curious indeed that so many people oppose universal health care, welfare, and other individual welfare programs while supporting the necessity of billions of dollars in corporate welfare benefits.
About the Author
Elijah Weber is a graduate student at Bowling Green State University. He holds a Master's degree in philosophy from Colorado State University, and Bachelor’s degrees in sociology and philosophy from Chapman Univerity. He currently lives in Ann Arbor, Michigan with his wife Laura, his son Brandon, age two and a half, and two cats, both of whom are mentally deranged.
5 responses so far ↓
1 Tony Orlando // Dec 3, 2008 at 11:01 am
I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.
2 Glynnda White // Mar 13, 2009 at 10:39 am
Good Afternoon Elijah
I read your comments above and wanted to ask if your view of the bail out situation has changed at all given that we now understand that our new president is at best incompetent and at worst truly intentional of wrecking our economy in order to grow government.
My feeling on the whole bail out thing is that government interference created the entire problem and all this running around hollering about the worst economy since…”whenever they say today”…. is an attempt to keep the focus off where it should actually be.
Our government, namely Chris Dodd, Barney Frank, and the entire gang that took pains to cover up what was going on in F.M. and F.M. have virtually sent the economy of the world into a tailspin.
I have to say however that I agree with your opinion on GM…their vehicles suck and I wouldn’t own one.
That being said, the automakers in this nation have been saddled with unbelievable amounts of regulation by the government rendering them pretty much ineffective as a business entity, not to mention the MOB-like tactics of the union as you said.
In my opinion, it is time for a serious re-structure of our government. We have gone beyond the need for change of people or legislation. Our government would be unrecognizable to our founding fathers and I believe that they might think they were back in feudal Europe.
I’m interested in your insight on my opinion if you have time. Thanks for sharing your thoughts they were quite interesting.
Glynnda
3 Elijah Weber // Mar 18, 2009 at 8:57 am
Glynnda,
I don’t really have an opinion on the bailout, other than thinking its an interesting ethical question. To some extent its a political nightmare, because doing nothing would be political suicide, even if it were the right decision.
I’ll be honest, the suggestion that Obama is intentionally wrecking the economy in order to grow the government is a little far-fetched. Just like Bush before him, Obama is doing what he thinks will work. I don’t think Bush intentionally harmed people, but his policies were pretty harmful sometimes, and I think the same can be said for any president. Most people are not sociopaths, which means they don’t intentionally harm others. Being ideologically right or wrong is different from deliberately causing harm to advance an agenda. Thinking Obama’s ideology is one thing; thinking he’s purposely screwing this up is a whole different matter.
That being said, I think your point about the role of government regulation actually points out why this issue is so complicated. I can give you an argument that the problem is a lack of regulations. After all, many analysts think the real issue is toxic debt, which was created by a lack of oversight on who was being approved for loans and how much people were allowed to borrow. Your argument is certainly legitimate, but a valid counterargument is too, which is what makes this issue so tough.
I’m inclined to stick by what I said in the article. I think the problem is the insatiable greed of most people. We don’t care enough about what happens to our fellow man. It’s not that we want to hurt other people, we just care about our own interests a lot more, to the detriment of everyone else. Auto unions are a great example. They’re so concerned with their own interests that they’re not willing to make concessions to fix the problem, even if it means the whole mess just gets worse. Banks are reluctant to loan money out, even though that’s what needs to happen, because they’re worried about their individual interests. We can point the finger at too much government, or not enough, but the real issue, I think, is the personal ethics of individuals and the social ethics that support them. This problem isn’t going to go away until someone starts to demonstrate a willingness to make sacrifices in order to fix the problem.
4 Strohecker // Dec 29, 2009 at 9:45 pm
I see it like this, the country was up in arms for political change, they got it!!! Now we have the government interfering in industries that frankly they know nothing about. If you really want to go there with fuel-efficient vehicles, let’s stop and look at what the consumer of today really wants, depending on the age groups, mind you, obviously the younger generation wants the sportier look, but lets look at that for a minute…we have the new Ford Mustangs with the older body styles…how fuel efficient?? And how about those gorgeous Dodge Challengers…we can go on about fuel-efficiency, but how many teens to early thirties buying a mini-van because they are economically fuel-efficient. Lets get real America…bailout or not, if you want to put an American out of work, keep buying your imports…I’d rather keep the American people working and buy American!!!
5 B_roony // Apr 12, 2010 at 1:27 pm
Strohecker,
I am an American young man, 22 in fact. I have no desire to buy an import because of the look it may have. I argue that my generation thinks much more about fuel efficiency than any prior generation. I agree that the government is intervening where it does not belong and that is a shame. But do you truly believe an American choses to buy an import b/c they want their neighbor out of a job? No, like Elijah stated…American cars are simply inferior. And until that is changed me, and my generation, may buy an import, but not because it looks cooler or goes faster, it’s because it makes sense to our wallets.
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