Link Stats
Added By: Alex
Added on: 11/11/2008 @ 5:25:30 PM
Link View Count: 528
Economics
Economics
Rate this Link
Yours:

Rated 0 times.

Bailouts for everyone say the Dems!

Did anyone see the South Park about the election? Every time one of the characters said the word change it reminded me of the "Got any change?" episode. I think the change the Obama is bringing to Washington is collecting everyone's spare change and then handing it to the companies that beg the hardest.

On a more serious note, I loathe this:
"Senate Majority Leader Harry Reid, D-Nev., also supports help for the industry, and he issued a statement saying Democrats were "determined to pass legislation that will save the jobs of millions" as part of a postelection session."

If no one is buying cars and we're going to give the companies money to save jobs involved in making cars, we're just going to end up with a pile of cars that nobody is going to buy. All this "saving jobs" BS drives me crazy. Might as well just send the money right to the workers and have them sit at home and stare at a wall all day. That'd be more "green" than making cars just for the sake of paying someone to make cars.
View External Link [news.yahoo.com]
Back to Link List
fry6beeu9.jpgJeremy - 8953 Posts
11/11/2008 @ 05:47:20 PM
 Quote this comment
Screw the car companies. Let these giant dinosaurs die already and let some new people take their place. It's not like we wont have cars. Bailing companies out for the sake of saving jobs, as Alex said, is idiotic. I believe I already complained about this on here.
Rate this comment
Yours:

Rated 0 times.
images.jpgcraig - 131 Posts
11/11/2008 @ 05:51:32 PM
 Quote this comment
Agreed! The problem with these 'bail outs' is that you're not solving the problem (failed business models, excess debt, inefficiency, etc.) you're just dragging out the problem. Sure, they may make a comeback, but even if they do, do they deserve to be bailed out? And would be we be bailing them out again in a few years? A few months?

Once a company gets so big it's 'to big to fail' the government feels the need to prop them up. Yeah, it's a shame that 'millions' of jobs would be lost, but these companies just aren't competitive anymore. Let them go under. Other auto companies would buy up some of the assets, but I have no doubt that one or more American auto company would be started to utilize the empty factories left by these companies. American auto companies not saddled with the debt, union contracts, and retirement obligations that have caused so many problems for the big three. Companies that would be able to actually compete on even terms with the foreign auto makers.
Rate this comment
Yours:

Rated 0 times.
craig messed with this at 11/11/2008 5:52:32 pm
thumbnailCAW1I0O3.gifMatt - Nutcan.com's MBL
11/11/2008 @ 06:16:35 PM
 Quote this comment
According to this guy, the companies can better fix their problems by going through Chapter 11 bankruptcy instead. I say let them do that.

No Bailout for the Auto Industry
Rate this comment
Yours:

Rated 0 times.
Matt perfected this at 11/11/2008 6:17:20 pm
fry6beeu9.jpgJeremy - Cube Phenomenoligist
11/11/2008 @ 06:21:53 PM
 Quote this comment
Yeah, and if a big part of why they need to be bailed out is pensions, then maybe look into setting up something directly for those. Pensions are just a bad idea, for many reasons.

Here's the comment from when I first talked about this.
Rate this comment
Yours:

Rated 0 times.
goodlooking.jpgcraig - 131 Posts
11/11/2008 @ 09:23:50 PM
 Quote this comment
Wow this thread is really stirring up a fire storm of agreement. Let's get back to that gun thing. emoticon
Rate this comment
Yours:

Total:

Rated 1 times.
face.bmpCarlos44ec - Tag This
11/12/2008 @ 07:30:23 AM
 Quote this comment
I'll take my bailout in Chinese Yuan, please.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - Pie Racist
11/12/2008 @ 09:58:36 AM
 Quote this comment
Well here's the thing, there's two solutions I see. Set up some strict regulations aimed at not letting a company get too big to fail, or do nothing and let them go.

There would be immediate trickle down effect. Parts suppliers would feel the pain, for example. However, whatever newer leaner car companies took over would be wise to keep using much of the infrastructure and suppliers.

I really don't even think it would take that long. I don't think there would be a 4 year period while the only American car companies are small startups. I think someone would step in right away, if for no other reason than because snapping up the already built production plants and existing supply chains would be at a premium.

