Not All Jobs Are Created Equal

Once upon a time, there was a company called General Motors.  It made cars.  But the company was poorly run, and the high cost of its unionized workforce drove it to insolvency.  But before the doors were shuttered forever, a great and benevolent benefactor swooped in and bailed out the failing company.

That benefactor was you.

And by you, we of course mean Uncle Sam, who in 2008 stepped in to flood GM with billions from the Troubled Asset Relief Program (TARP), a desperate attempt to shore up a variety of decrepit institutions whose imminent collapse threatened the entire U.S. economy (or so we were told).  The initial bailout was followed in summer 2009 with another round of auto stimulus; all told, the taxpayer tab for General Motors bailout was a cool $50.7 billion.

What did we get for that money?  It's true that some jobs were saved.  But President Barack Obama loves to embellish what the bailout actually achieved.  He claimed at an April campaign event, for example, that the bailout "saved probably a million jobs" and that "GM is now the number-one automaker again in the world."

In truth, GM employed a total of only 91,000 workers in the U.S. before it entered into bankruptcy in the summer of 2009.  As John Lott notes for  National Review, "[y]ou can reach a 400,000 total by assuming that all of GM's jobs, as well as all the jobs of its parts suppliers and car dealers, would have been lost."  In 2011, the entire U.S. auto industry employed only 717,000 people

Ironically, that money could have supported a million households for about a year.  For $50 billion, we could have given 980,392 families $50,678, the average household income in 2011 according to the latest figures provided by Sentier Research.

From a moral standpoint, there is of course no difference between giving a company a lump sum of money to stay open and splitting the same sum up and handing it out to individuals.  From an economic standpoint, it makes at least as much sense -- how many of those individuals would use their windfall to start a business, pay down debt, or go back to school, all of which would be net benefits to the economy?  Even the people who would just squander their newfound bounty would still be pumping it back into the economy by buying video games, cheese doodles, DVDs of Lost, and all the other things we consume to ease the crushing pain of modern life.

In other words, a stimulus by any other name would smell just as rank.

And much of the unpleasant odor that emanates from the auto bailout comes from the fact that the government largess was not distributed equally.  It was recently reported that the Treasury Department maneuvered in 2009 to secure the pensions of union workers employed at Delphi -- chief supplier of auto parts to GM -- while letting the pensions of Delphi's 20,000 non-unionized workers go down.  Why would unionized workers get preferential treatment from the government?

Money, of course.

According to, in 2008, the United Auto Workers (UAW) political action committee spent $13 million total on the election, including $2 million to candidates for the House and $171,000 for Senate candidates.  About 99 percent of this campaign cash went to Democrats.  That is more than enough money to pocket you a politician -- or ten

So unions got a commensurate bang for their campaign contribution buck.  But what about taxpayers?  Have we gotten enough bang for our bailout buck?  And what about the opportunity cost, defined as "the value of the next-highest-valued alternative use of that resource" by the  Concise Encyclopedia of Economics?  To put it another way, what else could we have bought with the bailout money besides a failed car company?  Six Panama Canals, as it turns out (which cost us about $7.5 billion in today's dollars).  We could also have gone halfway to the Moon (the Apollo mission cost about $98 billion in today's dollars).  Or funded the Manhattan Project...twice (about $22 billion in today's dollars).

Talk about bang for your buck.

But forget about national greatness; how many lives could $50 billion save?  According to, more than "7.5 million children under the age of 5 die from malnutrition and mostly preventable diseases," every single year, while "1.6 million people still die from pneumococcal diseases every year, making it the number one vaccine-preventable cause of death worldwide."  As Bill Gates points out in an interview with David Williams in the U.K's Independent, the cost to prevent these types of diseases is vanishingly small, from the Western perspective: "Vaccines are ... relatively inexpensive - polio vaccines are now available for 13 cents per dose, measles for 23 cents and meningitis vaccines are available for less than 50 cents."

So saving jobs is great.  But is a GM plant worker's job really worth more than a starving child's life?  These are the types of moral hazards, the Alice in Wonderland-type logical and logistical quagmires, that one gets into when the government starts picking winners and losers.

And of course, it's not as if the U.S. government is in any position to pick anything, except its nose.  The national debt in late 2008 stood around $10 trillion.  It's now more than $16 trillion, over 100 percent of GDP.  Uncle Sam currently borrows about $4 billion per day in a futile effort to sate his insatiable spending appetite.  Much of this borrowed money comes from foreign nations, especially China, owner of the lion's share of foreign-held Treasury debt ($1.15 trillion).

What is China doing with all the money it makes by loan-sharking to the United States?  Beefing up its military, for one -- defense spending in China is expected to increase 11.2 percent this year alone to about 670 billion yuan ($106.4 billion).  With 2.3 million-man armed forces and its first aircraft carrier now testing the oceans, China already is a daunting security challenge to U.S. interests.  If the International Monetary Fund (IMF) is right that China's economy will surpass the United States' by 2016, the communist nation will soon have the monetary muscle to match its formidable military might.

Beyond the actual dollar amount of the auto bailout, there's another intangible, but nonetheless steep, cost that often goes overlooked.  The higher-ups at GM have decided that they now want out of their Faustian bargain with the federal government, not least because they perceive that their association with Uncle Sam has tainted their reputation with consumers and investors.  And so it has -- the hand of government pollutes all that it touches, the integrity of businesses and people included. 

So in the end, yes, the auto bailout saved some jobs.  But let's be more specific -- it was really a jobs program for Obama's union buddies.  It was also a jobs program for Chinese soldiers whom GM plant workers may one day be called upon to fight.  And as much as the White House is using the auto bailout as propaganda to help re-elect the president, it is also ultimately a jobs program for Obama himself.

Which just goes to prove -- not all jobs are created equal, and not all jobs are worth saving.

Matt Patterson is a D.C.-based columnist and commentator; Crissy Brown is the director of Outreach for Young Americans for Liberty at the University of Alabama.

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