Con: Should the United States government have bailed out the automobile industry? Introduction A. In 2009, the .“Big Three” (GM, Chrysler, and ford) were facing fmancial struggles. They were fuced with a decision: either try and work through their problem on their own by securing loans, or to go to the government for help. Of the Big Three, only Ford declined government assistance, having already secured a line ofcredit in 2006 by using all of their assets as collateral. GM and Chrysler filed for a managed Chapter 11 bankruptcy that was funded primarily through the U.S. Treasury using taxpayer money. This modified version ofChapter 11 bankruptcy that was implemented by the U.S. government appeared to have allowed these automakers to survive for the time being, but it came at the expense ofthe taxpayers and it did not address all ofthe problems that caused the Big Three’s issues in the first place. I. The Big Three’s poor managerial choices created their financial problems, and the taxpayers’ money shouldn’t be bailing them out. A. GM, Chrysler, and ford continued to focus on and mass produce large trucks and SUVs because of their higher profit margins despite a growing concern over increasing fuel prices between 2002-2007. 1. Research done by Thomas Klier of the Federal Reserve Bank of Chicago indicates that during the span of 2002-2007, “about 40 percent of the decrease in U.S. market share has been caused by the recent increase in the price of gaso line.” 2. More specifically, research done by Meghan Busse and F brian Zettlemeyer of Northwestern University and Christopher Knittle of UC Berkeley showed that through the period of 1999-2006, “a$1 increein goIinepricewiII decree the market share of cars in the least fuel efficient quartile (< 17.7 MPG) by 11.5%.... that a $1 increase in gasoline price will increase the market share of cars inthemofu effidentquatile(>24.3MR3) by 15.1%” B. They allowed legacy costs to build by continuing to give out large pension plans when foreign auto makers were switching to more realistically defined contribution plans (4OlKs) back in the $Os. 1. The average per-hour base salary ofa U.S. auto worker and a foreign auto worker were about the same ($28/hour in 2007) but each worker actually cost $73.21/hour compared to $44.17/hour of Japanese competitors, with the difference being the additional benefits promised. C. U.S. autornakers should have switched to defined contribution plans (4OlKs) in order to stay competitive and keep costs sustainable. 1. GM didn’t officially freeze their pension plans until February of2012. a. This meant that they would no longer contribute to the pension plans of workers who were promised them upon employment. Those employees would now receive 4OlKs (defined contribution plans), a change that should have been made decades ago to avoid current financial struggles. II. There was no market failure and the U.S. auto makei should have filed for traditional Chapter 11 bankrup.

1. Con: Should the United States government have bailed out the
automobile
industry?
Introduction
A. In 2009, the .“Big Three” (GM, Chrysler, and ford) were
facing fmancial struggles.
They were fuced with a decision: either try and work through
their problem on their own
by securing loans, or to go to the government for help. Of the
Big Three, only Ford
declined government assistance, having already secured a line
ofcredit in 2006 by using
all of their assets as collateral. GM and Chrysler filed for a
managed Chapter 11
bankruptcy that was funded primarily through the U.S. Treasury
using taxpayer money.
This modified version ofChapter 11 bankruptcy that was
implemented by the U.S.
government appeared to have allowed these automakers to
survive for the time being, but
it came at the expense ofthe taxpayers and it did not address all
ofthe problems that
caused the Big Three’s issues in the first place.
I. The Big Three’s poor managerial choices created their
financial problems,
and the taxpayers’ money shouldn’t be bailing them out.
A. GM, Chrysler, and ford continued to focus on and mass
produce large trucks and

2. SUVs because of their higher profit margins despite a growing
concern over increasing
fuel prices between 2002-2007.
1. Research done by Thomas Klier of the Federal Reserve Bank
of Chicago
indicates that during the span of 2002-2007, “about 40 percent
of the decrease in
U.S. market share has been caused by the recent increase in the
price of gaso line.”
2. More specifically, research done by Meghan Busse and F
brian Zettlemeyer of
Northwestern University and Christopher Knittle of UC
Berkeley showed that
through the period of 1999-2006, “a$1 increein goIinepricewiII
decree
the market share of cars in the least fuel efficient quartile (<
17.7 MPG) by
11.5%.... that a $1 increase in gasoline price will increase the
market share of cars
inthemofu effidentquatile(>24.3MR3) by 15.1%”
B. They allowed legacy costs to build by continuing to give out
large pension plans when
foreign auto makers were switching to more realistically
defined contribution plans
(4OlKs) back in the $Os.
1. The average per-hour base salary ofa U.S. auto worker and a
foreign auto
worker were about the same ($28/hour in 2007) but each worker
actually cost
$73.21/hour compared to $44.17/hour of Japanese competitors,
with the
difference being the additional benefits promised.