I've often wondered about the point the guy in Matt's article brings up. As companies grow and grow they add and add products. They have to spend lots of money to advertise those products. However, how much of that money even helps you?

If you had one product every commercial would be for that and every sale would be a sale your competitor isn't. If you have 15 brands you have to have 15 ad campaigns and all they might be doing is swaying people from one of your products to the other. I think maybe that's why we've been seeing a lot of "here's our whole lineup of cars" commercial, though even then it's still all Chevy's.

So if mountain dew spends a billion dollars on launching a new flavor of dew, how many of the people who start drinking it are just other mountain dew drinkers, or pepsi drinkers?
Rate this comment
Yours:

Rated 0 times.
images.jpgcraig - 131 Posts
11/12/2008 @ 10:31:13 AM
 Quote this comment
Jeremy Wrote - Today @ 09:58:36 AM
Well here's the thing, there's two solutions I see. Set up some strict regulations aimed at not letting a company get too big to fail, or do nothing and let them go.


There's a third (and correct) way of handling this. Make regulations that actually help. Take the auto companies for example, if there had been regulations that required them to provide 401k type retirement plans rather than the company provided pensions that they are currently stuck with, they would be much more competitive with the foreign competitors. Additional legislation/oversight on the financial institutions (and lending institutions) could have prevented the current financial meltdown as well. The problem is these companies lobby to prevent any of these things, and our politicians are only to happy to take their campaign contributions and give them what they want.
Rate this comment
Yours:

Rated 0 times.
vignette.bmpCarlos44ec - 2078 Posts
11/12/2008 @ 10:35:23 AM
 Quote this comment
If the car companies went from supergiant corporations to smaller companies, how would that effect the end-user pricing? Part of the reason you can get a car for the price they are at is because of mass production and bulk (mfg parts) costs.
Rate this comment
Yours:

Rated 0 times.
face.bmpCarlos44ec - 2078 Posts
11/12/2008 @ 10:36:07 AM
 Quote this comment
craig Wrote - Today @ 10:31:13 AM
Jeremy Wrote - Today @ 09:58:36 AM
Well here's the thing, there's two solutions I see. Set up some strict regulations aimed at not letting a company get too big to fail, or do nothing and let them go.
There's a third (and correct) way of handling this. Make regulations that actually help.


More regulations = bigger government = taxes.

Since you said "regs that actually work" this is kind of a moot statement, but I can just see them making more regs, not better regs.
Rate this comment
Yours:

Rated 0 times.
Carlos44ec messed with this at 11/12/2008 10:37:11 am
vignette.bmpCarlos44ec - Tater Salad?
11/12/2008 @ 10:39:05 AM
 Quote this comment
So, why not a trickle-up effect? If they give me cash money, then I can spend it where I want to! I can go buy a big screen tv, a new stereo, toys, beer, crack, whatever. More money in the hands of the people is good, right?

I would actually use it to put a down on a house or pay for my wedding, but the vast majority of Americans would use it to buy new toys, not pay their debts or get themselves back on financial track.
Rate this comment
Yours:

Rated 0 times.
goodlooking.jpgcraig - 131 Posts
11/12/2008 @ 11:21:58 AM
 Quote this comment
Carlos44ec Wrote - Today @ 10:39:05 AM
So, why not a trickle-up effect? If they give me cash money, then I can spend it where I want to! I can go buy a big screen tv, a new stereo, toys, beer, crack, whatever. More money in the hands of the people is good, right?


Yeah, I know this has been mentioned before but I've never understood the logic of 'trickle down' economics. The way to get the economy going is to give money to people who will spend it. So, give everyone a $500 tax break, and the wealthy can put in their brokerage account to gain value, and the poor can spend it on booze, cigarettes, video games, flat screen tv's, and other things they can't afford, and that will jump start the economy right away. See the poor aren't a burden on society, they are useful resource for economic stimulus! Be proud Walmart shoppers!

I'm not implying anyone here is poor (or a Walmart shopper) so please don't take offense.
Rate this comment
Yours:

Rated 0 times.
newalex.jpgAlex - Who controls the past now controls the future
11/12/2008 @ 01:49:03 PM
 Quote this comment
Carlos44ec Wrote - Today @ 10:35:23 AM
If the car companies went from supergiant corporations to smaller companies, how would that effect the end-user pricing? Part of the reason you can get a car for the price they are at is because of mass production and bulk (mfg parts) costs.


