Should the US bail-out their car industry? – Welker’s Wikinomics Page

Web 2.0 never ceases to amaze me. Over at our class wiki, Zurich International School students regularly debate economic issues that relate to the topics we are studying in IB and AP Economics. The latest hot topic of debate was started by an 11th grade Brazilian student, Mark, who posed the following question:

Should the US bail-out their car industry?
Monday, 4:04 PM EST

In America, everyone believes that the American car companies like GM, Ford and Chrysler, which are nearly bankrupt, should be bailed-out by the government, to save their national pride. In this week’s “The Economist” magazine, they argue that bailing-out the car industry would be a grave mistake. Firstly, they argue that it would “open an invitation” to other companies to apply for aid to survive the recession. Banks qualify for this help because the economy depends on them; the car industry in the US failing would not be so disastrous. Secondly, they argue that the car industry is shifting from the saturated (full, at its peak) markets to the fast-growing emerging markets. This means, even if the car businesses fail in America, they would still have opportunities in other countries. In Brazil for example, Fiat has a plant where they produce 800,000 cars each year… that is a new car coming off the production line each 20 seconds! And they are not slowing the production; the plant continues operating with three shifts a day!

So, should the US government bail-out GM, Ford and Chrysler, save many lost jobs, and one of their nation’s prides, or should they be influenced not to, by economists that predict it would not help the economy at all?

I love to see students take an interest in the issues dominating our news that tie so closely to the topics we study in our principles classes at the AP and IB levels. The debates are interesting, insightful, and conflicting yet valid viewpoints on controversial issues.

If you’re interested in the economic issues dominating our news and want to join the debate, join the Discussion Forum at Welker’s Wikinomics Wiki and share your points of view.