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President Barack Obama and his administration have cited numerous job statistics after last week’s successful initial public offering of General Motors. John Berlau, director of the Competitive Enterprise Institute’s Center for Investors and Entrepreneurs investigated the numbers, and argues that the figures cited to support the bailout of Chrysler and GM are extremely misleading.
As we write, President Obama and Vice President Biden are doing a victory lap around a Chrysler plant in Kokomo, Indiana, in the wake of the recent successful initial public offering of General Motors. They will likely rattle off a litany of positive statistics that they and an adoring audience will attempt to attribute to the $82 billion bailout of Chrysler and GM.
But the figures the president has cited, and will likely cite, of jobs added to the auto industry over the past year include jobs at Toyota, Hyundai, Kia and other foreign automakers with U.S. plants — job growth at nonunion plants that can hardly be attributed to the bailout of the domestic companies.
And it is of course very good news, as well as a tribute to the quality of America’s labor force, that foreign auto and auto parts makers want to hire here. The trend seems to be growing, as BMW recently announced it would hire 1000 new workers at its plant in South Carolina. (Amazingly, Ralph Nader is complaining about this, because the $15-per-hour wage is less than what workers are paid in BMW’s native Germany!)
But it is very difficult to attribute this new hiring by foreign firms to the U.S. government’s bailout and takeover of our domestic dinosaurs. A plausible argument could be made that Ford, which wasn’t directly bailed out, was helped by the bailout assistance to Detroit suppliers. No such assertion can be made, however, for foreign global automakers that buy and sell all over the world. Plus, it goes against the “we’re number one” theme that Obama seems to be stressing in Kokomo on behalf of the bailed-out automakers.
In fact, despite the $82 billion from taxpayers and despite GM’s successful IPO, a look at GM and Chrysler alone still shows a huge net job loss from the bankruptcy. And this does not even count the losses from the rapid closure of car dealers, as well as the likely loss of jobs due to the higher cost of capital as a result of the disparate treatment of “old GM” bondholders in the bankruptcy in favor of the United Auto Workers.