Eventually the smaller companies would probably become bigger again if they could benefit financially from doing so (growth or mergers).

The problem is that the industry is maturing and demand is going to be down because instead of 50% of Americans owning cars and 20% of the rest planning to buy in the next year (made up numbers, but lets say that's how it was in like the 70s) pretty much everybody that wants a car has a car nowadays. At some point production has to be reduced because demand is now reduced, which means jobs are lost.
Rate this comment
Yours:

Rated 0 times.
Alex messed with this 3 times, last at 11/12/2008 1:50:14 pm
jeremy.jpgJeremy - I believe virtually everything I read.
11/12/2008 @ 01:52:51 PM
 Quote this comment
craig Wrote - Today @ 10:31:13 AM
Jeremy Wrote - Today @ 09:58:36 AM
Well here's the thing, there's two solutions I see. Set up some strict regulations aimed at not letting a company get too big to fail, or do nothing and let them go.


There's a third (and correct) way of handling this. Make regulations that actually help. Take the auto companies for example, if there had been regulations that required them to provide 401k type retirement plans rather than the company provided pensions that they are currently stuck with, they would be much more competitive with the foreign competitors. Additional legislation/oversight on the financial institutions (and lending institutions) could have prevented the current financial meltdown as well. The problem is these companies lobby to prevent any of these things, and our politicians are only to happy to take their campaign contributions and give them what they want.


I apparently ended half a thought early. No one wants those regulations, or really any regulations, but then you have to live with the consequences. Every corporation wants to live in a perfectly free market when times are good, the reverse of that SHOULD be that you get to die off like everything else that isn't equipped enough to deal with current conditions.

I'm no economist, so to an extent I'll have to assume that the people that study this stuff are correct, but trickle down economics sounds inherently flawed. In fact, it's against human nature. The simplified idea is that if company owners get more, their employees will get more eventually. First of all, if the goal is to get more money in the hands of the workers, why not just do that? Secondly, if you give people more money, they are just going to hoard it, not give it away.

There are, without question, lucky rich, and poor people that just can't catch a break. It's still, however, more likely the case that people are poor because they make poor financial decisions and rich because they are good with money. Giving poor people money will mean they'll buy tvs, rims, cellphones, etc. Rich people will just stash the money away. No one will "give it away" but poor people WILL give it back to the rich by exchanging it for shit they don't need.

This is off subject, but I wonder what percentage of the uninsured in the country have cable and/or cell phones?
Rate this comment
Yours:

Rated 0 times.
2887.gifAlex - I don't need to get steady I know just how I feel
11/12/2008 @ 02:03:22 PM
 Quote this comment
I'm no expert here either, but to counter the "rich people will just stash their money away" thought, I believe the expectation is that the rich people would invest that money into their company which could result in more jobs, lower prices, better products, etc. which are all good things for the rest of the population. Rich people who make sound financial decisions don't get rich by stashing their money, you have to spend money to make money (or work for it, as if!), and these people are the ones who are supposedly good at doing that.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - 8953 Posts
11/12/2008 @ 02:12:28 PM
 Quote this comment
Carlos44ec Wrote - Today @ 10:35:23 AM
If the car companies went from supergiant corporations to smaller companies, how would that effect the end-user pricing? Part of the reason you can get a car for the price they are at is because of mass production and bulk (mfg parts) costs.


Well, they would eventually be replaced by leaner better companies. There's no way around mass producing them. Really, if you think about how little overhead a company would be starting with, I wouldn't be surprised if they were cheaper.

Though, even if they are more expensive, if you think about it all we're talking about doing now is having everyone in America subsidizing the cost of a car, whether or not they plan on buying one.
Rate this comment
Yours:

Rated 0 times.
jeremy.jpgJeremy - 8953 Posts
11/12/2008 @ 02:16:03 PM
 Quote this comment
Alex Wrote - Today @ 02:03:22 PM
I'm no expert here either, but to counter the "rich people will just stash their money away" thought, I believe the expectation is that the rich people would invest that money into their company which could result in more jobs, lower prices, better products, etc. which are all good things for the rest of the population. Rich people who make sound financial decisions don't get rich by stashing their money, you have to spend money to make money (or work for it, as if!), and these people are the ones who are supposedly good at doing that.


