Saturday, December 06, 2008

$25B Bailout? Big 3 vs. Economics 101

The BBC has a video showing the real reason why the auto industry is asking for billions of dollars in bailouts from North American governments: nobody is buying their cars.

The video shows ports in Long Beach, California, where tens of thousands of brand new cars sit, unwanted. Twenty auto salesmen in one Mercedes dealership have lost their jobs. People simply aren't buying new cars.

And the Big Three understand this. When demand drops to zero, it's impossible to make supply more efficient to continue bringing in profits.

That's why, to earn profits, they've decided skip the whole supply/demand game, the whole sell-a-product-to-earn-money game, and instead go to the governments to give them money.

I say fuck 'em. This money should be used to invest in new industries, to build a more sustainable economy, not to line the pockets of dying industries.

People say that one in six Canadians has a job directly related to the automobile industry as a defence of such bailouts. This was used as an argument in 2003 when the Federal and Ontario governments each gave half a billion dollars to Ford to encourage them to build a plant in Ontario, creating jobs for Ontario workers. A plant which has since closed.

To me, one in six Canadians depending on the auto industry isn't a defence of bailing them out: it's a sign that we need to kick the auto addiction.

(Thanks to rgb for the link)

- RG>

2 comments:

XUP said...

YES! Let's kick the auto addiction. I've been advocating for that for a long time. It's not going to happen this week, though...

ml johnstone said...

Yippee!! Another Canadian with common sense.
They spend $25 Billion just on advertising.