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Rated: E · Essay · Research · #1536364
I read an article on america's floundering car market, and decided to write about it.
        The American Auto industry is failing due o the current recession of the American Economy, and The Big Three American car manufacturers, GM, Ford, and Chrysler, have come to the United States Senate, looking for a bailout in order to save the jobs of approximately Three Million Americans. However, this bailout plan for the Floundering American Auto Industry is entirely against the moral fibers upon which the capitalistic society of this country is built. By supporting this, the American People will be allowing The Big Three to continue paying their CEO’s large multimillion dollar salaries while they put the good of their pocketbooks ahead of the good of the environment and the American People. These companies also chose to ignore the development of more fuel efficient propulsion systems, be they gasoline powered or otherwise, and they are now paying the price for their negligence.
         One of the main arguments for the bailout is that the money will make its way down to the middle class and the poor through the auto makers through an economic theory known as the trickle-down effect. This essentially means that if we give corporations money, they will use it to pay their worker, and the workers will spend the money on expenses, perpetuating the cycle. However, the major flaw with this theory is that the American Economy is in a recessions, so the rich will hold on to their money rather than spending it. This means that the money will never find its way down to the poor, or even make it back into the economy. So by using this economic model, the senate will only be continuing the current cycle where the rich get richer while the poor get poorer.
         A better way of accomplishing the goal of jump-starting the economy would be to use a different economic model known as,the trickle up model. What this means is that congress would use the bailout money to finance one large public works project, or a large increase in infrastructure, such as highways. By using the money to build things such as highways and bridges, workers will be paid, and they will use the money to pay for their expenses such as food and water, meaning that the money will make its way back into the economy much faster than in the trickle down model, however the people who really need the money right away will be taken care of before the rich who already have enough money to coast for a little while. In addition the the already stated  positives of this plan, the improved infrastructure will help the American people as a whole everyday, and even lower emissions by decreasing traffic, and therefore helping the environment.
         Before the 1980’s The Big Three had a total monopoly over the American car market, and they only had each other to compete with. So rather than trying to innovate, the American car manufactures chose to sell what was selling, and only innovate when nessicary. So when companies like Toyota, Honda, and Volvo moved into the market, they saw an opportunity for massive growth, and worked as fast as they could to develop a full line of cars from the subcompact to the SUV, all with higher fuel-efficiency. However, in the beginning, the majority of the American people held on to the stigma associated with buying imported cars. However, it was not until long after that stigma disappeared that The Big Three began to play catch-up. Fast-fore ward to 2006, and Toyota not only has a hybrid which is popular, but the Carolla which gets an estimated 34 mpg. while GM and Ford struggle to have cars accessible which can get more than 25 mpg highway.(find a resource)
         Although in the past car manufacturing has not only been a successful business in the United States, but a rather lucrative one as well. As a corporation, these companies pay a board of directors to choose people capable of making the tough decisions  for running the company. These elected persons are the chief officers in their respected fields, The Chief Financial Officer, or CFO, the Chief Information Officer, or CIO, and the Chief Executive Officer, or CEO. However it is the Third officer on the list which has been one of the main topics for discussion as of late, in addition to their large salaries which would generally be understandable,  if the performance of the companies had been improving over the last couple of years. However, The Big Three have been losing millions of dollars in the past two years. For example GM lost $38 billion in 2007.(Saporito, Bill) What is surpassing is that, save Rick Wagoner, the CEO of GM who agreed to work for $1 in 2009, the salaries of the other two CEOs from the Big Three have not dropped a cent. What is truly ironic about that is, if these persons worked in any other industry, they would have had their paychecks majority cut, but more likely, they would have been fired.
         It is distinctly obvious that ratifying this bailout package for the American Auto Industry would not only be a waste of funds, but it would also be a money pit for any capital which becomes available in the future. First of all, the economic model which this bailout is based upon is entirely awry for the economic times that the United States are in or will be very soon entering into. Second of all, there are much more effective and efficient ways of generating jobs and stimulating the economy. Also, there is no way to ensure that Chrysler, GM, and Ford will make the nessicary changes to their faulty business plan, which they have been using since at least the 1980’s. In conclusions, not only would this bailout be against every rule of capitalism, but the nature of this business plan could lead down the road to communism, where the government has total control over all aspects of businesses. Any well- educated persons would agree that by passing this bailout package, we will only be opening up the flood gates for the uncertain hell that will follow the end of this recession.

                              Resources
NPR. Waterbury, CT.
Saporito, Bill. "Is this Detroit's Last Winter?" Time 4 Dec. 2008.
"2009 Ford Fusion 4-door S Sedan Pricing Report - Official Kelley Blue Book Site." New                    Car Prices, Used Car Prices, Blue Book Value, Car Reviews - Official Kelley Blue                    Book Site. Kelly Blue Book. 13 Jan. 2009                                                                      <http://www.kbb.com/KBB/NewCars/PricingReport/2009_Ford_ 
         Fusion_236823.aspx>.
"2009 Toyota Corolla 4-door S Sedan Pricing Report - Official Kelley Blue Book Site."                    New Car Prices, Used Car Prices, Blue Book Value, Car Reviews - Official Kelley                    Blue Book Site. 13 Jan. 2009 <http://www.kbb.com/kbb/NewCars/Pricing
         Report/2009_Toyota_Corolla_227500.aspx#survey>.

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