Why the use of public funds to bailout Chrysler and the General Motors

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Whythe use of public funds to bailout Chrysler and the General Motorswas the economically and socially right thing to do.

TheU.S. government used the public funds to bailout the General Motorsand Chrysler in the years 2008 and 2009 with the objective ofprotecting them from bankruptcy and liquidation (Higgins 1). Bailingout the two large companies benefited the U.S. economy in two ways.First, the decision to spend the public fund to rescue the Generalmotors and Chrysler prevented the loss of millions of jobs. It isestimated that the fall of the two companies would have resulted inthe loss of 2.63 millions of employment opportunities in 2009 alone(Higgins 1). This would have exacerbated the economic issue ofcontinuous increase in the rate of unemployment. The use of publicfunds to protect more than two million jobs also protected thesociety from the negative issues associated with unemployment, whichinclude insecurity, mental illnesses (such as depression), and casesof suicide.

Secondly,the bailout protected the U.S. exports since the two companies play acritical role in the export market. For example, the General Motorshave a market share of 11.9 % in the global automobile industry(Millikin 1). This implies that allowing the company to collapsewould have reduced the U.S. exports. The gap left by the GeneralMotors and Chrysler would have been filled by foreign companies,which would have intensified the impacts of the financial crisis thatthe government was struggling to resolve. Therefore, the bailout wasan effective measure used to protect domestic investors during thehardship.

Inessence, the bailout of the General motors and Chrysler protect jobopportunities, prevent social disorder, and safeguarded the U.S.export market. In conclusion, using the public funds to bailout thetwo domestic companies was the only right thing that the governmentcould do at that moment.

Workscited

Higgins,T., Katz, I. and Klimasinska, K., GM bailout ends as U.S. sells lastof government motors. BloombergBusiness.10 December. 2013. Web. 25 July 2015.

Millikin,M. GM global sales up 7.6 % in 2011 to 9.026 million vehicles Chinaand U.S. largest markets. BioAgeGroup LLC.2014. We. 25 July 2015.