Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

More Washington hypocrisy and the State takeover of the auto industry

The hypocrisy which surrounds the proposed bailout of the U.S. auto industry is reaching heights rarely seen, even in Washington, D.C. The automakers are being held to a totally different standard than is the UAW, which is, at least, partially responsible for the dire financial straits that the car manufacturers find themselves in. The politicians who support the bill, and are revealing themselves to be Statists of the worst sort in the process, are not calling on the union to make the sorts of changes they are demanding of the automakers. The UAW is not being told that it must make the wage and benefit concessions that are needed if the Big Three are to regain any type of long-term financial stability. This point has been driven home, in no uncertain terms, this morning after last night's failure of the Senate to pass the bailout bill. Not one of the Democrats who are so eager to expand the power of the Federal government, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senators Christopher Dodd, Diane Feinstein, Debby Stabenow, Carl Levin, and others, have called the UAW to task for failing to make wage and benefit concessions. UAW President Ron Gettelfinger stated yesterday, prior to the Senate vote, that the union would not make any concessions in the area of wages and benefits. Yet the Statists are strangely silent about the union's role in the breakdown of the domestic automakers' financial positions.

Not one of the supporters of the bailout of the auto industry is willing to take on the UAW. Instead, supporters of the move, such as Michigan's Governor Jennifer Granholm, are loudly shouting that the Senate Republicans killed the bill as an act of revenge against the UAW. Americans are being told that failure to nationalize the industry, euphemistically called “making bridge loans to the companies,” will result in the total loss of America's manufacturing base. One of Governor Granholm's arguments, made in an interview on NPR's “Morning Edition” today, is that failure of one of the Big Three will “cause a ripple effect throughout the economy” in the form of failure of suppliers to the industry. The governor then went on to state that such failures would have an adverse effect on foreign automakers such as Honda and Toyota because they are also customers of the same companies that supply parts to the Big Three. There is, evidently, no chance that the parts suppliers will shift production to meet the demands of the foreign companies, or move into new fields of endeavor.

The UAW has been told that it doesn't have to make wage and benefit concessions as, according to Governor Granholm, “the union has already done that.” This is patently untrue as UAW wages and benefits are still significantly higher than those of the non-unionized employees of the foreign auto companies. Why is the union not being required to make changes in the same way that the Big Three are? Why is UAW President Ron Gettelfinger not being hauled in front of Congressional committees to answer questions, such as why union workers should be exempted from the pain being suffered by those of us who aren't paid outrageous wages for performing jobs that have been made as simple and repetitious as possible? Why should most Americans be required to finance the lifestyles of a relatively small number of employees of companies which face dissolution no matter how much money is “invested” in them by the State? The answer is simple: union votes are more important to Statist politicians than is the overall health of the United States. Hypocrisy reigns supreme in Washington and ordinary Americans will pay the price in further economic troubles and loss of yet more freedom as the State absorbs another chunk of the economy.

Of course, all of the above was written before word came from the White House that President Bush is going to allow money from the $700 billion Wall Street bailout to go to the automakers. The Big Three will become simply another arm of the government and the American people will pay a high price in economic terms and loss of yet more freedom. This doesn't change the points made above, but it does mean that the Statists have scored another victory through the use of lies and distortions.


Norbert A. Cent said:

If one were to take what is handed out by the selective media one would tend to expect the working man to be the one with the sole greed.The unions just a short while ago have agreed to provide for health care for its members which is a concession agreed to prior to the present time - it was done to help the industry. The 73.20 /hr. wage, its core source is Deimier-Chrysler pree release passed on to CATO, Heritage and NYT. The figure is due to FAS106 an accounting practice used by auto companies which takes the potential value to the employee as the value paid to the employee-- the cost of premiums is far less. Lets talk about deferred compensation.the median wage paid to production line workers is 25.89 per hour and this includes line supervisors. My daughter who is a R.N. was paid $22.00 per hour starting right out of school, my son-in-law right  out of engineering school was paid 60000 and my vet daughter was paid 70000 starting my other so-in-law was paid 95000 right out of MBA school. I don't think 25 /hr. for a trained individual who has several years on the job unreasonable. How much is hard physical labor worth? Would you do it and why not? The big "3" in their dealings with the unions agreed to a contract stipulation where increased retirement benefits, early retirements,  etc. were used instead of increases in pay-these were deferred payments. Where has the money provided for for these promises gone? Surely they were not hollow statements, or were they.  The big "3".   Is fraud involved? What about amortizing the fringes over an employee tenure -- what happens when you fail to amortize a mortgage? Why did the union fail to accept a 20.00 /hr. wage increase or so and  instead for a intent to pay at some later time? was it greed on the part of the members or on the part of the union leaders? Did you know that dealerships are included in the $70 figure? Now bankruptcy makes it possible for GM et al  to evade  the price of the contracted promises it made in the past. Smooth and smart move so that now in the future they can default on them with the backing of the courts. That is why at least one CEO makes 9500 an hour. True there are some items agreed to in the contracts that are I wish were mine to gloat over. These should be addressed like getting 85% pay when a plant closes. Most people get nothing when that happens some do not even get two keeps notice. Do not state that the Japanese and German auto builders in the U.S. are an an even par with U.S. auto makers yet they can compete. They started to build cars in the u.s. and so do not have a large number of retired employees to add to their costs.  The many components of their autos built in the U.S. have many of including the engines built in Japan or/and other countries. Don't compare the 2.00/hr paid to workers in China to U.S. wages unless you also want to include a contrast of the  conditions labor toils under in the two countries and the cheaply made,junk that they peddle in the U,S. CEO and management salary. CEO's have private jets to go along with the 9500 dollars per hour! Have you ever seen the omnipresence of a CEO's office? What about a cut in all"wages" and benefits for all of management lests say 25% of everything over 250000 and a cap of 1,500,000, self insured life and medical and a end to by outs to start with. I was a teacher and am now retired and feel that I can now say what I will and I am doing just that. I do not expect to see this on your site and if so not for long

