Critique of George's Critique of Jessica's M's "Obama Says No More"

Good day everyone. Today I thought to myself, "I should critique a critique", and that's exactly what I did. First, I came across George's critique of Jessica Morse's blog and it was such an interesting topic, I felt compelled to give my two cents. I agree with Jessica and George on Barack Obama’s decision to make strict loan guidelines to the auto industry giants Chrysler, GM and Ford. One reason is because there is a future with these companies to consolidate and restructure their business if forced to because money is not simply handed to them by the government. Not every company gets a bailout and yes, the nation is dependent on the success of the auto industry because it allows us to compete in the global market. However, the production of new lines of vehicles is not worth the nation falling into a deeper deficit. The government’s decision is based on the lack of the auto giants’ abilities to sharpen their focus on marketing, which is what is crucial to making a profit, therefore satisfying bondholders.

Another interesting factor in why the bailout should not just be “handed” to these giants is the prevention of innovation. This struggle will force the corporations to think outside of the box, breaking the monopolistic hold on the technology that would come from companies such as Fiberforge, Aptera and Tesla Motors. These companies have the ability to create more earth friendly, fuel efficient vehicles which would lower the cost of manufacturing. This brings more of a benefit to consumers because with reduced costs of production, it would allow a lower sticker price. Also, outsourcing technological production needs to these smaller companies would enable more consumers to purchase cars that are safer for the environment, electronic in nature (lower gas expense), thereby improving the economic welfare of the nation.

The restricted bailout term appointed by President Obama would force GM, Chrysler and Ford to restructure on their company’s budgets, instead of wasting the government’s money. I believe that if these companies are given large sums of money at the consumer’s expense that the same result of non-profitable investing and wasteful allocation of funds will continue to occur. Unless and until they are forced to recognize that the inner-structuring of their operations in the financial and management strategies are in dire need, they will inevitably fail. Appreciation for the assets obtained by efficient production and possibly outsourcing to more cost-effective smaller companies will most likely drive future success.

Sources:
1 http://usnews.rankingsandreviews.com/cars-trucks/Auto-Bailout/

2 http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/03/EDSN14G1SR.DTL&type=autos

3 http://abcnews.go.com/Politics/story?id=6431621&page=1