Automotive Finances & Money

Ben Stein’s reasons to bail out Detroit

I was directed by a Snopes article to a commentary written by Ben Stein at Yahoo Finance about why America needs to bail out the big 3 automakers (Ford, GM and Chrysler). I do recognize both sides of the argument (for and against the bailout), and Ben articulates the reasons FOR the bailout fairly well.

In brief, here are some of his main points:

To allow our largest heavy industrial component to fail at this delicate moment is suicidal. To put a couple of million more Americans into unemployment is just not sensible. Mr. Barack Obama is talking about public works projects to employ hundreds of thousands of Americans -bridge building, school building, airport building. These projects take time to start, disrupt local community life, and are famously wasteful.

Why not be smart about it and NOT LET AMERICANS GET UNEMPLOYED IN THE FIRST PLACE? (Please pardon the shouting.) There are millions of Americans already hard at work making great American made cars and trucks. Why not keep them on the job? Wouldn’t that be smarter than allowing the whole upper Midwest to fall into oblivion and then rescue it over a fifty year period?

I didn’t actually think of it this way in relation to Obama’s job creation goal. Granted, it still doesn’t answer the question of whether we should let the market create jobs (and run on its own) or the government, but we ARE in dire times economically here and something needs to be done by someone. And when you can save millions of jobs in one fell swoop versus having to create them one-by-one, then I guess it does make sense. The next question is HOW to do it so you don’t make companies dependent on the fed (much like welfare can (and does) make some people dependent on the government rather than self-sufficient).

Stein then counters arguments by professors by pointing out that schools get hefty tax breaks on donations, but I think he was speaking directly to some critics and left out some key information for the average reader. He then went on to question the fed’s decision to fund bailouts for the financial sector, operations in Germany, and of course Iraq and other war-torn countries, but not provide aid to our own fellow countrymen.

Ben then counters one of my own arguments regarding why the UAW won’t make concessions regarding line worker pay and retirement benefits. I do think changes should be made to future workers, but Ben points out an interesting question if we went and changed/canceled the benefits for current retirees and workers:

And what about the retirees? They get the benefits they were promised. If those can be taken away, then whose benefits are safe? And do you think it will be cheaper if the government takes on those costs directly?

I guess I wouldn’t want to sign on to a company or federal agency in part for their benefits, only to have them pulled away when I need them the most. The automakers and UAW made their financial mess years ago, but the DID make a promise to those employees. The question is whether they will learn from those financial mistakes and change for the better. Will the automakers and UAW actually slim down so they can remain competitive in today’s economy?

Well, with Bush’s new aid package, they only have about 3 months to prove it.

About the author

Clever Dude


  • Those all seem like very clever points Ben is making. He is right that saving millions of jobs is better than losing them but with a plan to get them back. That’s always easier said than done. I think work project programs is something Obama could and will implement to help out workers and the community. I thought this was done in years past to help the country and was successful, am I misinformed?

  • @Craig, my viewpoint is that any jobs programs run by the government tend to be fairly mismanaged and wasteful. Take the DC summer jobs program this past year. They went in the hole by $millions. If they can support a few million jobs until a reorg can be arranged, then that is much more efficient than starting from scratch.

  • @Clever Dude That makes sense, I didn’t realize the DC programs were so unorganized and unsuccessful. Any program though if ran poorly will be successful. I also think they the bailout is good, tough situation to be in for America right now, and know easy answer to it. What are some the main reasons against it, besides the reliance on the government?

  • @Craig, reasons against the bailout:
    1. Not the fed’s responsibility to interfere in the free market
    2. Let the automaker execs pay for their poor decisions
    3. Are Mexico and Canada helping with the bailout? (Actually, Canada is).
    4. Make the UAW cut pay and benefits if that’s what’s killing the automakers.
    5. If they go bankrupt, then it’s easier for the automakers to restructure outside of UAW/Dealer contracts. They can become better faster by not having to honor labor contracts.

    Feel free to add to the list. Those were off the top of my head.

  • but homie…

    1. it has happened many many many times before throughout our lifetimes, well, your longer lifetime 😉


    3. stop buying goods that are of lower quality from mexico…
    when i think quality, i think mexico

    4. NLRB would smack the auto industry around for that one. The higher ups are the dumb ones that signed the contracts and the NLRB would bring the pain.

    5. that makes sense in theory…but that would never happen. they would continue to manufacture pieces of crap, but the execs would get more money, and they would still pay dividends out.

  • re: 1. But it was the “free market” that got us in this mess! Namely, lack of regulation, which led to subprime mortgages being given out right and left, which led to the current financial disaster. And besides, didn’t the government already “interfere in the free market” by passing the $700 billion bailout? ;p

  • I almost hope Ben Stein is kidding. His argument is, basically “We want to avoid massive waste and inefficiency. So let’s write a big ol’ check to — the American auto industry!” (This is a slightly worse idea than this one: ). It might be marginally better in the short run to bail out auto companies instead of spending money on public infrastructure. But in the long run, the auto companies are harder to give up on than a public infrastructure project.

Leave a Comment