GM Bailout Essay

Smith was very much concerned with the welfare of the community and created The Wealth of Nations, to put forth most of his economic ideas, that are still considered today. The message Adam Smith alleged was that since people satisfied their own self needs, then the economy would work affectively. For example, “When people look to their own self-interests, they contribute unintentionally, by means of an invisible hand , to the welfare of society” (Smith 281). Smith talks about the invisible hand as a guiding tool towards supply and demand within a society and argued the division of labor generates wealth not just for that one person but for the nation as a whole. By selling products that are in demand, for the purpose of earning money people are engaging in within their enterprises. Additionally, the more demands, the more people want to invest, the more people need to work, the harder it is to find a job when the economy is at a low. Today, the invisible-hand theory is often guides free markets and capitalism in the direction of efficiency, through supply and demand and competition for scarce resources.

The simplistic perception of capitalist society varies greatly among Smith and Marx. Smith believed that capitalism is a mechanism designed to curb man's selfishness and put it to work for the general good of all (Baumol, 1976). Conversely, Marx believed that capitalism is based on neither good nor evil, but a product of historical circumstances or experience (Baumol, 1976). Marx also believed that the law of motion in capitalism frustrates, rather than facilitates, the individual ends (wealth). Marx believed that wealth divides capitalists by class, and that workers must develop in a universal class (Levine, 1998). Marx also disagreed with Smith in believing that production must cease to be a labor process if it

In 2009, the Obama Administration bailed out the General Motors and Chrysler automobile companies. Having begun their decent into bankruptcy in 2008, losing thousands of jobs, sales plummeting forty percent, with a high threat of liquidation, General Motors and Chrysler finally reached government-assisted chapter 11 bankruptcy in 2009. Obama allocated eighty five billion dollars in TARP funds to the auto industry, close to fifty billion dollars of it going to General Motors. The allocated funds were successful in keeping two of the Big Three auto companies afloat, keeping taxes from sky rocketing and saving millions of jobs.

Way back in 1776 the English economist Adam Smith asserted that a free market economy would best promote economic growth and raise living standards (Schiller, p.3). As he saw it, the pursuit of profits would induce capitalists to improve products, reduce prices, and advance technology also known as market capitalism (Schiller, p.3-4). He promoted the idea of laissez-faire meaning no government involvement (Schiller, p.4). On the other hand, Karl Marx, a German philosopher, had a different view of a market capitalism. Marx predicated that the capitalist system of private ownership would eventually self-destruct (Schiller, p.4). The capitalists who owned the land, the factories, and the machinery would continue exploiting working class until it rose up and overthrew the social order (Schiller, p.4). He believed that long-term prosperity

Smith and Marx both agree that capitalism requires ever expanding markets. Smith believes this is so because you cannot divide jobs down too much unless you have a large market. For example, city doctors, with their large population (market) can specialize while a country doctor must be a generalist. Unless the market continues to grow, jobs cannot be divided down further and large machines cannot be justified, thus production cannot continue to become more efficient. Marx, on the other hand, believes that you must have expanding markets because as you produce more you have more to sell (duh) and if you have more to sell you either have to have more people to sell it to or lower your prices in order to convince the same number of people to buy more. And the goal of course is to keep prices high.

With the advent of the Industrial Revolution, western societies began to change at an unprecedented rate. Suddenly, economics became complex, the idea of a free market spread, and a new need to address political and social problems grew. Two economists, Adam Smith and Karl Marx, held fundamentally different views on capitalism. Smith believed that people's self-interest for profits would allow capitalism to sustain itself as competition between businesses stabilized the economy, benefitting both the consumer and the laborer. His theory left no room for government intervention.

In Chapter 1 from Ten Letters written by Eli Saslow, the lawyer that filed Jen and Jays bankruptcy believed that their bankruptcy was a combination of misfortune, reduction of salary and many more. As for me, I agree with this idea where Jay and Jen’s bankruptcy was inevitable and the most unfortunate thing was because they were stuck at the wrong place in a wrong time. All of this situations were due to the Michigan worst economic crisis in 2008 in which had affected not only Jen’s family but entire people in the United States especially Michigan state. In this paper I will explain in details about important factor of Michigan economic crisis and two main efforts that Michigan authority did with the help of President Obama towards Michigan

That is one of my inherent problems with capitalism. Capitalism is not for the benefit of all humans, it is for the benefit of the directors, management, and the owners of these huge companies. GM would not have lost money if it kept the Flint plants open. Nevertheless, the GM board of directors chose to close them and essentially ruin the city. It is clear that GM's board of directors cared only for making more and more money, for attaining the greedy goal of profit maximization, while neglecting the

In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists. If the government helped the ailing automotive industry, this industry would have to tighten their expenditures and plan for the future to prove to

In 2008, following the housing bubble crash, mortgages foreclosed across the country and the New York Stock Exchange saw catastrophic losses; several economists began to question the strength of an unregulated capitalist system. The debate sparked the question: Is crisis an inevitable aspect of capitalism? With nearly 80 years past since the beginning of the Great Depression, memories of high unemployment rates and sluggish economic growth during the Depression-era had mostly been erased by a long period of relative prosperity. The recession of the late 2000s served as a reminder of the danger that capitalism can pose to society. The Marxian critique of capitalism provides a framework for analyzing the pitfalls and conditions of existence of capitalism that led to the Great Depression of the 20th century and the recession of the 21st century. Additionally, discussion of Marx’s crisis theories has been reinvigorated by the increasing amount of income inequality in the USA, which many people blame on the greed inherent in a profit-driven capitalist society.

In a globalized world, the Common Good Approach has increased in relevance for judging ethical behavior. It presents “a vision of society as a community whose members are joined in the shared pursuit of values and goals they hold in common” (Markkula, para 12). This Approach calls attention to the conditions that are important to the common welfare of everyone. The principle states: "What is ethical is what advances the common good" (Markkula, para 12). The common goal when considering the bailout is a stable economy. What remains unanswered is why some financial institutions, such as JPMorgan Chase and Goldman Sachs, were helped with TARP funds while other banks, such as Bear Stearns and Lehman Brothers, were allowed to

Ferguson then moves on to his discussion of capitalism by discussing: “What is the right balance to be struck between economic freedom and government regulation”? Here his discussion focuses on whether “excessive regulation has become the disease rather than the cure” for the financial crisis that began in 2007 (Ferguson page 3). Adam Smith also wrote a book on capitalism and that is where he coined the term “stationary state.”

Discuss the bail-outs put forth in an attempt to end the Great Recession of 2008. Present their advantages and disadvantages in the short and long-term. How relevant have they been in your own life?

General Motors Corp. (NYSE: GM), the world's largest automaker, has been the global industry sales leader for 76 years. General Motors was founded 1908, in Flint, Michigan and currently employs approximately 284,000 people around the world. GM's global headquarters is the Renaissance Center located in Detroit, Michigan, USA, They currently manufacture their cars and trucks in 35 different countries. Its European headquarters are based in Zurich, Switzerland, and its Holden headquarters are located in Melbourne, Victoria, Australia. In 2007, 9.37 million GM cars and trucks were produced globally under the following 12 brands: Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and

Social, political and economics that led up to the bailout, as well as at political, social and economics that existed at the time of the bailout.