# December 12, 2008 3:27 PM

Ronald D. Morley said:

Well Norbert, your comments are welcome, even though you seem to have missed my point, which is that the UAW does indeed have a large share of the blame for the predicament that the U.S. automakers find themselves in.  The figure of $73.20/hr per employee also, as I understand it, includes the legacy costs attributed to union retirees and it is those costs which are helping to drag the companies down.  There are a variety of reasons why those costs are so high and not set aside into a separate pension fund, and there is certainly blame to be attached to both sides of the bargaining table for the decisions which led to this sort of cost structure.  My point is that, listening to the mainstream media, one rarely hears about the UAW's contribution to the overall problem; primarily the union's refusal, until the situation was already dire, to accept anything less than an inflated wage rate that made U.S. autoworkers the highest paid hourly employees in the world.  When there was little competition, immediately after WWII, because our international competition had been bombed flat, those wages could be sustained.  Once international competition became a significant factor those wages became less and less sustainable and certainly less justifiable.  The failure of the media to point that out, at least as often as they castigate the companies' management for making bad decisions, is to present a distorted view of the situation which leads to people failing to understand the motivation of the politicians who are seeking to greatly expand the power of the State over the U.S. car makers and manufacturing in general.

I'm glad to hear that your son and daughter did so well at the beginnings of their careers, but your figures rather reinforce my point.  I grew up near Flint, Michigan in the late 1960s and early 1970s and well remember talking to GM workers about their jobs.  I was often appalled at the tales they would tell of deliberate sabotage of vehicles moving down the production line, and of the machines used to build the cars on the lines themselves.  I could never understand why highly paid workers, whose jobs were generally learned in less than a day (so much for your contention that they are "highly trained") would act in such a manner.  Even when these workers were caught in the act of doing damage the company could rarely fire them because of lengthy, union required, arbitration and grievance procedures. Combined with highly restrictive work rules (many of which are still in place) that often acted to limit the efficiency of any given employee such actions do nothing to help the companies remain profitable.  I still do not understand the motivation, but it was these sorts of actions which made me determined never to work in a factory, or unionized, environment.

Regarding what you see as profligacy on the part of companies in providing corporate jets for their executives your own figures go far to show why that is done.  At $9500/hr. (or more) it makes no sense to force executives to spend their time waiting in lines at airports, nor to have to tailor their schedules to the whims of the commercial airlines.  The companies recognize that providing custom transportation for such highly paid executives is a cost-effective measure which makes better use of their executives' time.  Now, this leaves aside the question of whether or not anyone is worth that kind of wage rate (and that should be the subject of a separate debate), but, once the decision to pay those wages has been made it behooves the companies to make as effective use of their time as possible.

On a personal note I have to take exception to your last statement.  I do not believe that I have done, or written, anything which should lead you to believe that I would censor opinions that I do not agree with.  A large part of the benefit that I, at least, derive from this site, is reading comments from persons on all sides of a debate.  I am offended by your assumptions regarding my character and feel that they are entirely out of line.

# December 13, 2008 6:22 AM

Simon L said:

It is refreshing to see an article that raises issues and points not normally heard, and the lack of diverse opinions is essentially what is wrong with mainstream media. CBC discussed the union problem last night on the National broadcast, and it is important to note that the actual hourly wage difference between union Big Three and non-union Honda, Toyota, Nissan, and BMW is only $2 with the average compensation being $28 and $26 respectively. Where the real costs arise are GM's "Legacy" funds and generous health benefits that total to well over $70 per hour.

The union needs to read the writing on the wall, but they acted like a kid in the candy store with an acquiescent and  complacent parent who gave them all the promised. T

I would just like to comment that all of the auto makers are facing a tough time now as the sales of the past decade were financed largely out of credit which probably inflated sales beyond a level that would have been present in a free market. However companies like BMW or Toyota have one distinct advantage over Detroit, and that is the reputation for quality products. Amongst my generation there is little appetite to buy any car that the Detroit companies make, and even my friends are looking to Nissan or Toyota trucks. This is very important to note as many people will purchase vehicles from the same manufacturer over their lifetime, or at least "domestic" over "import". None of my friends are buying domestic makes and it is plausible to assume that as long as Honda, BMW, and Audi produce quality products they will stick with them over their lifespan.

Many of Detroit's mistakes have been management inflicted, but the best way for management to pay for their errors is in bankruptcy accompanied  by a pink slip.

# December 13, 2008 8:23 AM