I believe in the free market, which to me is the single most important aspect of a democracy. In fact, I don’t believe that real democracy can exist without a free market. Before you scream “Europe!” please be aware that there are degrees of free market and democracy, but the more direct an individual’s economic stake in her country is, the more interested she will be in how her country is run. The more direct the economy, the more direct the democracy. Hence, the widening gap between Americans and Congress as our economy has grown over the past six decades and unions and PACs have supplanted the power of individual voters.
And so it is with a double sense of betrayal that Americans should view Washington’s proposed bailout of the auto industry. First, in a free market economy a company should not allow itself to get into the absurd straits that the American auto industry has not only allowed itself to get into, but has in fact wallowed in for years. Second, in what is supposedly the most democratic country in the world, Congress should listen to the American public rather than the extremely well-paid union lobbyists.
This much of a mess doesn’t happen over night. The American auto industry has been ailing since Asian manufacturers emerged as a tour de force in the 1980s. Did that prompt the American auto industry to change in any meaningful way? Not really.
The United Auto Workers (UAW) just kept voting themselves bigger pay raises and more benefits; they kept making themselves harder to fire regardless of job performance—and many of them were frankly so lousy at their jobs that a standing joke among car dealers is that you should never buy an American car that was made on a Friday or a Monday because on Friday the UAW members would be in a rush to leave early and on Monday they’d be hung-over.
Job security has been more important in Detroit than the health of the American auto industry. The unions have fought to hold onto their jobs and their benefits even if it meant killing the industry itself. Like a huge tick, the UAW has glutted itself on the blood of Ford, GM and Chrysler until the big three are now staggering at death’s door. The union fought against innovation and for more pay, and now they and the CEOs who have played ball with them are saying that you and I should bail them out.
Well, I don’t want to.
I grew up in a family that always bought Fords. The last Ford I owned was an Escort in the early 1990s and it had so many problems that after only three years of ownership the damn thing died. My Mazda is 13 years old, I’ve put more than 300,000 miles on it, and as long as I keep the oil changed, it runs like a clock. I have friends with Hondas and Toyotas with similar stories to tell.
Three things to know: 1) Unions are an obstacle to innovation, since major changes in processes and job responsibilities require a union vote—and that vote is rarely “yes” since nobody wants to change the way they do things. 2) A union paycheck tacks at least $2,000 onto the price of every UAW-made car, making American cars far less competitive in the world market. 3) Detroit’s huge CEO compensation packages are nothing more than payoffs to the CEOs by the unions who want to retain their power, even if it kills America’s automobile industry.
According to the Associated Press, Ford’s CEO says he only earns $1 in salary, but that’s after receiving more than $39 million in compensation for the four months he was with the company in 2007 alone, as well as a $7.5 million hiring bonus and an $11 million “performance bonus”—even as the company lost billions of dollars.
So, Detroit’s Big Three, with the CEOs and unions in cahoots, have actively engaged in malfeasance for more than two decades, and now they say they want you and I—and some of us haven’t driven an American car in years and aren’t interested in doing so—to bail them out.
I have a better idea.
According to Businessweek, “a government report that said the U.S. lost 533,000 jobs in November alone, with more expected in December, seems to have spooked even Southern Republicans who have opposed a Detroit bailout, and who were not enthusiastic about the $700 billion Wall Street package.”
Congress isn’t thinking about the future of the U.S. economy or the blatant lack of justice in rewarding bad business. Congress is thinking about job loss (and how that might effect them getting re-elected). Fair enough. That is a practical concern. So, instead of bailing out the Big Three, require them to provide an extension of severance packages to the individual workers. Then, allow the Big Three, in their present form, to die. It’s the only way they can get free of the unions.
You can bet that somewhere among those designers and engineers and sheet metal cutters, there are a lot of good ideas that never saw the light of day thanks to the oppressive presence of the unions. Allow the Big Three to die and America may well witness the rebirth of the spirit of Henry Ford, innovation and competition, unfettered by unions.