BUSINESS ETHICS CASE ASSIGNMENT

“The GM Bailout”

Imanda Mulia Rahman – 361168

1. How would Locke, Smith, and Marx evaluate the various events in this case?
Locke believes in the idea that human beings have a “natural right” to liberty and a “natural right”
to private property. He said that if there were no governments, human beings would find
themselves in state of nature, meaning that each individual would be politically equal and would
be perfectly free of any constraints other than the law of nature. He thought that the government
should only have limited relines.
Smith is the originator of utilitarian argument. He thought that GM was best to stay a free market
with the government assistance. He would think thank the failure was not due to his theory, but
due to poor management and vision.
Marx might think that the failure was due to privatization and capitalism because the government
stepped in and owned partially the companies. There, it is best that privatization is eliminated,
instead, owned by public.

2. Explain the ideologies implied by the statements of: the letter to the U.S Congress signed by
100 leading economist, Joseph Stieglitz, Bob Corker, the Republican resolution on the
bailouts, Robert Higgs, and Michael Winther?
U.S. Treasury created the new “General Motors Company” whose share owned by the Government
for 61%. Thus, the government held a major control over the company. The purpose might be
changed from making the better welfare for the people in the country to maximizing profit. It can
be concluded that the ideology they implied was socialism.

3. In your view should the GM bailout have been done? Explain why or why not. Was the
bailout ethical in terms of utilitarianism, justice, right, and caring?
From utilitarian perspective, which all about costs and benefits. GM bailout has more benefits pr
advantage, for as stated before, created jobs that save economic from harm, utilize human
resource. The cost or disadvantage is losing bailout money. Compared to not implement the
bailout strategy, it indeed saves taxpayer from paying more and the money can be used in another
sector but there would be employment more and the tax revenue of the government would be
reduced. Which also could lead to social problems. Therefore, according to this view, GM bailout
should have been done.
From justice perspective, it is actually not ethical to bailout GM because the other company also
need to get bailout since justice means all of them deserve to be treated in the same way, which is
difficult to implement. It is impossible to bailout the other companies in the same industry
because they have different problem as GM thus it cannot be generalized. Therefore, according to
this view, GM bailout should not have been done.
From right perspective, the company has the right to ask for financial help from other parties that
have potential to help the overcome the problem. Thus, bailout is ethical.
From caring perspective, bailout is ethical because it prevents GM from bankruptcy. All parties
that are related to GM get benefit from it. Such as more job fields, which society is benefitted from
it, and the government where tax is increased from the employee’s salary.

4. In your judgment, was it good or bad for the government to take ownership of 61% of GM?
Explain why or why not in terms of theories of Locke, Smith, and Marx.
I think it is wise to say that it is better for the government to take 61% of GM, which make the
government take the most control over the company. Because with the government intervention,
it could avoid free market monopoly which means the government holds highly as regulator of the
market. The government is also help the company financially and since it was the government the
finance could be more stable rather than being held by a certain company or public.