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Monday, November 17, 2008

No UAW Bailout

IBD Editorials writes that a bailout of the automakers is a misguided idea, aimed only at protecting their current union contracts (which are largely to blame for their demise):

Filing for Chapter 11 protection under bankruptcy law is the normal way a company stays in business when facing an unmanageable financial situation. It keeps creditors at bay while the company reorganizes under court supervision and settles its debts. In recent years it has served as a refuge for major airlines (Delta and United) which, you may notice, continued to fly while in Chapter 11 and, post-bankruptcy, fly today.

Bankruptcy protection also frees companies from union contracts. Could this be why it seems to have been taken off the table as an option, at least among Democrats? We can only surmise, but it's clear that a bankruptcy process would be rough going for the United Auto Workers.
The New York Post echoes this sentiment:
Chapter 11 bankruptcy would allow the Big Three to operate while their ruinous labor contracts are renegotiated to reflect 21st-century economic reality.
Michael Barone adds that the automaker's bailout plan does nothing to make their firms viable - "No one in the private sector is willing to pony up a dime for this business plan."

Finally, Dan Mitchell notes that such a bailout rewards a business model based on lobbying, while also rewarding mismanagement.  Of course, offering such perverse incentives will only end badly:
The money devoted to influence peddling in Washington would be better spent on improving quality and finding ways to reduce a bloated cost structure, but both management and UAW have decided that fleecing taxpayers is a better option.

A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the synonymous with inflexible and anti-competitive work rules.

2 comments:

Anonymous said...

Obviously since you all appear to be anti-union, punish all the workers and retirees by stripping their pensions. Why did the banks have to be bailed out? Bigger banks would have assumed them and they wouldn't be out having parties and buying up Spanish road companies that are going under because they are losing some of their poor investment money. All you rich guys always think about is the unions wrecking things. You would have us all on sec. 8 housing if you had your way but nothing would be cheaper. Just bigger profits for the fat cats!

Anonymous said...

Do a search on AFL CIO of which UAW is a member.With over 10,000,000 yes 10 million members in the U.S.Each and every one paying mounthly dues.The UAW and the greater
AFL CIO need to open ther financials to congress/senate and members.There coffers are full.There stock holdings are un-imaginable.
A complete listing of there holdings in non-union company's would be interesting.