Creative Destruction and Bailing out the American Auto Industry

One of the more debatable government actions of 2008 and 2009 were the bailouts given to save the American Auto Industry. This controversial decision will once again be at the forefront of debate during the Presidential campaigns in late 2012.

What do you think?

The following activity is intended to prepare you for class discussion and also to provide you with different perspectives regarding the bailouts.

Each group and each person of the group must read the following:

Jobs, Jobs, and Cars

Let Detroit go bankrupt

Creative Destruction

In addition each group must read a specific reading that they should use in their discussion.

Group 1 Auto Industry creating jobs as bailout success debated

Group 2 What Detroit’s Resurgence says about the Auto Bailouts

Group 3 The Real Cost of the Auto Bailouts

Group 4 American Airlines Shows the Corruption of Obama’s GM Bailout

Group 5 Auto Bailout price tag rises to $25 Billion. How high will t go?

Group 6 The Truth about the Auto Bailouts

After reading the group article you will write only three sentences to describe your article to the class.

Next, working as a group complete the following small activities:

1. 
   Briefly summarize both the Democratic and Republican positions on the Auto Bailouts.
   
2. 
   Describe the trade-off of bailing the car companies out, consider both the cost and the benefits of the decision.
   
3. 
   Determine the possible cost and benefits of not bailing out the auto industry.
   

If you decide to suggest bailouts be sure to explain where the money comes from.

If you decide to suggest no bailouts provide and alternative plan.

Hint: Use the information for both b and c. Additionally, consider your views on economics (the allocation of scarce resources that have alternative uses), free markets, creative destruction, and your views on central planning.

Organize your group’s short presentation: