The big bold letters across the TV Screen are frightening. And the superlatives are even more so. Auto failure would leave 600,000 jobless. 517,000 Ontario jobs at risk. Auto failure could cost 582,000 jobs. When you throw around numbers of half a million people out of work, it does sound pretty bad. Some superlatives, however, are a little over the top, such as this one from Ontario’s Economic Development Minister Michael Bryant: “economic equivalent of a nuclear freeze with catastrophic effects that would knock us into a deep recession”. How does one work in the word “nuclear” in a discussion about the auto industry?
The fact is that Ontario’s auto manufacturing sector is about to go under without government intervention, and that has the Provincial Liberals running for federal aid:
The report by the Centre for Spatial Economics — which does forecasting work for the federal finance department — projects 323,000 jobs in Canada would be lost immediately, with 281,000 of those in Ontario.
Within five years, the job loss across Canada would climb to 582,000. The vast majority of those jobs — 517,000 — would eventually be lost in manufacturing-heavy Ontario.
The impact would start in the automotive sector, then ripple out to other parts of the provincial economy such as the retail and service sectors.
[...]
David Paterson, vice-president of corporate and environmental affairs for General Motors of Canada, told CTV Newsnet that automakers desperately need access to funds to keep their businesses afloat.
“What we’re really looking for is access to liquidity, which we cannot get from the banking sector right now with all the credit locked up,” he said Tuesday.
“We really are looking for temporary loans that we’ll repay once we get through this restructuring.”
Here’s my view. The auto companies may employ a great deal of Canadians, and that’s an important part of the economy. It’s also been a traditionally strong and heavily protected sector by unions and government. But the companies that ran their businesses into the ground so carelessly do not require government assistance in life support to sustain their enterprise. The last place we should be putting our money into is areas that have shown market inefficiency and signs of collapse. In a free market system we should be investing in areas of expected growth and sustainability, and there is absolutely nothing that indicates there is a sustainable industry for auto manufacturing in Ontario into the 21st Century. We are witnessing the dying of an archaic and historic part of the economy.
Yes, the times will be hard by trying to absorb so many Canadians suddenly unemployed. But not all of this need be necessarily bad. It will certainly bankrupt Employment Insurance, causing us to reevaluate the usefulness of state-appropriated income for a collective unemployment fund instead of encouraging individuals to prepare for their own rainy days. It will create an across-the-board assessment of socialist spending programs that are inherently unsustainable with a burgeoning population. It will create a slowdown in immigration as auto sector workers adapt to new and more efficient areas of the economy in training and education, reducing but not negating the need for high levels of migration.
In the end it should be the logical fact that paying ourselves to work is not a sustainable enterprise, since it relies on borrowing money from efficient sectors of the economy and dumping it into the ones that are treading water. Let the auto industry go. Let the archaic and powerful unions crumble. Let the economy go where it’s most efficient by the forces of supply and demand and innovation. But let us not make the mistake of thinking we can save this old man on his last legs. It’s time to euthanize, and let go.
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Catelli asks: What is the Big 3 Bailout supposed to accomplish?
Either there is a market for new cars, or there isn’t. We can’t make one where one doesn’t exist. Or will the government deliver you a shiny new vehicle in reward for tax dollars being used to produce said car?
Fortitudine says: Let Them Fail: Auto Industry Bailout Would Reward Irrational Business Behaviour
Rather than campaign against these governmental intrusions, however, the auto industry has turned to their powerful lobby to attempt to coerce money from taxpayers who weren’t willing to give it to them voluntarily. Rather than fighting against the real cause of their trouble, these companies have accepted even greater state involvement as the solution to their current state of crisis.
