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Blog

    The Real Cost of the Auto Industry Bailout

    07/30/2010

    Today, Politico’s Arena featured an online debate over the results of the automobile industry’s bailout. Many of the contributors have hailed the bailout as a success due to the perceived growth in the auto industry and, namely, in Michigan, Ohio, and Pennsylvania. While there may be growth in those specific areas, I think we should take a closer look at the bailout’s effect across the board to properly assess its benefit or detriment to our economy.

    Perhaps what is most difficult to point out is the COST of such growth. The bailout was funded by tax dollars, redistributed wealth from across the country and placed it in specific locations (the auto industry). Every tax payer essentially chipped in to bail out General Motors. Because of this, it makes tracing the burden very difficult and especially hard to see since it is not concentrated but rather, spread out across millions of people. The BENEFITS however are concentrated and, thus, easier to point out and focus on. Therefore the growth of the auto industry cost us the growth of other industries across the United States. This lost growth, however, cannot be pinpointed because it is only what COULD have been had we, as individuals, chosen to allocate our resources to our wants and needs rather than the government choosing for us.

    It's a common yet dreadful mistake to only look at the economic gains in one sector without tracing the effects over the entire picture. The job gained in Detroit might have cost a job in Tallahassee; however the loss will never be seen because it is only what COULD have been.

    Let us not forget that the government only bailed out GM, Chrysler, and Ford (though they didn’t take the money) leaving out companies like Toyota— a Japanese company with several factories in the southern states. To refresh your memory, here’s the roll call vote so you can be reminded of the Congressmen who made this happen.