Holman Jenkins adds a great observation about the auto bailout in today’s WSJ:
What you wouldn’t know is that the single biggest factor in preserving the UAW’s monopolistic power has not been labor law but Congress’s fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let’s face it, that’s what other successful U.S. manufacturers do.)
All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit’s woes other than an improbable series of “stupid decisions” (as another Massachusetts congressman put it) by 18 CEOs over 30 years.
Read the rest of the piece because Jenkins makes some good points and we’re going to back in the middle of the Detroit free-for-all on Monday. There’s no excuse for the Auto CEOs to have come to Washington without a better plan. Yet, it reminds us that not a single bank executive has been asked to submit a plan or justify their bailout. In the annals of mismanagment, Wall Street has it over Detroit by a mile. And the Wall Street CEOs can’t blame foreign competition or labor unions for having driven the banking system over a cliff.
A Car Wreck Made in Washington
Can Democrats afford to let Detroit succeed?
Wall Street Journal, November 26, 2008