Adam Smith, Economics, and the Big Three Bailout

         Adam Smith was a renowned Scottish economist who developed the basis for the economy employed in the current U.S. and worldwide. He studied moral philosophy at Glasgow University beginning at the age of 14. In the year 1750, he began compiling writings with his a man named Hume. This collection later became known as the start of the Scottish Enlightenment. In 1751, Adam took a staff position at Glasgow as the Chair of Logic and, later, the chair of moral philosophy. Adam Smith published his first book in 1759, titled "The Theory of Moral Sentiments", included many of his lectures he gave at Glasgow. Its overall message was that communication depends on sympathy between the individual and the wider community. After becoming an author, Smith focused much more on economics. In 1762, he started to tutor a French Duke's step-son. After this, he went home and became a part of the Royal Society of London and used the next ten years to write his final book, "The Wealth of Nations." Afterwards he went to live with his mother and became a member of the royal society of Edinburgh. His book was published in 1776 and stated that the formation of a free market economy would create a higher standard of living. This economy would be highly democratic and competitive. Its basis would be on the concept of supply and demand. He thought government interference would wreck a free market economy and that the government's sole purpose was to act as a referee and stop things such as mafia tactics. The economic principles of Adam Smith can be summarized as freedom to try, freedom to buy, freedom to sell, and freedom to fail.
    
            The free market, an idea developed by economist Adam Smith, is an economy where companies are allowed to compete, thus creating lower prices. In this capitalist economy, buyers also compete, offering more for a good or service if they are having trouble buying it. The concept of capitalism also calls for households and private businesses to completely control the economy and, by this, an invisible hand will balance the economy. Another facet of the free market system is supply and demand. When there is a high demand for an item that is in low supply prices go up and businesses make money. However, when there is a low demand and a large supply, businesses lose money. In a pure competition setting, businesses decide what production methods to use, who and when to employ workers, and what goods to produce. Therefore, they need to supply goods and services and demand capital. However, households supply capital by deciding how much labor to give and demand goods and services through basic necessity. In the theory of pure competition, these demands and services would perfectly balance out, letting all succeed, but in practice many fail. A market is another piece of the capitalism puzzle. Markets are simply the place or situation where labor, goods, or services are exchanged. The two forces of a market are supply and demand, the amounts of which determine prices. The free market/ capitalist system is basic in theory, but complicated when trying to apply it to our world.

          The Big Three auto bailout was caused by the big economic downturn. It seems to me like Detroit pulled a fast one on D.C. And they did it knowing that there isn't a very structured repayment system for the money they borrowed, totaling $24.9 billion for GM and Chrysler. In addition, Ford asked for $14 billion in loans from the federal government, but was rejected. When reviewing all the facts involved in the bailout, this seems unfair to the taxpayers who end up 'holding the bag' for large corporations. These domestic companies don't even produce half of the vehicles purchased in the U.S., showing that Americans feel that oversea companies produce a better product. The automakers have been very lazy in adopting new technologies (besides plush features) in the last decade, devoting their time to producing large, inefficient SUVs and pickup trucks instead of researching fuel efficient and alternative fuel vehicle designs. Already, before even having paid off their loans, these companies are breaking promises, starting with Chrysler who promised to debut an electric vehicle in 2010. This did not happen. I think it is unfair to average citizens, like a real estate agent in Portland, Oregon or a farmer in Lincoln, Nebraska, when big automotive corporations can siphon tax dollars from Congress because of their high profile and political connections. The bailout is the type of deal that inflates cynicism in voters across America and escalates mistrust in the government.