To rescue them or not
It has been reported that General Motors and Chrysler require $10 billion to bail them out of the current financial crisis. Yes, that’s a billion with a “B”! If assistance is not forthcoming, more plants will be closed and thousands of employees laid off. What should governments do?
If no bailout occurs, closings and layoffs become a certainty. Will our government be able to bear the added burden of the newly unemployed? I imagine job benefits would be stretched beyond capacity. The tax bases would almost wither and disappear. We all know that tax dollars, paid by large corporations, support municipalities and their social programs. The domino effect could be devastating.
What if we bail them out with $10 billion? It’s enough? Who will determine how that money is allocated? How and when would this ransom be distributed? Who would get how much? The questions are endless.
The government has a shaky track record when it comes to financially supporting the auto industry. The Ontario government recently pledged millions of dollars to General Motors to prevent plant closures and improve product development. Plants are cutting shifts and layoffs continue. Automakers say they didn’t anticipate the severity of the economic downturn. I find such statements staggering and completely offensive.
These corporations have economic analysts on staff who forecast the viability of market conditions years in advance. Recently, a former government bank official revealed that they and their counterparts around the world feared an economic downturn was looming. They knew it five years ago. In other words, they saw it coming. Now, I can only assume that concerns of such magnitude spilled over into industries, like the auto business. It would have been the wisest thing to do. So what happened?
In general, it is part of human nature to ignore warnings when things are going so well. For example, the Great Depression, World War II, Pearl Harbor, the 1970s energy crisis, and most other major events in history. Warnings were issued and ignored. So, I find it hard to believe that no one was warned about this economic downturn. It was also ignored.
Greed is a very powerful emotion and can become addictive. Many leaders succumb to his advances. Money and power are the byproducts of greed. As we have recently witnessed, some CEOs have been earning obscene salaries and benefits by operating sinking ships. Actually, who ultimately pays for all this? You and me, the average taxpaying consumer.
So whether or not a $10 billion bailout happens, one thing is for sure…the average Canadian and American will carry the load.