Jim Stanford and Justin Fox debate the pros and cons of allowing the auto industry to go bankrupt at TheRealNews.com.
November 21 - The US is agonizing over what help to offer to its foundering auto industry. Ford and GM stock prices have hit 23 and 66-year lows, respectively, as a direct result of the global credit crisis. Now, to save themselves from insolvency, American automakers are in the process of securing a $25 billion bailout package from Congress. Jim Stanford, economist for the Canadian Auto Workers' Union, and Justin Fox, writer of Time Magazine's "Curious Capitalist" column, join The Real News for the first in a three-installment discussion about the legitimacy of the auto industry's claim on American taxpayer dollars.
Stanford offers his assessment of the situation's severity: "Even if you were willing to buy a new car--and who would want to buy a new car these days if you read the headlines--you can't get credit to buy a new car, car dealers can't get credit to place wholesale orders with the auto companies... It's a very, very grim situation, no doubt about it."
Fox counters with skepticism about auto industry claims that the credit crisis represents a marked exception from the workings of the market-as-usual: "They were already in the process of getting ready for a new era and they just, sort of, ran out of time... We have Chapter 11. It's designed to help companies stay alive when they're dealing with their debts."
Meanwhile, Stanford holds that ordinary bankruptcy protection would be insufficient. "Governments around the world have always been proactive in growing and nurturing industries like the auto industry," he says. "In North America for the last couple of decades, we haven't done that."
Stanford continues: "It's no coincidence North American companies are on death's door."
Part Two will detail more of Justin Fox's Chapter 11 proposal and will be posted on Saturday November 22 at TheRealNews.com.