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GM Bailout Benefits China

Posted by Steve Markowitz on May 24, 2012

One of the accomplishments President Obama often touts cornering his first term is the supposed success of the auto industry bailout; i.e. General Motors.  The claim of success relates to the fact that GM is still in business and is once again profitable.  However, this simplistic view of success is an illusion and would only come from people who have no experience running a business.  Any first year business student knows that the definition of business success must be defined in the terms of a cost and benefit.  Specifically, does the benefit exceed the cost of an investment?  The Obama Administration has never done such a study for rather obvious reasons.

Lee sent in the video below that helps explain why the GM bailout was a failure.  Specifically, this $80 billion bailout benefits people outside the United States more than Americans.  Here are some of the facts in the video:

  • 7 out of 10 General Motors cars are currently made outside of the United States.  So much for helpful US workers.
  • General Motors has 11 joint ventures in China with Chinese government controlled companies.
  • GM is moving a significant portion of its R & D from the US to China.

While the video is critical of President Obama, it appropriately points out that Mitt Romney supporters have also profited handsomely from the auto industry’s bailout by the US government.

Conclusion: Get the government out of the business of bailing out failed companies.  The funds used ultimately benefit some citizens (or foreigners) at the expense of paying taxpayers.

 

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