3. C. U.S. autornakers should have switched to defined
contribution plans (4OlKs) in order
to stay competitive and keep costs sustainable.
1. GM didn’t officially freeze their pension plans until February
of2012.
a. This meant that they would no longer contribute to the
pension plans of
workers who were promised them upon employment. Those
employees
would now receive 4OlKs (defined contribution plans), a change
that
should have been made decades ago to avoid current financial
struggles.
II. There was no market failure and the U.S. auto makei should
have filed
for traditional Chapter 11 bankruptcy.
A. foreign automakers such as Toyota changed the nature ofthe
automotive retail
industry in the United States. The defined contribution plans
and focus on fuel efficient
cars gave them and their foreign counterparts a competitive
advantage over American
automakers.
1. There was no market fuilure, as the Big Three had the
opportunity to alter their
gamep Ian
a. If there is no market failure, then there should be no
government
intervention.

4. 2. Since GM went public with their shares in November 2010,
their stock price
has dropped 13.07% while Toyota’s has risen 40.65% over that
same span.
B. AtraditionaiChapter 11 would have forced GM and Chrysler
to downsize their
operations, which would have slowed the over-spending that
was going on and allowed
them to restructure their business modeL
III. Bailing out the U.S. automakers would cause unintended
future
consequences to the way American business is conducted.
A. When the U.S. government bailed out the auto industry, they
gave them the notion that
they were “too big to fail.”
I. When a government bails out a specific company or industry,
it gives other
companies the idea that they will step in and bail them out for
taking on risky
projects/investments.
2. Creditors will be less willing to lend money to large,
struggling industries in the
future if the government continues to bail these companies out
of the ir debt
obligations.
Reference List:
Burtles, G. (2008, December 4). Is big labor kitling the big

5. three?. LosAngeles Times. Retrieved
from b un :ij4Is- iicnpi4-
200SdecO4,0.203 I 804.stor
Busse, M. R., Knittel, C. R., & Zettelmeyer F. (200$). Fain at
the pump: How gasoline prices
affect automobile purchasing. Retrieved from Yale University,
Department of
Economics: htt ://www.econ. va Ie.ecl u/scm mars/an m
icro/amO8/husse-O8 1 023 .nd F
Edmund, M. (2009). The big three: Will a bailout be enough?
Quality Progress, 42(1), 14-15.
Retrieved from
httn://search.noquestcom/docview/214757600?accountidl3802
James, E. M. (2009, february 26). The demise of the defined-
benefit plan. Investopedia.
Retrieved from
http://www.investopedia.com/articIes/retirernent/O6/dcrniseofd
bp Ian.asp
Klier, I., & Linn, J. (2008). The price of gasoline and the
demand for fuel efficiency:
Evidence from monthly new vehicles sales data. (2008).
American Economic Journal:
Economic Policy, 2(3): 134-53.
Klier, I., & Rubenstein, J. (2012). Detroit back from the brink?
Auto industry crisis and
restructuring, 2008-11. Economic Perspectives, (2), 35-54.
Rothstein, J. S. (2008). Lean times: The UAW contract and the
crisis of industrial unionism
in the auto industry. New Labor forum (Routtedge), 17(2), 60-
69.

