Tag Archives: BAD ECONOMICS

GM BAILOUT= $250,000 PER WORKER

Remember the GM bailout that turned General Motors into Government Motors?

That was your money that was used to keep the company in business and save 75,000 jobs.

I like to apply the helicopter theory when it comes to the government spending huge sums of money to improve the economy.

I ask myself if it might be better for the government to just throw the money out of a helicopter rather than go through all the bureaucratic red tape.

For example, I have a feeling that it would have been better for the economy of Glendale, Arizona if the city council had decided to throw $25 million out of a helicopter instead of throwing it at another year of Phoenix Coyotes hockey.

Megan McArdle, writing in The Atlantic, did some math on the GM bailout and those 75,000 jobs that were saved.

“The question is whether it was worth it to the taxpayer to burn $10-20 billion in order to give the company¬†another shot at life. To put that in perspective, GM had about 75,000 hourly workers before the bankruptcy. ¬†We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks–and over $100,000 a piece if we just wanted to break even against our losses on the common stock.”

Imagine $20 billion falling from the sky over Michigan. They’d have to keep all the malls open 24/7.

And think of all the Escalades that could have been sold.