Dondrei
Diabloii.Net Member
Re: How to save the Big 3 US automakers
These agreements spanned fifty years? That sounds pretty extraordinary. I'm surprised a company can actually bind future management and shareholders for such a span of time. And get away with it.Dondrei:
That's correct for two main reasons.
1). Unless it's happened fairly recently, The United Auto Workers (UAW) has never successfully unionized any foreign Auto Company's plants in the United States.
2). Much of the problems with union contract terms go back a half a century when the Big Three had close to a monopoly in the U.S. market. Salary is not the issue; benefits are.
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I never said that the agreements between the UAW and the Auto Companies were not part of the Free Market, I just said that they are a major cause of why the Auto Companies are not competitive.
What is going to NOT be part of a Market solution is the bailout (if it happens). The goal of any Economic System is to provide for the most efficient and effective allocation of goods within a Society. The way a Market accomplishes this goal is by rewarding the productive and punishing the non-productive. Bailing out companies and unions that are locked into agreement terms that are fifty years out of date means that the taxpayer will end up subsidizing both Management salaries and Union wages and it does absolutely nothing to resolve to cost differential between domestic and foreign plants. In addition, it allows other interested parties (after all, we as taxpayers are paying a sizable chunk of the bill) to persuade the Government to force the auto companies into building cars that meet goals based on other ends than building cars that people want to buy.
This best thing to do? I prefer bankruptcy and re-organization. This allows the companies to 'break' the agreements that have become so onerous and that is the best approach to take if you want to preserve the most jobs while simultaneously allowing the companies to try to become competitive.