Fear is a laxative for the desperate. The Big 3 carmakers were out in force this weekend peddling scatological stories so frightening as to make Stephen King blanch.
I saw this rather dishonest video on DrudgeReport that summarizes the wild claims of the Big 3 automakers. Supposedly, their research reveals that if all three American carmakers were to completely shut down permanently that America would lose 3 million jobs, hurtling us into a massive recession.
The analysis ignores the fact that many of these workers would be hired by the foreign carmakers who ramp up production to replace them. The person who sells cars for a Chevy dealership would suddenly find himself much in demand at the Honda dealership. The person who screws in bolts in Flint, Michigan could move to Kentucky and put together Toyotas. It is even possible that a company like Volkswagen would buy a shuttered plant in Detroit and retool it to produce Jettas.
This would be a difficult and painful transition, right?
Not necessarily. In 2006, the U.S. unemployment rate fell from 4.8% to 4.4%. The total number of jobs increased by nearly 2.4 million. How many people lost their jobs during that year of healthy economic expansion? 16.2 million initial jobless claims were filed during the year.
If the economy can absorb over 16 million in jobs losses by creating nearly 19 million, how concerned should we be by the loss of 3 million jobs? This is especially true given the domestic auto industry’s motivation to provide the scariest number possible under the worst-case scenario of utter collapse and shutdown. Logic tells us that a significant portion of these jobs would quickly shift over to other automakers.
Tell your representatives to vote “No” to an auto bailout.