Yes, that's the idea, but it doesn't always happen. They DO in fact just stash it sometimes. The flip side is that either poor people give the money back by buying crap, or they save it for college or something that has a positive impact on society.

There just seems like there's much more potential for a "win/win" that way.
Rate this comment
Yours:

Rated 0 times.
jeremy.jpgJeremy - I hate our freedoms
11/12/2008 @ 02:48:13 PM
 Quote this comment
Also, though this new one might be being brought up by the democrats, it's not like they have the monopoly on bailouts.

http://www.govtrack.us/congress/vote.xpd?vote=s2008-213
Rate this comment
Yours:

Rated 0 times.
face.bmpCarlos44ec - 2078 Posts
11/12/2008 @ 04:00:05 PM
 Quote this comment
Jeremy Wrote - Today @ 02:12:28 PM
Carlos44ec Wrote - Today @ 10:35:23 AM
If the car companies went from supergiant corporations to smaller companies, how would that effect the end-user pricing? Part of the reason you can get a car for the price they are at is because of mass production and bulk (mfg parts) costs.
Well, they would eventually be replaced by leaner better companies. There's no way around mass producing them. Really, if you think about how little overhead a company would be starting with, I wouldn't be surprised if they were cheaper. Though, even if they are more expensive, if you think about it all we're talking about doing now is having everyone in America subsidizing the cost of a car, whether or not they plan on buying one.


Little overhead, you mean Legacy costs right? Overhead is paying for things not directly related to the manufacture of your product. That may be true- OK it is true... but this new company would be facing startup costs, new marketing, would NOT be getting any of the same purchasing benefits the huge companies do.. let's face it, from a business standpoint it pays (literally and figuratively) to be large with a lot of clout. You get things for less, and you're able to pass that saving along.

Startups and splinter organizations rarely see the return on investment in a short timeframe. They have to scratch and claw. Perhaps ultimately they can succeed, but like Alex says, they get huge and clumsy again- the purpetual cycle.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - 8953 Posts
11/12/2008 @ 04:23:44 PM
 Quote this comment
Right, and then we let them die off. I think that, in this case, it's not like the 6 of us would get together and try to start a car company, these would be fairly big organizations from the get go, most likely foreign car companies. Hell, for one thing there's a lot of semi-successful car companies out there that are only NOT making it bigger because of the oligarchy of the "Big 3."

There might be costs that Chevy didn't have, but they also wont be paying $1500 a car in pensions. You'd have to be running an awfully expensive ad campaign for it to break down into $1500 a car. The parts manufacturers would still be just as over a barrel as ever, there would still only be so much demand.

Cars are being so over supplied that lots would be full of cars until the next batch is ready anyway.

Dealerships, Suppliers, ect all need the car companies, not the other way around. Hell, they could be part of the problem.
Rate this comment
Yours:

Rated 0 times.
Jeremy messed with this at 11/12/2008 4:23:55 pm
newalex.jpgAlex - But let history remember, that as free men, we chose to make it so!
11/12/2008 @ 08:29:14 PM
 Quote this comment
Jeremy Wrote - Today @ 02:48:13 PM
Also, though this new one might be being brought up by the democrats, it's not like they have the monopoly on bailouts.

http://www.govtrack.us/congress/vote.xpd?vote=s2008-213


And that's why I didn't vote for McCain. As far as fiscal responsibility goes, I'm equally disgusted with both parties right now. Well, not quite equally, but I'm fully aware that the Republicans are spend happy and into lots of government involvement too. Also, I don't know when Kohl is up for re-election, but I'm starting my vote for the other guy campaign right now. Spread the word.

Edit: I forgot that I titled this with blame on the Dems. Still, they seem to pushing this one.
Rate this comment
Yours:

Rated 0 times.
Alex screwed with this at 11/12/2008 8:45:41 pm
2887.gifAlex - I was too weak to give in Too strong to lose
11/12/2008 @ 08:46:22 PM
 Quote this comment
http://news.yahoo.com/s/ap/20081112/ap_on_go_co/auto_bailout

Going for government ownership in the companies now
Rate this comment
Yours:

Rated 0 times.
matt.jpgMatt - Nutcan.com's MBL
11/12/2008 @ 08:48:04 PM
 Quote this comment
I'm far from an expert, but from my limited knowledge of the subject, and from skimming some Wikipedia articles, here are my thoughts on "trickle-up/down" economics:

1."Trickle-down economics" is more of a political/journalistic term (one that is used kind of pejoratively) for the ideas of "supply-side economics".

