Do U.S. carmakers deserve a break?

If the U.S. auto industry isn't bailed out, Europe will suffer, too.

Pity the poor Americans, said Jeremy Warner in Britain’s Independent. Their auto industry is now in the same fix that Britain’s was 30 years ago. Detroit’s Big Three companies “pay themselves too much, they’ve failed to modernize, and they no longer produce the sort of cars that anyone wants to buy.” Predictably, the U.S. intends to try the same rescue technique that we did—handing out cash. Of course, it won’t be enough. “By March, General Motors and Chrysler will be back with the begging bowl, by which time they will have been joined in the queue of destitutes by Ford.” And then more money will be offered. In Britain, “huge amounts of taxpayers’ money were spent propping up this dying industry,” with “very little to show for it by the end.” Rather than endure the “slow death by a thousand cuts” that British carmakers suffered, the U.S. auto industry would do better to file for bankruptcy and restructure. That is the only possible “long-term solution.”

It’s not that simple, said Quentin Willson in Britain’s Sunday Mirror. U.S. automakers did themselves in with “lousy management, kowtowing to unions, too many big-drinking trucks and SUVs, and an arrogant contempt for small cars and green technology.” Yet even though they “don’t really deserve to be saved,” they must be. Allowing them to go into bankruptcy would not only have a “seismic” effect on the U.S. economy, it would also hurt Europe. While waiting for the car companies to recover, the auto manufacturers’ suppliers would fail—and European carmakers are dependent on some of those same suppliers.

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