I must admit to not really having a position yet on the auto bailout. My entrepreneurial side says “let them go bankrupt”. Why invest in poorly run companies? If our goal is to maintain an auto industry in the US and save jobs, then why not put our money in fresh new companies that are free of old problems, debts, and bad management. What would happen if we gave the electric car company Tesla a couple billion dollars? They’ve already proven they can build a viable (albeit expensive) electric car, and now they want to build a model that is more mainstream. Lets give them and the other start-up green car companies a shot. Perhaps if we finance them they can step in fairly quickly and reinvigorate the American car industry. What if we gave every taxicab company in the US an interest free loan and a tax credit if they would order an electric car, and gave the new companies enough money to get large manufacturing rolling to meet the demand. Wow – quiet big cities with clean air! Sounds nice! Maybe we could reopen a few closed auto plants with new owners. Wouldn’t it be nice to see our money actually creating jobs right away? Supporting necessary innovation seems smart.
But then I look at the massive amounts of money we have given to companies that don’t really produce anything. What’s your favorite AIG or Citigroup product? Has the money the government gave to your local bank really pumped up the economy, or are they just sitting on the capital? I have good friends that own car dealerships that would be devastated by the loss of our car companies.
So it’s a difficult dilema.
But in any case, there might be a source of funding out there we are overlooking. In 2008 the US gave out $26 billion in foreign aid – 70% more than when Bush came into office (not including the enormous war expenses). If we were to drop foreign aid back to the pre-Bush days (in fact – is there some way to revert everything to the pre-Bush days?), we would free up over $18 billion dollars.
A certain level of foreign aid is a necessity. I’m certainly in favor of building schools, and providing food and education, but a lot of the money goes for weapons. We gave Israel $2.4 billion last year for weapons, and starting next year we plan to give them $30 billion over the next thirty years. $30 billion would be enough to fulfill the car companies demands.
We gave Egypt $1.3 billion for weapons last year, and we gave the Jordanian government $163 million “just because we like them”.
Proponents of giving the money away point out the fact that American companies make a lot of the weapons, so some of the money comes back to us. But I would rather be selling Israel Tesla electric cars than bombs, and if we built a few more schools to educate our potential enemies, perhaps we wouldn’t need so many jets to kill them. Wouldn’t it be great to be in the business of exporting healthy technologies rather than sophisticated ways to kill people?