| Galaki said: Suppose you bail them out. And they continue business as usual, pooping out cars nobody buys. Meanwhile, economy's in a slump and less and less people buying cars. They should invest in public transit, where people will actually be using. |
Precisely. The car industry failed, not because of the recession but because of poor response to competition. Failure to compete should be punished by a failure of the company - that's practically the foundation of a free market. Unlike the banks, few people lose service (OK, current owners do but the market for parts will still exist).
So, instead of a bailout, I would label this illegal protectionism (amounting to subsidising domestic manufactured goods over foreign imports). I didn't agree with the bank bailout because it wasn't practical and wasn't the best way to solve the issue, but the car bailout (and the UK have one as well) has the potential to damage the market itself: if e.g. Toyota's business is more profitable than the Three but Toyota dies because the Three were bailed out, what is the incentive to be more profitable and efficient? Why not just run a bad business and continually ask for subsidies?
