The U.S. Government Should Allow the Big Three Automakers to Go Bankrupt

I offer my apologies to my opponent, in my attempt to address the issue "tout ï¿½ fait" I failed to directly address some of the points he raised. To make amends, in this round I will tackle each point in turn. 1 (a) – Legacy costs are, indeed, a huge impediment to the future success of these firms. That is why they need to be re-negotiated with the unions. As I mentioned previously, given a stark choice of productivity deals, voluntary redundancies and reduced employer pension contributions on one hand and the total closure of the business on the other hand, the unions would have to accept the required restructuring measures in order to save their members' jobs. 1 (b) – I think my opponent may have been confusing the HUMMER H2 "soft-roader" with the formidable HUMMER H1 which is based on the US Army military HUMVEE. They are two very different kettles of fish. The former rarely goes off road and is more usually found cruising up and down city swanky boulevards adorned with chromed running-boards, low-profile tyres and spinners all of which preclude any off-road progress. They are more fashion statements for people with more money than sense or status symbols for small-time drug dealers than serious off-road vehicles. Regarding the Q7 – no I wouldn't want to go to war in one. That said, a bloke I met in the pub told me that SUV buyers in Germany are expected to invade Poland in them. Okay, he'd been drinking heavily, but still... 1 (c) - The bailout of the financial industry was botched because it was implemented as a panic measure. That doesn't mean to say some sort of rescue package wasn't necessary and in the long-term interests of the country. My point is that any bailout of the auto industry should be more circumspect and should be subject to on-going Government scrutiny. In the final analysis, the overall cost to the economy of unemployment benefits or well-paid skilled workers being forced to take low-skilled, low-paid service sector jobs would far outweigh the cost of any investment in the industry, even if it failed to produce any substantial direct returns in the future. Regarding nameplate nostalgia, yes, my opponent is right, I do believe the public attach a value to this. One of Britain's oldest and most famous marques, Rover, is now in foreign hands all because the firm failed to invest in new models. This is a source of great national shame. Sure, you can still buy a Rover, but it will be a seriously outdated car that was made in China. I wouldn't like to see marques like Cadillac go the same way. At the end of the day, you can't evaluate everything merely in terms Pounds, Shillings and Pence – national pride is worth something too and we shouldn't always take the advice of people who know the price of everything but the value of nothing. 2 – In business, nothing is inevitable. No decline cannot be reversed provided the correct remedies are implemented. In the case of the "Big 3" this means streamlining and investment in research and development. This takes capital, which the companies don't have. Since the banks are unwilling to invest, the Government must. The alternative is that famous names like Ford, Chevrolet, GMC, Chevrolet, Dodge, Pontiac, Mercury, Lincoln, Jeep, Cadillac and Buick could fall into the hands of cash rich companies like Porsche. They recently took a 75% stake in Volkswagen, which was then valued at EUR287 billion (USD363 billion), which is more than the market value of companies such as Exxon Mobil or Microsoft. http://business.timesonline.co.uk... Most Volkswagens are now produced where it is cheapest: in East Europe, Asia, Africa and South and Central America. Why would Porsche / Volkswagen, or any other foreign buyer, continue to produce bog-standard, labour-intensive vehicles in North America when it would be much cheaper to move production abroad? http://www.volkswagenag.com... Does a patriotic American really want to drive around in a Lincoln Shantytown Car or a Jeep Goatherder or a Pontiac Firebird Transvaal or a Ford Mule GT or a Cadillac de Favela or a Chevrolet Former Yugoslav Republic of Macedonia? 3 – My opponent's reference to state aid for the industries such as cotton growing and textiles represents a false dichotomy. This type of industry is low paid and low skilled. In Asia, cotton is picked and processed and the clothes manufactured by children which is why you can now buy a shirt for less than the cost of laundering it. Low paid, low skilled American workers never contributed huge amounts in tax revenues and can be easily redeployed into low-paid jobs in the service sector. Skilled workers on good pay in the auto industry contribute far more to the economy. Furthermore, firms that supply the car companies would have to shed workers on a wholesale basis if the auto industry was allowed to go to the wall. 4 – I broadly agree with my opponent that even though the "Big 3" were allowed to fail, cars would still be produced in the US, albeit by companies such as BMW, Toyota and Mercedes. This is what happened in Britain after our once proud motor industry went west. Here is the current list of car manufacturers in Britain, followed by which country the profits go to in brackets: Aston Martin (Great Britain) Bentley (Germany) MINI (Germany) Honda (Japan) Jaguar (India) Lotus (Malaysia) Land Rover (India) MG (China) Nissan (Japan) Rolls-Royce (Germany) Toyota (Japan) Vauxhall (USA) http://www.autoindustry.co.uk... Fantastic. Of the millions cars produced in the UK every year, only the profits of a niche market producer of hand-built sports cars goes into a British bank account. The rest is transferred to accounts in Munich, Tokyo, Mumbai, Kuala Lumpur, Shanghai, Nagoya and Detroit. Again, this not just is a matter of money, but also national pride. 5 – My opponent wrote: "I challenge Con to explain what would have happen if agriculture had been protected by government, rather than allowing market forces to prevail." Perhaps Pro is unaware that under the United States Farm Bill, American agriculture receives over $55 billion per year in Government subsidies? If market forces HAD been allowed to prevail, American farmers would be poorer and food would be cheaper. Incidentally, the reason so few people are employed on the land compared to a hundred years ago has nothing to do with the decline of the industry and everything to do with farm mechanisation – a combine harvester can do the work of dozens of men. Although I generally agree that market forces should prevail, some industries need Government support in order times of crisis. This is not for the benefit of the shareholders, they should understand that the value of their investments can go down as well as up, that is the risk they take. No, some vital industries need to be supported because the alternative would spell wider economic chaos. For example, if the power companies went bust, should the Government let the lights go out? 6 – Indeed, I do not dispute that the Government should facilitate industry transition, with the following caveat: provided it is not a key industry; and I would politely refer the voters to the passages hereinabove for a detailed explanation of my reasoning for this qualification. Thank you.