Let's get this straight: taxpayers are being placed on the hook for keeping automakers solvent, and now the UAW will be bargaining with itself on wages, benefits, and work rules.
Call it a bailout or restructuring. What you're seeing is not a new beginning for the homegrown auto sector. It's the culmination of a decades-old, dishonestly peddled auto policy.
The two parties that turned the Big Three into a perennially limping freak of unwritten industrial policy now will take formal ownership of their handiwork. The United Auto Workers (UAW) would own 39% of GM. The federal government would own 50%. The creditors will be shafted with just 10%. (In the Chrysler plan being discussed, labor would own 55%, making it effectively a subsidiary of the UAW.)
The day after any such settlement is finalized, the clock will start ticking down to the next collective-bargaining session between a monopoly UAW and what remains of the Big Three -- though now the UAW would be sitting on both sides of the table.
The possibility of UAW ownership and this delicious collective bargaining scenario was first offered in American Thinker last November. And yesterday's update posed the question of how well the UAW's (and taxpayers') equity "investment" in Chrysler will do when the auto companies are saddled with the "green" car imperatives of the Obama administration. But what about the auto company that has had the wherewithal to manage without direct federal bailouts and remain free of government and UAW ownership? How will Ford fare in competition with a GM and Chrysler owned by labor and government. Read the rest of Jenkins' article which describes "the basic dynamics of the homegrown auto sector--a labor monoploy combined with endless finagles in Washington to help the Big Three survive competition from Japanese, German and Korean auto makers." Though Jenkins doesn't deal with the question of Ford, I doubt he would expect it to be competing on a level playing field.
Ed Lasky adds:
With the UAW owning huge percentages of both Chrysler and General Motors, has anyone questioned the fringe benefits politically to the Democrats? The unions will be in a prime "bargaining" position, able to extract vast amount of money that might otherwise gone to shareholders, people who loaned money to the company, or technological development funding to actually make affordable cars.
Taxpayers will be on the hook for billions of dollars forwarded to these companies. Money is fungible, so how much of this money will move into the accounts that fund union political activities? Or go toward high salaries of union officials?
This risk is exacerbated by the fact that the Obama administration has rolled back the requirement that labor unions and their leaders report information about their finances and compensation.
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