There Is No Automaker Bailout

Let’s be honest.  This proposed 25 34 billion dollar bailout is a bailout for the United Auto Workers union.

The UAW has utterly failed at what is ostensibly its primary duty: to protect workers.  It has artificially inflated the wages of those workers to the point where they’re being paid far more than their non-union competition at other automakers.  Pricing your workers out of the market, out of their jobs, and driving their companies into the ground is hardly a good way to protect them.

Quoting The Wall Street Journal:

To put it concisely, the [other automakers] operate under conditions imposed by the free market.  Detroit lives on Fantasy Island. ... Hourly labor costs are $44.20 on average for the non-Detroit producers, in line with most manufacturing jobs, but are $73.21 for Detroit.  This $29 cost gap reflects the way Big Three management and unions have conspired to make themselves uncompetitive... Both management and unions chose to sign contracts that let them live better and work less efficiently in the short-term while condemning the companies to their current pass over time.  It is deeply unfair for government now to ask taxpayers who have never earned such wages or benefits to shield the UAW and Detroit from the consequences of those contracts.

Every dollar spent on labor is a dollar that the automaker can’t spend on R&D to improve its products, and can’t put towards lower prices to attract buyers.  So it’s not hard to see why Detroit is getting hammered by its competition.  And that competition isn’t so "un-American" as the UAW would lead you to believe:

Quoting The Wall Street Journal:

These are the 12 "foreign," or so-called transplant, producers making cars across America’s South and Midwest.  Toyota, BMW, Kia and others now make 54% of the cars Americans buy.  The internationals also employ some 113,000 Americans, compared with 239,000 at U.S.-owned carmakers, and several times that number indirectly. ... A government lifeline for Detroit punishes these other companies and their American employees for making better business decisions.

One person who knows how to run a business is Bill Gates; here’s his take:

Quoting AFP:

"If no one else is willing to invest, why is that?" Gates told CNN ... "What is it that investors are seeing about this business model or cost structure that makes them unwilling, and why, in that case, is the government alone stepping forward in this way?" Gates asked in the Wednesday evening broadcast.  "When you don’t have any private investors you really have to say, is taxpayer money going to have the desired effect?"

We’ve already given Detroit automakers $25 billion; do we really want to give another $34 billion to them, and then however many more billions they ask for after that?  The law offers bankruptcy protection for businesses for exactly this situation, so let them use it.

If we the taxpayers are going to be forced to fund automotive development, the funding should not go to failing companies; it should go to companies that are successful and innovative like Tesla, which is already delivering pure-electric cars with proven technology and putting us on a path towards energy independence.