Tucson CitizenTucson Citizen

Big 3 bailout would be appalling

About five seconds after the $700 billion financial bailout passed, politicians asked about saving automakers, too.

And then there were the “underwater” mortgage-holders. And really, would it be fair to let Circuit City die?

The “Where does it stop?” roulette is complicated when it comes to our important domestic auto industry – but not that complicated.

For years, the Big Three automakers have known this day would come. For years, they rushed shoddy-quality cars to dealerships, trading away brand value for immediate cash.

They eventually resolved quality problems but repeated the same pattern of grasping the quick cash fix with SUV gas guzzlers and putting off development of increasingly popular hybrids.

They also entered into insanely pricey labor contracts loaded with future costs (like pensions) that would have to be paid eventually.

Well, the day of reckoning is now here, and the U.S. taxpayer is in a pickle.

I realize that the ripple effect a Big Three failure would cause further pain for our economy – and would personally hurt many close friends in my husband’s hometown near Flint, Mich.

However, I’m appalled that the Democratic leadership and President-elect Barack Obama are even considering extending the financial-sector bailout to carmakers.

It would be one thing to try to help the industry retool, manage a painful process of drastic expense reduction and become competitive. That would be reasonable if still anti-free market.

But most current proposals would simply bail out automakers that are dying due to inability to meet demand, as well as excess capacity and unsustainable expenses.

In 2005, for example, GM produced three times as many cars as Toyota in North America – but had five times the number of production workers. GM had 77 plants (all unionized) to Toyota’s 12 (only three of which were unionized).

As Russ Roberts, professor of economics at George Mason University, put it in an interview:

“Historically, many companies are driven by bad decisions. If GM dies, it will be painful, but it may die anyway. And with a bailout, it will die with my money.

“Let the resources and energy and creativity flow into companies that can actually do something with them.”

Citizen Online Archive, 2006-2009

This archive contains all the stories that appeared on the Tucson Citizen's website from mid-2006 to June 1, 2009.

In 2010, a power surge fried a server that contained all of videos linked to dozens of stories in this archive. Also, a server that contained all of the databases for dozens of stories was accidentally erased, so all of those links are broken as well. However, all of the text and photos that accompanied some stories have been preserved.

For all of the stories that were archived by the Tucson Citizen newspaper's library in a digital archive between 1993 and 2009, go to Morgue Part 2

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