Bankrupt: An Ethical Analysis of the 2009 Auto Bailout

Abstract

The three major Detroit-based manufacturers of the American automotive industry, General Motors, Chrysler and Ford, are jointly referred to as the Big Three for distinguishing their operations from those of competitors in terms of size, sales, geography and profits. In early 2009, the Big Three found themselves covered in debts and losses as the U.S. Government handed them an initial bailout package worth $25 billion to rescue them from bankruptcy. Through an analysis of the ethics behind government bailouts and an evaluation of arguments for and against the decision to give out such a package to the auto firms, I shall argue in this paper that, given the circumstances in which the decision had to be hastily made, it was morally justified for the U.S. government to reward the bailout package to the Big Three. These circumstances, however, could have been avoided had the auto industry not disregarded the outcomes of its prolonged indulgence in corporate malpractices. Thus, if no lesson is learnt from this recession and such neglect continues, the Big Three, or any other corporation for that matter, should not be allowed access to such enormous amounts of public funds in the future.