You accidentally hit on the other problem with the bailout. Chrysler got one in 1983 and now 25 years later they need another, thus proving that all that money didn’t help them fix the core problem of a mis-run company.
Failure part of the natural business cycle, the failure of some helps others to succeed. By bailing companies out and preventing failure we prevent that additional success for others. Think about it like this, had Chrysler failed GM and Ford would have been the big winners, being the only other major American auto companies (and thus the only guys capable of getting the “buy American only” customers Chrysler left behind) and the only other big truck guys they would have gotten the lion’s share of Chrysler’s business. To keep it easy figure GM and Ford would each have gotten about 1/3 and then “the field” (Japanese, Italian and small American companies) would have gotten the rest.
How much better off would GM be now if for the last 25 years they’d gotten 1/3 of Chrysler’s business?
And the answer to that question is why bailouts are stupid.
The states are GIVING with tax breaks, they’re TAKING LESS. We’ve already had that discussion.
Really, let’s see we have 25 years of taxes from Chrysler and its employers. Chrysler invented the Mini Van- sold tons and tons...one of the best selling cars of all times. Chrysler paid back all the money with interest and provided many jobs...I consider that a success. As for GM getting the business from Chrysler...not without changes in the trade policy. We are not talking about one company going under here...without a loan, the entire industry goes down...well worth giving a loan. As for giving tax breaks...The government has no independent funding thus they must take before they can give tax breaks to say the transplants. They also used enterprise zone (federal) money-another wonderful Clinton legacy (sarcasm).