The GM layoffs remind us that bailouts don't work

We were told that we simply must bail out General Motors during the financial crisis because if we failed to, that would lead to a bloodbath of job losses and cascading business failures. But the job losses were always going to come: Paying people to build things that consumers don’t really want isn’t a sustainable business model. That’s a reality you cannot bail your way out of.

Advertisement

The U.S. government was buffaloed into the bailouts. The so-called experts argued that if GM went down, it was going to take the whole U.S. automobile industry with it, that its failure would do such violence to the supply chain and automotive ecosystem that it had to be prevented at practically any cost. That alone should have been reason enough to liquidate GM rather than reorganize in bankruptcy what we were just informed is a systemic threat to the stability of the U.S. economy.

But the U.S. automobile industry was never going to fail in toto. The unprofitable parts were. There are billions and billions of dollars to be made selling Americans pickup trucks and SUVs, and GM knows how to do that. And if GM doesn’t do it, somebody else will. We’ve already seen that as U.S. automakers wind down their passenger-car businesses: Soon, you won’t be able to buy a Ford sedan in the United States, but you can do yourself a favor and buy a Toyota Camry, instead. “But what about our jobs?” the so-called nationalists demand. The Toyota Camry is made in Kentucky, which, last time I checked, was still in the Union.

Join the conversation as a VIP Member

Trending on HotAir Videos

Advertisement
Advertisement
Advertisement