Wednesday, December 10, 2008

How to Fix the Auto-Makers

Just a couple of quick points about the near-bankrupt American automotive industry: first, their biggest problem is that they are hamstrung by the UAW. The average UAW worker costs over $70 an hour to employ. At minimum, that's about $40 in wages and $15 in benefits, plus another $15 (some say) in costs to keep paying benefits to current retirees and those laid off. (Some sources say the $70+ figure doesn't include anything for that last bunch, but I'm taking the most favorable interpretation.) Now, let's make it really clear--if it costs $20 more PER WORKER PER HOUR to build a Chevy than a Honda, there's no way the cars can be of the same quality and sell for the same price. Oh, yeah, and while we're at it--if you're an "average" auto-worker and make $83k in salary plus gold-plated benefits, then don't give me any crap about the poor "working class" guy turning a wrench. There are plenty of "working" FAMILIES who don't net what these guys do. So if these guys want to NOT go under, they've got to do something about that math.

Point #2 is, that's what chapter 11 Banruptcy is for. You re-structure your obligations. In a fair world, that's what would happen. Of course, our world is not fair, and there's no way that congress is going to allow the big 3 to go bankrupt. There WILL be a bailout.

Point #3 is, there is absolutely no incentive for any Republican congressman to support the bailout. Their voters are still ticked about the last one they went along for. If you're fiscally conservative enough to vote GOP, you should be able to do enough math to know that the first bailout is only the tip of the iceberg unless the business model changes (which is unlikely), and covering for the Democratic majority on this doesn't make political sense. They have the majority, they get the union votes, let THEM own it. (That said, if congress passes a stopgap measure to cover until the Obama administration gets to town, Bush shouldn't veto it... that's just basic politeness for a lame duck).

Finally, point #4: There is almost zero chance that congress has the stones to do what must be done. So what they ought to do is give the job to somebody who does (and that can give them cover). About 15 years ago, after the Cold War ended, we needed to close some military bases. No congressman dared vote to close the base in his or her own district--it was political suicide. So they created a base closure commision that made a list without their input, and then accepted the commission's recommendations on a voice vote. Our Navy base here in Charleston was closed, but our congressman didn't get blamed for it. We could do that here--if the congress is serious, they can appoint someone with the authority to undo the union contracts, and then later say, "Wow. Sorry about that. Wish we could have stopped it."

Now, will they do it? Who knows. I don't know that anybody in DC is that serious about genuinely doing things that make sense. But they could. And if I can figure it out, it's not rocket science.

1 comment:

Pete said...

That's why we miss your blogging. When you speak:

1. you make sense to anyone with half a brain.

2. You have that booming voice... granted, i can't actually hear it... but it's how my mind hears your blog.

3. Why doesn't congress have a direct link to your office or at least your blog?