2. It's a little too simple to just say that the idea is to give rich people money and that it will work its way down. The real idea of supply-side economics is that economic growth benefits everybody, and that the best way to grow the economy is to get people to produce more. This is done by adjusting tax rates to provide an incentive (or depending on how you look at it, remove a disincentive) for those who have the capital and money to affect the economy (i.e. "rich people") to use the capital and money to produce more (by investing, or starting/expanding/improving a business, etc.).

3. I don't think this approach is necessarily mutually exclusive with tax cuts for everyone else as well, but the point is that when people oppose tax cuts "for the rich", they are potentially sacrificing future economic growth to score points in the class warfare game.


Trickle-down economics (Wikipedia)
Supply-side economics (Wikipedia)
Supply-side economics (econlib.org)
Rate this comment
Yours:

Rated 0 times.
Matt edited this at 11/12/2008 8:48:28 pm
jeremy.jpgJeremy - As Seen On The Internet
11/12/2008 @ 11:16:03 PM
 Quote this comment
Alex Wrote - Today @ 08:29:14 PM
Jeremy Wrote - Today @ 02:48:13 PM
Also, though this new one might be being brought up by the democrats, it's not like they have the monopoly on bailouts.

http://www.govtrack.us/congress/vote.xpd?vote=s2008-213


And that's why I didn't vote for McCain. As far as fiscal responsibility goes, I'm equally disgusted with both parties right now. Well, not quite equally, but I'm fully aware that the Republicans are spend happy and into lots of government involvement too. Also, I don't know when Kohl is up for re-election, but I'm starting my vote for the other guy campaign right now. Spread the word.

Edit: I forgot that I titled this with blame on the Dems. Still, they seem to pushing this one.


Right, but Democrats also don't pretend to be the party of small/no-involvement government.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - 8953 Posts
11/12/2008 @ 11:18:41 PM
 Quote this comment


Isn't that good though? At least, all things considered, we aren't giving the money away for nothing.
Rate this comment
Yours:

Rated 0 times.
face.bmpCarlos44ec - "The tallest blade of grass is the first to be cut by the lawnmower."
11/13/2008 @ 08:43:34 AM
 Quote this comment
Just read on Y! news that Federal bank regulators reject a debt forgiveness plan that would forgive consumers' credit card debts.

I did a double-take on that one. Do people really think the solution is letting folks off the hook? Forgive people for being idiots and let them off without penalty? That's a great way to teach someone a lesson, what say you?

http://news.yahoo.com/s/ap/20081113/ap_on_bi_ge/meltdown_credit_cards
Rate this comment
Yours:

Rated 0 times.
goodlooking.jpgcraig - No, it's time to move on.
11/13/2008 @ 09:12:24 AM
 Quote this comment
Carlos44ec Wrote - Today @ 08:43:34 AM
I did a double-take on that one. Do people really think the solution is letting folks off the hook? Forgive people for being idiots and let them off without penalty? That's a great way to teach someone a lesson, what say you?


That's what economists call 'moral hazard' (the same applies to the bailouts) if you protect people from the consequences of their choices that distorts their decision making. So, for example, if the auto companies get bailed out, that may encourage other large companies in financial trouble to take more risks since their thinking that if they risk pays off they will okay, and if it doesn't the government will help them too. Same with credit cards, if you forgive the debt many of those people will quickly run up their credit cards again.

http://en.wikipedia.org/wiki/Moral_hazard
Rate this comment
Yours:

Rated 0 times.
goodlooking.jpgcraig - 131 Posts
11/13/2008 @ 09:23:03 AM
 Quote this comment
Jeremy Wrote - Yesterday @ 11:18:41 PM


Isn't that good though? At least, all things considered, we aren't giving the money away for nothing.


So, we're going to have a Democratic government that's indebted to the auto unions running the car companies? What possible conflict of interest could there be there? We're just going to end up funding these car companies forever. It's an awful idea.