6. dol: 10.1080/10957960802026770
Sherk, J., & Zywicki, T. (2012). Auto bailout or UAW bailout?
Taxpayer losses came from
subsidizing union compensation. The Heritage Foundation.
Retrieved from
http ://www. hcritaae.oru/research!reports/2012/06/auto-bai
lout-or-tiaw-ba ilout-paçr
losses-came-from-suhsidizina-union-cotpçnsation# ftn4
Siemiatycki, E. (2012). Forced to concede: Permanent
restructuring and labour’s place in
the north american auto industty.Antipode, 44(2), 453-473.
doi:10.1111/j.1467-
8330.2010.00863.x
Terlep, S. (2012). GM cuts benefits for salaried staff. The Wall
Street Journal. Retrieved from
http://online.wsi.com/article/SB1 000
1424052970204?924045??225202499659404.html
Webster, P. (2006). US big businesses struggle to cope with
health-care costs. Lancet,
367(9505), 101-102. doi: 10.101 6/S0140-6736(06)67945-2
Zachary, A. G. (2012, September 06). Auto bailout was not
unmitigated success. The
Washington Post. Retrieved from http ://artic Ies.wash
ingtonpc)St.col11/20 I 2-09-
06/business/35497827 I auto—hai lout—auto— industry- gm—
ancl—chrvs Icr—dealers hips
Should Everyone Have the Right to Receive a Good Education
at a Minimum Cost?

7. Introduction
Since from the beginning of the 1990s, the cost of receiving an
education has been rising faster than the cost of other products
and services (Schoen, 2016). If a student pays a few for their
own education cost, taxpayers will pay more for keeping the
balance of national finance. The cost of receiving a good
education is ever-growing, it is infeasible for the government to
provide a minimum-cost education because of the increasing
inflation. In terms of educational cost, schools need educational
tuitions to attract faculty, provide amenities for the next group
of students, and remain the latest facilities to improve
educational quality. In terms of students, the high costs of their
education can make them take education for granted. It is
harmful to receive a minimum-cost education for countries,
schools, and individuals.
I. The cost of receiving a good education is more ever-growing
than inflation; everyone should pay relative costs for their
education to reduce the country’s economic pressure.
A. Amanda Ripley reports in the newspaper, The Atlantic, that
American families spend almost $3,370 on education per
student, which is over approximately three times than other
developed countries. If students pay a few for their own
education cost, taxpayers will pay more for education. It would
increase taxpayers’ pressure and is disadvantageous for
economic growth.
B. Receiving a good education at minimum cost is a vicious
circle. If the government requires to offer a minimum-cost
education, taxpayers will pay for expenses of education, which
would increase taxpayers financial pressure.
1. Furthermore, low-income taxpayers would face financial
hardship, and they would not have the ability to provide fees for
their children’s growing up, such as healthcare, etc. It still is
disadvantageous to educate a student by providing other
services for them.
II. Schools need educational tuitions to provide prospective

8. applicants to improve educational quality.
A. Robert Kelchen, a professor of the Educational Department
of Seton Hall University, stresses that amenities have become
an essential factor for the high-quality educations (Schoen,
2016). Without reasonable payment for education, schools do
not have money to bring the latest amenities to students.
B. The Delta Cost Project at American Institutes publishes a
comprehensive statement related to college-spending structure,
which states that expenses of education have risen from 17% to
20% over the past ten years (Schoen, 2016). The high cost of
education should be paid at a minimum cost.
1. Good education needs sports teaching, and recently, the
rising cost of education sports involves free coaching costs.
This expenses also need students to pay for them.
III. Students should pay for their education without a minimum
cost to make them realize the importance of education.
A. Ripley worries that some students would not study hard if
they are required to pay a minimum cost of their education. If
they receive a good education at a minimum cost, they might
drop out earlier than their graduation (Ripley, 2018). People
appreciate things that they have paid for or worked for with
great devotion, but they might not value things with free.
B. Ellen Andersen points out that one of the essential learning
experiences is to know how to manage finances to save money
and make a reasonable investment. Basically, without paying for
their education, the experience disappears.
Reference List:
Schoen, W. J. (2016, December). Why does a college cost so
much? CNBN Newsletter. Retrieved from
https://www.cnbc.com/2015/06/16/why-college-costs-are-so-
high-and-rising.html.
Ripley, A. (2018, September). Why is a college in America so
expensive? The Atlantic. Retrieved from
https://www.theatlantic.com/education/archive/2018/09/why-is-
college-so-expensive-in-america/569884/.

9. Andersen, E. (2019, February). Pros and cons of free college
tuition. College Raptor. Retrieved from
https://www.collegeraptor.com/find-
colleges/articles/affordability-college-cost/pros-cons-tuition-
free-college/.
4