Christmas Bailout, Seasonal Giving

In this season of giving, Congress has been especially generous with taxpayer money. This year, the Big Three automotive companies have asked for $34 billion, even though they haven’t been very good recently. In fact, they have been selfishly focusing on trucks and other cars that bring in a big profit margin, rather than the vehicles that the rest of the world wants to have. As a result, the companies are feeling the natural consequences of their actions, but are currently trying to receive a rescue in the form of a mixed-economy type bailout.

Capitalism, contrary to popular belief, requires the people in business to selflessly think of others’ desires and needs. This is a requirement in order that the market will voluntarily purchase the goods and services offered to them by the various sellers. If the Ford Motor Company fails at providing vehicles that enough consumers want to purchase, the fault can be found in their deficiency of land, labor, capital, or smart people with entrepreneurial ability.

General Motors has failed in the instances of entrepreneurial ability. According to the New York Times, the majority of GM CEOs have been from the financial side of the company, which has “led to the demise of GM’s most publicized efforts to try something new, like the EV electric car…” Since GM seemed to only focus on the vehicles that produced most profits (SUVs), they lacked the resources in research and development to focus on what people would demand in the future, such as the fuel-efficient car. This poor decision-making has resulted in today’s situation, with the company offering little that the customer wants and only the request to continue to make poor decisions with tax-payer money.

With capitalism, the companies that produce innovative products that satisfy the customer thrive. The most popular example might be the illustrious Steve Jobs, whose risks with Apple have created the iPod and many other products for millions of people to enjoy. In the automobile industry, it seems as if Toyota’s Prius and similar cars have been correctly supplied for what individual consumers demand.

On the other hand, industries run by the government have no incentive to produce something that the customer desires. The reason for this is because they are funded by taxes and have no incentive to produce something that consumers will voluntarily purchase in mass amounts. One example of a specific state-run industry is the agriculture of the famished USSR.

When American farmers visited the Soviet Union, they were shocked at the distribution practices for the produce. Since the Soviet workers’ only concern was to fill their quota of boxes, they carelessly packed spoiled fruit or vegetables with the ripe produce, multiplying the waste during transportation. These results would have ruined an American farmer whose livelihood was dependent on whether or not the market would voluntarily buy the produce, but instead the Russian citizens had only the scarce food offered by their government.

The politically expedient action of Congress to buy into the Big Three will not change the inherent problems within these unionized and inflexible companies. With new performance standards that will be expected to be fulfilled, the companies will be reluctant to take the necessary risks to succeed in the fluctuating automotive industry. They will have willingly exchanged the precious freedom that comes only through the ownership of private property for the false security that the government can help them correctly supply for the automotive market.

It is fortunate for the Big Three that congress has been friendly to undeserving companies this year. Hopefully they can change and provide what the markets want, but otherwise they will surely be kept painfully alive after the valuable investments congress has put into them.

[Francis Mader is a sophomore Business major at UNL writing anonymously]