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: A Car Wreck Made in Washington -- Can Democrats afford to let Detroit succeed? |
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| | From:  tc101 (Original Message) | Sent: 11/27/2008 6:49 AM |
WSJ NOVEMBER 26, 2008
A Car Wreck Made in Washington -- Can Democrats afford to let Detroit succeed?
By HOLMAN W. JENKINS, JR.
The wrong folks were in the witness chairs in last week's congressional hearings on auto doom. A fantastic moment was Massachusetts Rep. Stephen Lynch assailing Rick Wagoner about whether GM was asking China for a bailout too. The implication seemed to be that GM can't afford its inflated UAW pay packages because it's squandering money to build cars in China.
AP Photo/The Dallas Morning News, Michael Ainsworth
The General Motors assembly plant in Arlington, Texas.
Mr. Wagoner mildly answered that GM's China operations are profitable. They actually help to underwrite the massive losses in the U.S.
Mr. Lynch showed no sign he was actually listening, having illustrated his disapproval of foreigners. He didn't ask the obvious question: If GM can make cars profitably in China, why doesn't GM import them to the U.S.?
For that matter, any of the brainpans on the Hill might have asked why Ford and GM managed to build viable auto businesses all over the world but not in North America.
You don't need the Hubble telescope to tell the answer: The UAW is present only in the U.S., not all over the world.
What you wouldn't know is that the single biggest factor in preserving the UAW's monopolistic power has not been labor law but Congress's fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let's face it, that's what other successful U.S. manufacturers do.)
All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit's woes other than an improbable series of "stupid decisions" (as another Massachusetts congressman put it) by 18 CEOs over 30 years.
There's a larger lesson here for the Obama administration. A whole lot of Rube Goldbergism is coming home to roost, in the auto business, in the mortgage market, in the health-care market, in farm policy. We need to simple-down. The economy has a giant adjustment ahead, paying off debts, going from a heavy absorber of foreign capital and goods to a rebalanced relationship with the world.
The good news is that we have a natively resilient, flexible economy capable of making these adjustments -- unless bound up in Rube Goldbergian mandates. Barack Obama, bless his heart, may or may not be ready for what's coming his way. Yet his objectives are perfectly amenable to the simple-down approach.
He asked on Monday for Detroit to deliver a "plan" somehow to reconcile, at long last, the fantasy life of Washington, with nobody losing a job, with super energy-efficient cars, and yet somehow all this being done at a profit to Detroit.
Here's a plan, but it requires Mr. Obama to play a role too, finally relinquishing such chronic free-lunchism where autos are concerned. He should simply get rid of the CAFE rules and impose a gasoline tax to move the country to a "new energy economy," if he really believes in panicky climate predictions and/or that "energy independence" would be a net improver of American welfare. And be prepared for Detroit to shift jobs offshore if the UAW won't concede competitive labor agreements.
Not acceptable? Here's an alternative plan: Buy out the UAW with taxpayer dollars and free the Big Three to staff their factories with nonunion workers the way Toyota and Honda and BMW do. Last week's Hill circus notwithstanding, the negotiation that really needs to take place now is between Democrats and their union allies. The Big Three executives are just in the way.
Of course, Mr. Obama may have ideas of his own. His climate speech last week was Rube on steroids, aimed at creating whole client sectors of the economy dependent on his favor and endlessly flowing subsidies. It would be a poor excuse indeed of an economic depression that didn't create demagogic opportunities to boss around entire patches of the economy and extract political rents for doing so. There will be plenty of scope for Mr. Obama to head in this direction if he chooses.
Then again, he might just hand the next election cycle to the GOP, assuming Republicans can figure out that they're supposed to be the party of non-Rube-Goldberg government.
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Of course, blame the workers not the managment. That's your answer to all business failures. Do you really think that there would be workers in the US that would be willing to work for $2.00 per day, 12 hour days, 6 days a week? Would YOU? Maybe the problem with a lot of big business these days is because the company loyality between workers and management in years past, has been destroyed by mistrust and greed. No longer do we have workers working for a pension at the end. As soon as a worker starts making it up the ladder and making more money, they are replaced with a younger, cheaper worker. It makes me sad to see generations of factory workers lose those jobs. Not everybody wants to work in a cubicle pushing paper for peanuts. Those factory jobs were the backbone of this country and to degrinate those workers is shamefull. Perhaps some sacrifice on tha part of those CEOs might be necessary too. |
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