Basic Facts of the Case
The Ethical Issues Involved
Under utilitarianism, the GM bailout was certainly ethical because it focused on the maximization of the overall good of the company, the people, and the government. However, when one keenly scrutinizes justice and rights issues involved, there is contention with the bailout. The executives of General Motors were allowed to enjoy the organizational profits for the longest period with the taxpayers bearing the losses. Economist Joseph Stiglitz wrote the debate about whether or not to bail out car manufacturers had been mischaracterized, and that the profits were privatized, and the losses socialized. According to him, bailouts benefit the shareholders and bondholders, and should not be allowed because these people do not deserve due to their main contribution to the problem (Thoma). From a retributive point of view, the GM bailout was unethical because these executives do not take responsibility for their wrong decisions, such as locking the GM company to the SUV market. Looking at the individual rights and freedoms of the citizens, the government was unethical in utilizing taxpayers’ money to bailout GM. That freedom of choice should have been left to citizens that pay taxes, although the employees involved might have opted to defend the bailout to retain their wages. The general population, however, was not involved in the government’s decision, and additionally, none of the profits were redistributed to them. The bailout would, therefore, appear unethical.
The Various Options in Question
Nationalization of GM – the USA government could have nationalized the company to be owned by taxpayers. With a market value of $32 billion and $45 million in debt, the USA national government could have bought out the company and operated it with the national interest.
Structured bankruptcy – prepackaging the company’s bankruptcy and eliminating uncertainty in the Chapter 11 filing. Shareholders, unionized workers, creditors, bondholders, and private investors would have to cooperate such that everyone would obtain less, but the company would survive under new rules of engagement. The national government would guarantee any warranties and payments to automotive parts suppliers and provide some interim financing during the bankruptcy period. The government, in return, would have a significant say in the organization’s new management plan.
Pay as you go – by raising the price of gasoline to about $3.50 a gallon and collecting the funds between the pump price and $3.50 as taxes and using the money to underwrite transitions to energy efficient vehicles.
Conclusion
In my view, the government acted well in preserving the industrial base and providing jobs while moving in a direction of energy independence as per the national objectives. However, considering the policy of free trade market and comparing it with the outright socialism of the government, many businesses become discouraged due to monopolization and fear of ownership by the government. Furthermore, the government utilized taxpayers’ funds unethically in implementing the bailout, without any past, present or future plans to dish out dividends or share profits with them. This contrasts with natural rights to liberty and property, and additionally, consumers are left to suffer because public welfare does not benefit them as much as it is initially supposed to without interference by the government.
Work Cited
Thoma, Mark. "Economist's View: Stiglitz: Don't Bail Out Incompetence". Economistsview.typepad.com. N.p., 2008. Web. 27 June 2016.