Let them die. One of the reasons that the United States has been able to maintain it's high growth rate (and productivity) relative to other countries is that, traditionally, it has let the market decide what companies should survive and which shouldn't, while other countries (particularly Europe) would try to prop up large inefficient failing companies.
Rate this comment
Yours:

Rated 0 times.
jeremy.jpgJeremy - I believe virtually everything I read.
11/13/2008 @ 10:02:56 AM
 Quote this comment
craig Wrote - Today @ 09:12:24 AM
Carlos44ec Wrote - Today @ 08:43:34 AM
I did a double-take on that one. Do people really think the solution is letting folks off the hook? Forgive people for being idiots and let them off without penalty? That's a great way to teach someone a lesson, what say you?


That's what economists call 'moral hazard' (the same applies to the bailouts) if you protect people from the consequences of their choices that distorts their decision making. So, for example, if the auto companies get bailed out, that may encourage other large companies in financial trouble to take more risks since their thinking that if they risk pays off they will okay, and if it doesn't the government will help them too. Same with credit cards, if you forgive the debt many of those people will quickly run up their credit cards again.

http://en.wikipedia.org/wiki/Moral_hazard


Not to mention what about us people who didn't max out their cards on crap. I'd like a new laptop and all kinds of crap, should I quick go run up my card?

craig Wrote - Today @ 09:23:03 AM
Jeremy Wrote - Yesterday @ 11:18:41 PM


Isn't that good though? At least, all things considered, we aren't giving the money away for nothing.


So, we're going to have a Democratic government that's indebted to the auto unions running the car companies? What possible conflict of interest could there be there? We're just going to end up funding these car companies forever. It's an awful idea.

Let them die. One of the reasons that the United States has been able to maintain it's high growth rate (and productivity) relative to other countries is that, traditionally, it has let the market decide what companies should survive and which shouldn't, while other countries (particularly Europe) would try to prop up large inefficient failing companies.


Well obviously I still feel we should let them die, I just mean that if we're going to be giving them this money, shouldn't we get something?
Rate this comment
Yours:

Rated 0 times.
Jeremy perfected this at 11/13/2008 10:03:57 am
scott.jpgScott - 6225 Posts
11/13/2008 @ 12:03:37 PM
 Quote this comment
If GM and Ford can't keep up with the demand for more fuel efficient vehicles, I say screw 'em. I won't ever buy from either of those companies anyway. I'm a Toyota/Honda/Mazda guy myself. Also let me note that I hate America*.


(*this statement is not true)
Rate this comment
Yours:

Rated 0 times.
Scott perfected this at 11/13/2008 12:05:00 pm
face.bmpCarlos44ec - "The tallest blade of grass is the first to be cut by the lawnmower."
11/13/2008 @ 12:24:23 PM
 Quote this comment
I've driven many cars, but now that I can afford to buy a nice one, I go for foreign. For quality, fuel economy, and overall cool-factor.
Rate this comment
Yours:

Rated 0 times.
newalex.jpgAlex - 3618 Posts
11/13/2008 @ 01:54:42 PM
 Quote this comment
I think a government loan (at inflation only?) would be better than government ownership which would be better than a handout.

I fully intend to buy American, as long as the choices are comparable. Seems like a better way to support our companies and jobs than giving bailouts.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - 8953 Posts
11/13/2008 @ 02:54:55 PM
 Quote this comment
Well, the lines of what it means to "buy American" are getting fuzzier and fuzzier.
Rate this comment
Yours:

Rated 0 times.
thumbnailCAW1I0O3.gifMatt - 3354 Posts
11/13/2008 @ 03:51:53 PM
 Quote this comment
craig Wrote - Today @ 09:12:24 AM
That's what economists call 'moral hazard'


It seems that I must redouble my efforts if I wish to retain my monopoly on introducing economic concepts to the Nutcan. emoticon
craig Wrote - Today @ 09:23:03 AM
One of the reasons that the United States has been able to maintain it's high growth rate (and productivity) relative to other countries is that, traditionally, it has let the market decide what companies should survive and which shouldn't, while other countries (particularly Europe) would try to prop up large inefficient failing companies.


I agree with Craig here. It's a necessary and unavoidable aspect of a free-market economy that new companies thrive at the expense of the less productive ones, and new industries replace obsolete ones. This is called creative destruction. While this hurts some in the short term (and possibly longer), the economy can't grow without it, and if the economy doesn't grow, everybody suffers in the long run.

