I'm a conservative, so it is no surprise that oppose the bailout of the auto industry.  But one of the reasons that I knew it would never work finally got pulled, kicking and screaming, into the open last night.  I'm talking about the United Auto Workers.  Now there is a lot of talk about how much autoworkers do or don't make.  The UAW has been screaming at people who used the $73/hour estimate, saying that it was a misrepresentation of what autoworkers actually make and that their salary is actual comparable to the salary of non-union workers in Japanese/Korean/German auto factories in the US.  So...last night the GOP said put up or shut up.  They included a condition on bailout funds that the UAW reduce their wages to a level comparable with the Japanese/Korean/German auto factories in the US.  The UAW, predictably threw up a road block.

That has been the major problem with the bailout proposals all along.  The proposal has no stick to force the UAW to negotiate and they never will.  The UAW will drive those companies into bankruptcy sooner rather than later.  Only when a bankruptcy judge is staring them in the face will they make any concessions whatsoever.  Even then, they may not...anyone besides me remember Eastern Airlines?  Remember what the mechanics did to them? 

And oddly enough, the fault does not lie with the rank and file union members.  It lies with the leadership.  Unions in America have only two purposes today.  The first, and most important purpose, is to provide outstanding paychecks to otherwise unqualified union leaders. Union leaders could really care about little else.  If management could figure a way to send $1 of every $5 saved in salary to the union leadership, the rank and file would soon find themselves paying to come to work.   The second purpose is closely related to the first.  Since union leaders haven't figured out how to get management to (legally) pay them directly, they have to convince the rank and file that they are better off for being members of the union (or convince state government to enact closed shop laws).  They do this by negotiating contracts that make sure that the members get paid the most money for the least work possible. For good measure they have to also make sure that, as much as possible, being hired means automatic promotion and retention for life. 

So there you have it.  UAW leadership has to torpedo any deal that involves any restriction on their ability to blackmail the automakers into paying wages above what the market allows and protecting shoddy workers.  Because of that, any bailout is bound to fail, and even bankruptcy will not work unless the UAW is kept out of any negotiations.

Have you driven a Ford/Kia/Hyundai/BMW/Mercedes/Honda lately? 

I was reading this morning that we are near a bail out agreement for the "Big 3".  There is a lot of speculation as to what the strings will be, but apparently there will be some sort of government oversight.  I read in a couple of articles that people really want the senior executive's pay capped, and that they companies won't be able to pay dividends while still owing on the loans. No where have I seen any serious talk about the unions giving back anything.  Now according to news reports, the average union auto-worker makes $78 an hour an the average non-union auto-worker makes $48 and hour (for those of you keeping score that means the average non-union auto-worker has to scrape by on more than $99K a year compared to the $162K for the union worker).  Now if GM just reduced their wages to average non-union wages they would save $7,980,000 EVERY HOUR! (266,000 workers times $30 an hour).  That is $16,598,400,000 a year.  There is your $16 billion bail-out right there.