Capital Markets

Reason Writers Around Town: Shikha Dalmia on the Bailout Season

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Over at Forbes, Reason Foundation Senior Analyst Shikha Dalmia argues that when it comes to diagnosing the woes of GM, Ford, and Chrysler, Big Labor is what's making all that noise under the hood.

Read all about it here.

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  1. The bottom line seems to be that the automakers cannot survive without union concessions unless they are nationalized. Simply becoming more efficient won’t cut their expenses enough to make a difference, the unions will have to renegotiate and give up some of their agreements, which they are unwilling to do. So it appears that nationalization is the only route, seeing as how the adminstration is not willing to let them go out of business or go through bankruptcy. I hear much talk already about the unfair situation whereby US car companies are shackled by our capitalist system while competitors are backed by their governments.

  2. Management to UAW: We’re going out of business in a month or two unless you accept big pay cuts. So, do you want the pay cuts or unemployment?

    UAW: Let’s talk about pay raises when our contract expires in 2011.

  3. “shackled by our capitalist system ”

    and by capitalist, you mean the government colluding, burdened by near-socialist commitments to support the lives of every employee until death, forbidden-to-fire anyone unless they shutter the entire operation (i.e. not allowed to create ‘efficiency’, only scale back), shitty car making, functioning as the shadow-government of Michigan Auto Industry?

    Oh, yeah. The only way they can survive now is to be nationalized. We should nationalize all the industries that fucked themselves into self destruction. After all, america is a nation of people who love failures, and believe failures should be nurtured into infinity with the dollars of actually productive enterprises.

  4. Gilmore,

    I think you misunderstood — I’m not proposing nationailzation, merely looking at the mindset and probabilities.

  5. Beyond job cuts, the UAW will also have to agree to eliminate a whole host of exceedingly rigid work rules for its remaining constituents. Such rules, for instance, had historically made it difficult to train auto workers for multiple jobs to fulfill multiple needs.

    The issue of work rules is egregiously underreported. The actual take home pay differential is not that big, but the Detroit contracts make their workers less efficient, and less productive. GM originally had separate contracts for the Saturn Division, which were much less restrictive. Instead of expanding the Saturn contract to GM overall, they rolled over for the UAW and bundled the Saturn contract back into the corporate megalith.

    That was when it became obvious (to some people) that GM was fucked.

  6. We’re actually experiencing a quasi death-of-Socialism moment here. It’s been going on in slow motion for about 20 years, but it’s finally reached the tipping point. The unions, having had the automakers in shackles for decades, basically behaved like workers in state-owned industries. They didn’t give a fuck about competition, and just tried to get as much money as possible while getting away with as little work as they could.

    The flaw in Marxism is that if workers actually do control the means of production, they will sit on their fat assess and produce crap that consumers aren’t interested in buying. Unless they are forced to by the state.

    Likewise, the UAW was content for the big three to continue producing shoddy products and was happy to lobby for trade protectionism to keep Americans from shopping elsewhere.

    When the Japanese car companies entered the scene, their captive market started to flee, but the unions were once again content to do nothing real, but instead put little “Buy American” stickers on stuff as a substitute for making cheaper and better cars. (Cause that would mean pays cuts and other unpleasantness.)

    Rather than submit to consumer demand, the unions basically were (are) counting on the state to continue subsidizing their incomes. Which is essentially what we are doing here. We’re going to prop up the wages and benefits of UAW workers because they are politically more powerful than consumers and taxpayers.

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