No bailout for ‘Big 3’

Submissions for Op/Eds must be dismal for The Crimson White to have printed Nicholas Rose’s misinformed, misleading and delusional piece on the proposed auto bailout on Wednesday. I will give him this: The title was accurate. The bailout bill is not socialist — unless the government takes an ownership interest in the “Big 3” — but the article’s respectability ends there.

The Big 3 are the “anchor and bedrock of American industry and business?”

Please.

Maybe in the Rust Belt, but not in the rest of the country, where we’ve moved our economies onward, changing with the times. When the textile and paper mills across the South were shutting down due to outsourcing, did the Clinton administration or the Contract with America Congress jump to the rescue with a $25 billion subsidy? No, and they should be lauded for that.

Those corporations hadn’t even made such idiotic and shortsighted business moves as paying high school dropouts $30 to $40 an hour, or continuously pumping out 12 miles-per-gallon SUVs, despite the obvious signs of steeply rising gas prices. People all over the South complained and railed against globalization, but it came anyway, and we moved on.

Now we’ve diversified our economy and added jobs — most notably in the automotive industry, of all places.

Of course, the Rose article doesn’t even attempt to address these commonsense and obvious refutations of his claims. The best he comes up with is a cheap, nationalistic emotional reaction against “auto companies who send their bottom lines to Korea, Tokyo and Berlin. Places where socialism is rampant.” I’ll even ignore that statement’s obvious failure to mention that those very companies are the ones who have created thousands of jobs here in Alabama, and move onto the fact that those vile, foreign automakers are public companies, and like all publicly traded stocks, they pass their dividends onto whoever owns them. Americans are free to buy a share of Daimler AG (NYSE symbol: “DAI”), Mercedes’ parent company, just as foreigners can buy shares of Ford (NYSE symbol: “F”).

Now I must take a moment to address the glaring historical distortions about “The New Deal, The Great Society, progressive programs that put Americans and their interests first.”

As charming as his populist rhetoric is, it fails to mention a very important fact — all of these programs were massive failures. The War on Poverty not only failed to decrease poverty, it entrenched its supposed beneficiaries in a system that would lock them into government dependency for generations.

By the way, I’m not a Republican.

Finally, with the goal of informing my fellow UA students, I’ll address a very important issue regarding the bailout that Rose surprisingly didn’t raise directly. The multimillionaire CEOs on Capitol Hill today are trying to convince Congress that if they fail, all the businesses that depend on them (dealerships, material suppliers, etc.) will also fail. This ludicrous argument proceeds essentially as follows: Ford, GM and Chrysler purchase billions of dollars worth of materials and services each year, and if the Big 3 fail, then these purchases will stop and, as Rose lamented “3 million jobs would be lost.”

It superficially makes sense, and to an elementary education major, that apparently is enough. But the argument falls apart under a simple economic analysis. Those nationally important purchases by the Big 3 are made to produce cars, which are then sold to satisfy their respective market share of the global demand for automobiles.

The disappearance of a producer does not destroy the total demand, only one part of the supply. The market share previously filled by, say, Chrysler, will not dissolve, but will instead be absorbed by Hyundai, Toyota, BMW, etc. And these manufacturers will then need more materials to produce enough to satisfy their new chunk of the market, thus offsetting the “loss” of business activity provided by the Big 3. Put more simply, people aren’t going to start riding bikes just because they can’t get a Chevy. They’ll just buy something else that was produced with the same amount of steel, rubber, nylon, plastic, etc.

So don’t listen to the apocalyptic hyperbole of those who want to subsidize dying corporations who had every opportunity to succeed in a thriving industry but wasted their chance with foolish decisions. Let nature take its course with Detroit and let Alabama reap the rewards.

Judson Crump is a third year law student.