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Automobile industry

The Government's Role in the Auto Industry: A Threat to Capitalism and Property Rights

Strategic Insights

— 1 min read

Taxpayers are unwittingly becoming shareholders of major corporations, including Chrysler and General Motors, as the government purchases shares on their behalf. This unprecedented move raises concerns about the Constitution, the role of government in the economy, and the threat to capitalism and property rights. The Obama administration's handling of the auto industry, including the proposed Chrysler deal, has sparked questions about the motives behind this unprecedented government intervention.

Key Takeaways:

  • The proposed Chrysler deal would give the UAW 55% ownership and Fiat 35% ownership, with taxpayers owning only 10% of the remaining shares.
  • The secured creditors, with specific pledged assets, are being treated equally to general creditors, in violation of contractual rights.
  • The cash creditors are being treated worse than pension creditors, raising concerns about the fairness of the process.
  • The Obama administration's appointed directors to the Chrysler board may be more beholden to the administration than to the American taxpayer.
  • The proposal raises questions about the expertise and motivations of the board members and the government's role in the company.
  • The government's actions are at odds with normal bankruptcy law, which would allow companies to reorganize and reduce debt without government or taxpayer funding.
  • The administration's policies are moving the country further away from capitalism and towards socialism and fascism.

Statistics:

  • $4 billion: The amount of bailout taxpayer dollars spent on Chrysler
  • $8 billion: The additional amount of taxpayer dollars proposed for the managed bankruptcy
  • 55%: The ownership share of Chrysler proposed to be given to the UAW
  • 35%: The ownership share of Chrysler proposed to be given to Fiat
  • 10%: The ownership share of Chrysler proposed to be given to U.S. and Canadian taxpayers
  • 12 billion: The total amount of taxpayer dollars proposed to be invested in Chrysler

Sources:

  • Richard W. Rahn, a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth
  • "Traders take a break outside the New York Stock Exchange in New York City." (Getty Images)
  • Byline: Richard W. Rahn, SPECIAL TO THE WASHINGTON TIMES

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