Detroit, Michigan: the home of Ford and General Motors is virtually bankrupt as of right now. If we recall, in 1929 the worst depression in American history hit and banks, companies, and people were bankrupt. Henry Ford, the founder of Ford motor company experienced the Great Depression and I believe he would think today’s economic situation was essentially the same as in 1929.
There are two main differences of today’s situation; 1) in 1929 it was actually a depression and 2) the government in 1929 and throughout the depression, did not decide to run Ford motor company. As of today, tax payers own 60% of Ford and General Motors because the government believes these companies are too big to fail. With owning 60% of a company one would think that we could get a pretty good deal on cars, or even better yet, we could get an employee discount. However, that is not the way it works. Instead, our wonderful government that likes to tell us what we can and cannot do, decided on this program called cash for clunkers.
Cash for clunkers actually sounds like a pretty good idea. In fact, it was such a popular idea Congress had to vote on extending the program which required putting more money into the system (this program was supposed to last until November 1, 2009 but, the funds have been exhausted both times and it officially ended August 24). So what was this program supposed to do? The main objective of this program was to get people to have faith in the economy again and purchase new cars that are more “fuel efficient.” But wait, you could not trade in any old car, the car needs to qualify and here are some qualifications:
· The vehicle must be less than 25 years old.
· The trade-in vehicle needs to get 18 or less MPG.
· The trade-in vehicle must be scrapped once trade is complete.
These qualifications are not too bad and seem alright (however, doesn’t scrapping a vehicle sound a lot like waste in landfills?). What I have not mentioned yet is this: the dealer will give you $4,500 for the trade-in and if it qualifies, the government will step in and give you an additional $4,500. How can you go wrong with $9,000? This deal seems almost too good to be true, but it actually got people to get do the cash for clunkers program! By this point I am sure that one might wonder why I have a problem with this program.
To explain of why I do not approve 100% for this program I give you several answers. Firstly, the amount of money the government spent on this program, which happened to be our hard earned money that the government has taken away via tax increase. Why should I have to virtually pay for someone else that wants to buy a car!? Secondly, the cash for clunkers did nothing for the economy in the sense of the long-run. For short-term, of course it did because it gave the consumers a little hope in the economy. Next, I do not agree with the government taking over a company. If a company is failing it is obvious that consumers do not have faith in the company, or in the case of the auto industry, American automobiles are not the best therefore people buy foreign cars (not that I agree with buying foreign). Finally, I have to argue against you global warming people with cash for clunkers. If the government was truly concerned or believed in global warming, they would not agree to scrap these “clunkers” because these cars end up sitting in landfills because they are not supposed to be put back out into the market. Can you say hypocrites of no waste.
What I do not understand is that GM is about to launch a new series of cars, like the next model. Well, if there is no more cash for clunkers program, how are people going to afford new cars? But GM is backing up its decision to come out with the next model because they are going to be hiring a few hundred, possibly thousand people to get these newer cars out on the market. Once again, there will be a surplus of cars and they will be just sitting in the dealer’s lot because nobody can afford them. If that happens, once again, GM is going to have to let go of the people they just hired and the general public will be again unhappy. So why is GM going to release these new line of cars when they know down the line consumers will not buy them because they cannot afford them.
You can disagree with my views, which I know many do but if you stop to think about this, how in the world does this stimulate the economy? Where are the promised 750,000 jobs? If the government wants to intrude on everything why not create jobs instead of giving hand-outs? Give people an incentive to work or find a job (granted, I know there are plenty of people out there looking). Obviously promising such a great number of jobs was a bad thing because nobody sees them. This administration is too concerned with making sure Ford and GM don’t fail rather than keeping promises about producing jobs. I would rather see this administration, instead of giving out jobs and money, provide incentives to work. Giving incentives to work in turn stimulates the economy which gives the consumer faith to buy, sell, and trade.
*The bullet points I retrieved from: http://www.cars.gov
Give credit where credit is due!
http://pleaseallowmetointrucudemyself.blogspot.com/
ReplyDeleteOk here is my reply. First off the cash for clunkers program has been a huge success in multiple arenas. #1. the average gas mileage of cars in the U.S. has improved 8 miles per gallon. This program is giving people incentive to buy cars that are more fuel efficent or cars that don't use gasoline. This is decreasing our dependency on fossil fuel, which is a VERY GOOD THING. second it has been so successful for GM and chrysler that they have been able to pay back a good chunk of the money that was loaned to them. A lot of car dealerships also have said that cash for clunkers has saved their businesses. and we don't want businesses disappearing do we? Also look at the tax credits, people get tax credits for participating in this cash for clunkers program, so you don't have to give the government any more of your money. Lastly about the jobs, this was to stop the bleeding. Believe me no government wants to inject a massive amount of money into the system unless its absolutely necessary. there were a lot of jobs that could have been lost. And unless GM brings back their work from Mexico and China there won't be job creation there for a long time. I am among the believe that government is here to help us, although it may not seem like it. There are things we(including are government) have to spend money on or else the economic cost of the reprecussions will be much worse. these bailouts (except the TARP) were necessary because the backlash of unemployment and uninsured workers would have cost the government a lot more in the long run. so i'm guessing you like to see hard working Americans lose their jobs because the company they worked for screwed up and no one came to help.
ReplyDeleteAs sad as it is for " hard working Americans lose their jobs because the company they worked for screwed up and no one came to help." it is not the government's job to save companies. America was built on the ideals of capitalism and lassiez faire economics. Once that free market becomes a little less free and people become dependent on the government for that "help", we descend down a slippery of government control.
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