In Your View, Should The GM Bailout Have Been Done ✓ Solved

In your view, should the GM bailout have been done?

In this assignment, we will explore the ethical implications of the GM bailout that occurred during the 2008 financial crisis. The case study revolves around the government's intervention to prevent General Motors (GM) from declaring bankruptcy. This situation brings forth several important questions regarding business ethics and the role of government in private enterprise.

Understanding the GM Bailout

In 2008, the American automotive industry faced a severe financial crisis, with GM being one of the major players on the brink of bankruptcy. The U.S. government intervened, providing financial assistance amounting to billions of dollars to help stabilize the company, ostensibly to protect jobs, support related businesses, and maintain the health of the economy. At the core of this situation are ethical considerations drawn from various philosophical frameworks including utilitarianism, justice, rights, and caring.

Should the GM Bailout Have Been Done?

From a utilitarian perspective, which focuses on the greatest good for the greatest number, one might argue that the bailout was justified. By saving GM, the government aimed to protect thousands of jobs and stabilize an industry crucial to the U.S. economy. At that time, GM employed hundreds of thousands of workers, and its failure would have resulted in widespread unemployment and economic downturns that could have affected millions more. Therefore, the immediate benefits of preserving the company and protecting jobs could be viewed as a greater good, even though the decision involved significant public expenditure.

However, philosophers like John Stuart Mill might argue against the bailout on the grounds of long-term consequences. Mill's utilitarianism emphasizes not just immediate relief but also the sustainability of such decisions. Critics pointed out that saving GM could enable poor management practices and lessen the incentive for future companies to operate responsibly. This brings us to the ethical concerns surrounding justice and fairness.

When assessed through the lens of justice, particularly as articulated by John Rawls, the GM bailout raises questions about equity for taxpayers. Many taxpayers felt they were unfairly bearing the financial burden of rescuing a company that had made poor business decisions. The ethical considerations of rights suggest that individuals—specifically taxpayers—should not be forced to compensate for the failures of a corporation. This framework highlights an ethical dilemma where taxpayer rights are seemingly violated to support a corporation's mismanagement.

The virtue ethics perspective, which focuses on character and moral integrity, provides another viewpoint. Supporters of the bailout might argue that the action aligned with caring and concern for the workforce and families affected by the potential loss of GM. This perspective emphasizes a moral obligation to protect those who would suffer from the economic fallout of a major corporate failure.

The Issue of Government Ownership

The second question asks whether it was 'good or bad' for the government to take ownership of 61 percent of GM. Views on this issue vary largely based on the philosophical perspectives of thinkers like John Locke, Adam Smith, and Karl Marx. From Locke’s standpoint of property rights, government ownership can be seen as inappropriate. Locke argued that private property is not just a right but a fundamental element of freedom and individual autonomy. Therefore, the intervention raises ethical questions about the extent of government authority over private enterprises.

On the other hand, Adam Smith's invisible hand theory offers a contrasting view. Smith believed in the self-regulating nature of markets, arguing that government involvement distorts natural market forces. In this context, one could argue that the government’s significant stake in GM was detrimental to market competition and could lead to inefficiencies, as the company may not operate under normal profit-loss incentives.

Marx’s perspective, which emphasizes the role of the state in regulating capitalism and protecting workers, may provide a framework supporting the government’s intervention. From a Marxist view, government ownership could be justified as a means of protecting the working-class majority against the exploitative practices often associated with capitalistic enterprises. This consideration of protecting workers aligns with the ethical dimensions of caring and community support.

Conclusion

In summary, the ethical implications surrounding the GM bailout and subsequent government ownership are complex. From a utilitarian perspective, the bailout can be seen as justified, as it aimed to protect jobs and stabilize the economy. However, concerns about justice, fairness, rights, and virtues illustrate significant ethical dilemmas that question the appropriateness of such an intervention. The perspectives of Locke, Smith, and Marx further illustrate the multifaceted nature of this issue, as each thinker offers valuable insight into the ethical considerations of government involvement in private enterprises. Overall, a thorough examination reveals that while the bailout might have achieved short-term stability, the long-term implications and ethical ramifications warrant careful reflection and ongoing discourse.

References

• Mill, J. S. (1863). Utilitarianism. Parker, Son, and Bourn.
• Rawls, J. (1971). A Theory of Justice. Harvard University Press.
• Locke, J. (1689). Two Treatises of Government. Awnsham Churchill.
• Smith, A. (1776). The Wealth of Nations. W. Strahan and T. Cadell.
• Marx, K. (1867). Capital: Critique of Political Economy. Otto Meissner Verlag.
• Wren, D. (2004). Ethics and Business: A Global Perspective. Routledge.
• Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Pitman.
• Hursthouse, R. (1999). On Virtue Ethics. Oxford University Press.
• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Boatright, J. R. (2003). Ethics and the Conduct of Business. Pearson Education.