Greg Mankiw's Blog: Auto Industry Bailout?
A great summary of the arguments on either side. I agree with Becker. I think the bailout is a wise political move, but a poor economic one. I believe propping up the auto industry in the days of Chrysler is part of the reason we are in this mess now. American auto manufacturers are simply not competitive with foreign manufacturers. They need to change. The lesson would be painful and hard for the auto industry in the short run, but in the long run it will be better for the economy as a whole.
Having said that, the plight of GM and Ford employees is a real one. Perhaps the best move for the government would be to provide retraining programs and other assistance to employees of the failed firms. That would be more effective, in my mind, than any bailout.
1 comment:
Creative destruction. It does need to be allowed to happen, but I don't think it's an all or nothing proposition. Social programs and bailouts soften the blow of capital failures. No simple solutions here.
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