I saw the news this morning that the Obama administration told Citibank to ditch their plans to order a 50 million dollar jet from a French company and thought, “Wow… that jet represented jobs for French workers. I bet France is pissed.” and it occurred to me that no one is thinking about the bigger picture when it comes to the economy.
I believe that it is necessary to spend money in order to create stability in a capitalistic environment. I also believe that manufacturing jobs in France probably mean offices in the US that employ Americans. Now, I’m not sure that this is the actual case in this specific situation, but in most cases I suspect it is the truth.
This sort of thing really isn’t the result of a trickle down effect so much as it is the result of a what goes around comes around effect. If you spend money in France, in addition to creating jobs there you create the need for representation for that company on American soil which means… American jobs are created too. Just like, if we spend money on products made in China, Chinese workers have jobs–let’s not start the conversation on weather our morality applies to these workers, this is merely for the sake of argument– and so do the Americans that sell Chinese goods. Every Wal-Mart employee has a job because someone in China made something.
Now, I do appreciate where the Obama administration is coming from. No, I don’t feel that luxury jets should be purchased with taxpayer dollars and when the taxpayers gave Citibank 45 billion dollars, they did it to keep the company afloat as a stop gap measure. And sure, the American people feel that Citibank should be changing the way they think about their business, but if Citibank wasn’t doing well because its business model wasn’t working, why did we bail them out? Why didn’t we let them fail?
Businesses are going to fail in an economy like this. The fact that companies like Citibank and Countrywide got so large merely means that the failures will be larger too. I think it is necessary to let these businesses fail. Artificially supporting them with money that taxpayers really do not have is only delaying the inevitable. This also applies to GM and Chrysler. These companies spent too long riding the wave of financial liquidity without paying attention to the fact that economies are not constant, perfect things that will remain lucrative forever. They can only do so if the industries that are the foundation of that economy are watchful of their markets and make wise decisions. If they don’t, then sooner or later the bottom will drop out.
It’s still dropping out. Saving Citibank hasn’t saved anything.