December 10, 2008
The Car Czar
We are on the verge of appointing a "Car Czar" to dole out federal money to domestic automobile makers. As far as I can tell, his power is negative -- he will pass on federal bailout money unless various parties sit down and "negotiate." Translation -- he will set the terms of the bailout and force parties to comply -- threatening bankruptcy it they do not. We will put tremendous faith in such a "czar." "Is he sympathetic to the unions? ...to green cars?" He will fail, of course. Moreover, the czar, whoever she is, will become an industry lobbyist, seeking new funds from Congress to make his plan "work." The obvious solution, which is politically impossible, is three fold: 1) Repeal CAFE standards and other standards that affect the domestic car industry consumer choices; 2) Let the domestic auto makers restructure in Chapter 11 with DIP financing from, if necessary the federal government; and 3) tax gas up to $4.00 a gallon (if you are serious about alternative energy cars).
Union wages for domestic automobile production are too high; there is no "right" to get a certain amount of money for line work in domestic automobile plants. Their wage ultimately depends on whether the cars they make are selling. If workers produce cars that do not sell better than cars produced in a domestic plant of a foreign manufacturer, they should get less, not more, or even an amount equal too, the workers of the foreign manufacturer. Union also must learn that retiree benefits are not 1) an invitation to a federal takeover and bailout of retiree packages and 2) that they count against current wage costs of a product.