To echo Craig's comment, I'll post the last two paragraphs from this article:
http://econlib.org/library/Enc/CreativeDestruction.html

"Over the past two centuries, the Western nations that embraced capitalism have achieved tremendous economic progress as new industries supplanted old ones. Even with the higher living standards, however, the constant flux of free enterprise is not always welcome. The disruption of lost jobs and shuttered businesses is immediate, while the payoff from creative destruction comes mainly in the long term. As a result, societies will always be tempted to block the process of creative destruction, implementing policies to resist economic change.

Attempts to save jobs almost always backfire. Instead of going out of business, inefficient producers hang on, at a high cost to consumers or taxpayers. The tinkering shortcircuits market signals that shift resources to emerging industries. It saps the incentives to introduce new products and production methods, leading to stagnation, layoffs, and bankruptcies. The ironic point of Schumpeter’s iconic phrase is this: societies that try to reap the gain of creative destruction without the pain find themselves enduring the pain but not the gain."
Rate this comment
Yours:

Rated 0 times.
Matt edited this 2 times, last at 11/13/2008 3:53:52 pm
fry6beeu9.jpgJeremy - I believe virtually everything I read.
11/13/2008 @ 03:55:47 PM
 Quote this comment
Maybe someone should bail this lady out too.

http://www.katu.com/news/34292654.html

Edit: Well Craig is an econ major. You just took some classes.
Rate this comment
Yours:

Rated 0 times.
Jeremy perfected this at 11/13/2008 3:56:31 pm
matt.jpgMatt - Ombudsman
11/13/2008 @ 04:02:20 PM
 Quote this comment
I am offended. I have a degree in economics as well. Not that it means much, but I have it.
Rate this comment
Yours:

Rated 0 times.
Matt screwed with this at 11/13/2008 4:24:03 pm
fry6beeu9.jpgJeremy - 8953 Posts
11/13/2008 @ 04:04:10 PM
 Quote this comment
Yeah, I know. 9-10 posting users and 3 people with an econ degree. Clearly econ is an easy fall back major.
Rate this comment
Yours:

Rated 0 times.
matt.jpgMatt - 3354 Posts
11/13/2008 @ 04:07:36 PM
 Quote this comment
I guess that means Craig can join Jon and me in the Non-Practicing Economists Club.
Rate this comment
Yours:

Rated 0 times.
images.jpgcraig - 131 Posts
11/13/2008 @ 09:15:05 PM
 Quote this comment
Matt Wrote - Today @ 04:07:36 PM
I guess that means Craig can join Jon and me in the Non-Practicing Economists Club.

I believe what you mean is I can join the 'Nutcan Economic Advisory Council'. If any organization can chart a way out of these troubled economic waters it's the NEAC.
Rate this comment
Yours:

Total:

Rated 2 times.
goodlooking.jpgcraig - 131 Posts
11/14/2008 @ 08:36:02 AM
 Quote this comment
I'm listening to WPR and they are speculating that GM may actually not want a bailout, but prefer to go into bankruptcy. With the idea/hope that the bankruptcy court would nullify the collective bargaining agreement and they could emerge from bankruptcy union free. If that's their plan they'd better hurry because I doubt President Obama would let that happen.
Rate this comment
Yours:

Rated 0 times.
fry6beeu9.jpgJeremy - Broadcast in stunning 1080i
11/14/2008 @ 09:20:12 AM
 Quote this comment
Well who was the crazy person who green lit those in the first place?
Rate this comment
Yours:

Rated 0 times.
2887.gifAlex - Refactor Mercilessly
05/27/2009 @ 05:51:29 PM
 Quote this comment
http://news.yahoo.com/s/ap/20090527/ap_on_go_pr_wh/us_government_motors
Rate this comment
Yours:

Rated 0 times.
newalex.jpgAlex - Refactor Mercilessly
03/09/2012 @ 01:35:48 PM
 Quote this comment
http://news.yahoo.com/american-auto-bailout-france-100824412--abc-news.html
"Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.

That's right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen - a 7 percent stake in the company.

Because U.S. taxpayers still own roughly one-quarter of GM, they now own a piece of Peugeot."
Rate this comment
Yours:

Rated 0 times.
Leave a Comment of your very own
Name:
Comment:
Verify this code
Verify the Code in this box, or sign in, to post a comment.
click me!
There's an emoticon for how you feel!
click me!
My Files
Sign up, or login, to be able to upload files for Nutcan.com users to see.