"America is like a healthy body and its resistance is threefold: its patriotism, its morality, and its spiritual life. If we can undermine these three areas, America will collapse from within."
--Joseph Stalin

Tuesday, September 30, 2008

Nothing More Than Sop to Unionized Inefficiency

Will Malven
September 31, 2008

Throwing good money after bad. That seems to be the only ideas coming out of Washington these days and the GM $25 Billion bailout is a perfect example of pandering at the tax-payer's expense.

It's the worst idea to come out of Washington yet in response to the current financial crisis; let’s give $Billions to the bloated unions of the automotive industry.

Make no mistake, the proposed $25 Billion bailout for GM is nothing more than that; a sop to the UAW. Everyone knows this, the Democrat demagogues who are pushing the bailout idea know this, they are simply providing a payback for union support in the past election. Republicans know this, that's why they are fighting the GM bailout plan.

There has been a lot of criticism, some of it well deserved, directed at the management of the big three auto-makers, but it is not the manufacture of SUV's and other gas-guzzling vehicles that has been the primary cause of economic distress for US automakers, it is the power of unions in non-right to work states that has been the most egregious negative force on manufacturer profitability.

It is time for the big three to declare bankruptcy and break those bloated union contracts.

I know, I know, I've heard all of those dire predictions of 3 million displaced workers should the automotive industry fail, but those absurd predictions are predicated on a lie. Bankruptcy does not mean the end of a business; it means the restructuring of a business.

Filing Chapter 11 won't mean the loss of millions of jobs, that's just more union/Democrat demagoguery. What it would mean is restructuring those industries with a more profitable business model, more rational benefits packages for their employees and more realistic pay scales for their employees.

Toyota manufactures a majority of the automobiles they sell to Americans right here in the good ole' USA and they manage to do so profitably. The reason why is simple; they aren't locked into huge pension and benefits packages like the Big Three.

It is estimated that labor under the current contracts between the Big Three and UAW workers cost over $73/ employee. Toyota America costs run about $48/employee. This means that Toyota America has an advantage over GM, Ford and Chrysler of better than
$25/employee.

On a per vehicle basis this amounts to an increased cost of
$1400.00 in healthcare and pension benefits to current and retired auto-workers over that of Toyota.

Of course it gets even better than that, the unions have also garnered an additional overhead of $1000.00 in holiday pay, work rules, plant-shutdown-pay and line-relief to UAW workers. Thus every automobile that GM manufactures comes with an automatic
$2400.00 penalty in union associated costs; expenses that Toyota doesn't have to pay.

Forcing GM and the other United States automobile manufacturers into Chapter 11 would enable them to restructure their debts, renegotiate more reasonable contracts with the unions and instantly become more competitive in the automotive market.

Of course sacking management would probably be a reasonable action as well, which is why GM is begging the government to bail them out at tax-payer expense. Those fat-cat managers won't be able to collect their huge bonuses if they are forced into Chapter 11 bankruptcy.

For those of you average citizens, who are inclined to feel sorry for the UAW workers, just remember those hourly numbers:
1.     Average hourly compensation for the Big Three, $73
2.   Average hourly compensation for Toyota, $48
3.   Average hourly compensation for all American workers, $28.48
Democrats need to explain why those "average workers" making $28.48/hour in total compensation should be forced to foot the bill for those Big Three autoworkers pulling down over two and a half times as much money and benefits as those same "average workers."

Break the unions, restructure the automobile manufacturers, and revitalize our economy with tax-breaks. End all corporate taxes (after all, customers pay corporate taxes, not corporations), completely eliminate the capital gains tax, and increase tax incentives for research and development.

Do the above and make the current tax rates permanent and this economy would turn around virtually overnight.

Of course none of this will happen now, because Democrats control both Houses of Congress and the White House, and the unions control Democrats. What will happen instead is a bailout for the Big Three automakers, forced unionization of Toyota America, an end to the tax-cuts President Bush put in place, an increase in corporate taxes, and an increase in the capital gains tax-rates.

And that is a recipe for economic disaster.
·  In six months, GM and the rest will be back for more money because nothing will have been done to solve the core problems in that industry.
·  Because of the draconian tax system, the economy will sink into a nighmarish recession which the Democrats will blame on Republicans even though they have been in control of the economy since January 21st, 2007
·  Job losses will sky-rocket as will government spending, plunging us into further economic misery.
·  More jobs will be lost to overseas companies, again due to the draconian corporate tax-rates imposed by Democrats.
·  Gasoline prices will be up over $4.00/gallon by next summer and they will not fall, because Democrats will not support further domestic exploration.
·  Energy prices will also sky-rocket as "green" initiatives restrict our ability to build coal-fired electric plants and government invests $ Billions into untested, unproven alternative energy sources.
Pretty grim stuff for the average American citizen. Democrats won't care, because they want high gasoline and oil prices. They figure to leverage your misery into forcing you to use mass transit and drive smaller, more dangerous vehicles.
America always deserves the government for which it votes. Unfortunately the idiots who earn that $28.48 and still voted for Obama and the Democrat Party will force the rest of us to suffer along with them.
The one bright spot in all of this is that probably by 2010, but certainly by 2012, American voters will see once again that the Democrat Party model of high taxes and increased government spending doesn't work (and never has) and the pendulum will swing back towards the free-market model of Conservatism and Republicans (if they don't screw it up).
We may not unseat the messiah of the Democrat Party in 2012, but we will begin to make inroads in Congress and by 2016 the Republican Party will be back in the White House. My only concern is how we survive long enough economically to get there.
I would much prefer a strong economy to the narrow, doubtful pleasures of political gamesmanship, but then I'm a Conservative and therefore unlike my Democrat friends, place the good of my country over the good of my party.
It is time for unions to die their long overdue deaths. They served a real purpose a hundred years ago, but they have been the primary drag on our economy for forty years or so, extorting unrealistically high wage and benefits concessions from corporations, institutionalizing inefficiency, and protecting incompetence.
We see these effects in virtually all industries (and especially so in our federal government where employees are virtually impervious to attempts to terminate them), but nowhere is the problem unions cause more readily apparent than in the problems of our automotive industry.
Long Live Our American Republic!!!!

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