As North American taxpayers take a look at the gleaming new models on display at Detroit’s auto show this week, they might well ask themselves just why they poured billions of dollars into saving GM and Chrysler when no one else would.
Politicians, local car dealers, parts suppliers and the auto workers’ unions told them it was to protect strategically vital jobs in their economies. But far from being essential to our economic future, those jobs are rapidly becoming obsolete—at least in this part of the world, where they are being funded by taxpayers’ money.
With GM car sales in China up over 60 per cent this year and North American sales still down from last year, I know what I’d be doing if I were running the company.
I’d take the bailout money given by the taxpayers of countries with shrinking auto markets, like the US and Canada, and use it to build new car plants in China and other countries where car sales are booming. (GM already sells almost as many cars in China as it does in the US.)
But I’m sure the company promised not to do that.
Even so, the bailout is a losing proposition for North American taxpayers, who have become the de facto owners of the company. US car sales are a shadow of what they once were, and in a world of triple-digit oil prices, they will become even fainter.
There were four million fewer cars on American roads last year than there were the year before. As oil prices climb ever higher, some 50 million more vehicles will be heading for the exit lane over the next decade.
Is that the kind of market outlook the taxpayer should be investing in?
But invest they have. American taxpayers ponied up some $40 billion last year. The federal government in Canada, along with the provincial government of Ontario, anted up $14.5 billion in direct taxpayers’ assistance to GM and Chrysler—a bailout equal to half those jurisdictions’ entire annual corporate tax collection.
Just think of the public outrage that would follow if the government gave the money directly to the oil industry instead. Yet the auto and oil industries are two sides of the same coin—over half of all the oil used in North America is burned in our cars.
During World War II, Detroit went from manufacturing cars to making tanks and bombers literally overnight. Today, couldn’t all those unemployed auto workers be re-employed to make what their economy really needs—more public transit vehicles—so that when those fifty million Americans get off the road, there’s a bus or mass rapid transit vehicle for them to get on?
That way, if we’re going to spend billions of dollars of taxpayers’ money, we’ll be investing in our future, not in our past.