United States auto industry could not survive without government support for the following reasons: first is the loss of market share to foreign auto makers such as Toyota, and Honda. Secondly, the US auto industry is unable to withstand an economic recession. Lastly the alternative of the government not supporting the US auto industry will result in an increase in unemployment, and can cause other social and economic issues. According to the Wall Street Journal research, foreign companies capture 1/3 of the US market.
The leading US companies are GM Motors, Ford, and Chrysler totaling around 46. 2% of the market. The leading foreign companies are Toyota, Honda and Ionians totaling around 31. 4%. This is a significant loss of revenue to foreign competitors. In the US market economy the better firms are more innovative, more efficient, and supply the demand of consumers, therefore they gain more market share. The US companies are losing a large market to foreign companies and in result of that struggle to survive hard economic times.
The first significant US auto industry bailout took place during the George W. Bush administration. After the recession in 2008 the auto industry faced another difficult era resulting in another bailout from the President Barack Obama administration. Obama bailout totaled $85 billion for GM motors, and Chrysler. Bush also defended the decision of Obama’ bailout because he believed without the bailout the country would have had a second great depression resulting in 21% unemployment.
Twice the US auto industry leaders have been unable to withstand hard economic times, exulting in government aid. This proves that our industry leaders are unable to survive without government aid. Similarly to what George W. Bush states if the US government does not bailout our auto industry what is the alternative? We understand how tax payers find this difficult and frustrating, however it is necessary. In conclusion, gas price control will spoil fair market mechanism and make our lives more irrational.
Furthermore, price control will cut down incentives that suppliers make more goods or services which we ant, especially useful alternatives for our society, such as oil shale. Therefore, we disagree with the statement that government should control gas prices. On the other hand we believe that without the government bailout our unemployment rates will soar to an all-time high. This could lead too great depression, and or other economic related issues we have yet to face. It’s important for the US to protect their economy, and the support what is necessary to remain socially aware. Auto Industry Bailout By generates