Quiz #1 – The Car and History
Lee Iacocca’s argument for Chrysler’s 1979 bailout
The 1970s were a turbulent decade for the Fortune 500 Chrysler Corporation. The
Oil Crisis in 1973 paved the way for Chrysler to become on the verge of bankruptcy in
1979, but not only did Lee Iacocca ended up saving the auto firm, he brought Chrysler
back to profitability in a few short years. Lee Iacocca’s principle argument revolved
around the potential loss of 500,000 Chrysler autoworkers, which would’ve impacted
about a million people in the US. Furthermore, a bankrupt Chrysler would’ve meant a
loss of about $10 billion in US taxpayer money to welfare, unemployment benefit, etc,
programs. In essence, the cost of bailing out Chrysler ended up being less than the
resulting cost to society had Chrysler went out of business. The bailout ended up as a
success as Chrysler reimbursed its debt a half a decade later, and Chrysler became a
growing and profitable auto firm under the watch of Lee Iacocca.
There’s a parallel in the 1979 bailout of Chrysler and the 2008 bailouts given out to
struggling automakers General Motors and Chrysler. In 20072008, GM and Chrysler
were at the brink of bankruptcy, and at stake were the jobs of millions of US and
Canadian autoworkers. The tremendous number of people dependent on GM and
Chrysler was taken into account the democratic US political party in power at the time,
and Obama and his administration ended up deciding that the cost of bailing out GM and
Chrysler in 2008 would be much less compared to the cost of the American government
paying out unemployment wages to former GM/Chrysler autoworkers. The US
government would’ve also seen a great decline in tax revenue because of the rise in
unemployment. GM and Chrysler were bailed out and millions of jobs were saved, and
GM recently paid out its remaining debt to the US government. In fact, General Motors
stock is on the rise, and is on the verge of paying out dividends to its shareholders for the
firs
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