Editor,
Congress apparently needs a refresher course in economic theory, particularly the concept of competitive advantage and the benefits of free trade to an economy. While Congress has the responsibility to make educated decisions to create a better future for Americans, they tend to listen to unions, lobbyists and corporations more than their constituents.
After the financial meltdown in 2008, Americans expressed needs for new job creation, higher wages and the stabilization of the markets to help some citizens recover a portion of the billions of dollars in lost investment and retirement income. The majority of Americans never rallied for the protection of one industry at the expense of the taxpayers. In fact, according to an ABC News/Washington Post poll from Dec. 8, 2008, 54 percent opposed giving automakers up to $34 billion in federal loans, while 37 percent supported it.
Yet, while the majority was against it, Congress poured billions of dollars in bailout money into the “Big 3” auto manufacturers: Ford, General Motors and Chrysler. Congress justified the bailout by claiming that the U.S. had already lost over a million jobs — about 300,000 more jobs would be lost as a result of the failure of the Big 3 and millions of jobs in the supply chain could be lost. Allegedly, this action was the only way to prevent the loss of those jobs and to protect the industry.
Protecting certain jobs and certain industries at taxpayers’ expense and against popular opinion is a shortsighted and economically weak decision. The economic theory of comparative advantage dictates that a country will ultimately have a lower gross national product and lower standard of living if, rather than importing certain products, the country continues to waste valuable resources producing items another country has a comparative advantage in producing. In that situation, the country as a whole suffers. Last October, a leading U.S. economist stated that job growth in the U.S. won’t be in the manufacturing sector, but rather that strong sources of job growth would be in areas where America has a comparative advantage in brainpower, and the country has to keep generating innovations in order to keep generating the employment gains. Innovation is key to job growth in the U.S., not protecting failing industries that have failed to keep up with the times.
By redirecting the resources used to bail out the Big 3 to support innovative industries in the U.S., new jobs would have been
created and resources would be properly allocated to reach the most beneficial outcome. While Congress predicted the loss of roughly 1.3 million jobs if the auto industry failed, President Barack Obama has stated he wants the U.S. to create five million “green” jobs over the next decade, in fields such as solar power and wind energy. It estimated that achieving this goal would require advances in current technology and training which are likely years away. Perhaps that goal could have been reached much quicker had the billions in bailout money been redirected to this goal.
President Obama recently granted $2.3 billion in tax credits to assist companies in creating 17,000 green jobs. At about $135,300 per job, that $34 billion could have jumpstarted the creation of over 251,000 jobs in the green energy fields. Delaying the creation of potentially five million jobs to save a little over a million jobs doesn’t make long term economic sense.
Congress needs to make decisions with America’s future in mind, and not heed cries for assistance from uncompetitive and failing industries.
Aaron Burkhalter, Christina Jaecks,
Jesse Jiron, and Jessica Massoth
Seniors at the Anderson
School of Management
