eco 400

Running Head : DO NOT BAIL OUT THE CARMAKERS

: Do Not Bail Out the Carmakers

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Do Not Bail Out the Carmakers

The Economist news 's Do Not Bailout the Carmakers highlights several reasons why American policymakers should not provide monetary help for the ailing industry . According to the news , problems of American vehicle manufacturers have little to do with current economic crisis or lack of money to fund respective company programs . This is in consideration that foreign owned carmakers , such as Toyota , are also experiencing significant decline in

the number of automobiles sold in the United States but have not expressed the need for bailout . Reason they have other important factors of dealing with the crisis in place Why only American firms are in trouble ? First , the three firms (Ford , GM and Chrysler ) have been making products that do not resonate with 21st century consumer demands . While foreign owned competitors were developing and aggressively marketing fuel efficient automobiles at the height of high crude oil prices , American firms were getting obsessed with their Big is Better ' mentality of producing low mileage vehicles such as GM 's Hummer , Chrysler 's Durango , and Ford 's F-150 . American consumers were on the other hand getting concerned with high fuel costs and climate change and therefore opted to purchase fuel efficient hybrids . Second , automobile production costs of America companies are higher because of labor laws that give unions (Union of Automobile Workers - UAW ) too much power to meddle with carmakers affairs any...