While many in the Democratic Party have focused on "corporate greed" and "fairness," according to Sherk, "competition, not corporate greed, is the real problem facing labor unions. When unions negotiate raises for their members, companies pass those higher costs on to consumers." Americans used to tolerate those increases, but no more. Competition has brought lower prices for Japanese cars and Americans are buying more of them, taking a pass on those manufactured in Detroit.
The argument made by those favoring a bailout of Detroit is that it will save more than 100,000 jobs in the auto and related industries. But what good does that do if people are not buying cars in sufficient numbers to allow the Big Three to make a profit? This becomes the kind of corporate welfare Democrats decry when it comes to Wall Street. But, then, Wall Street isn't unionized and Democrats want and need the union vote.
What about Chrysler's bailout 30 years ago? It was a loan. Didn't Chrysler pay back the government? Wasn't it worth the risk to save jobs? According to the Heritage Foundation, the $1.2 billion in loan guarantees made by the Carter administration still resulted in a partial bankruptcy for Chrysler. "Most of the company's creditors were forced to accept losses just as they would if Chrysler had gone through Chapter 11, and the company ended up firing almost half its workforce, including 20,000 white-collar workers and 42,600 hourly wage earners. The only people who benefited from the bailout were Chrysler shareholders."
The Heritage Foundation also notes, "If Washington really wants to help Detroit, they could end the regulatory nightmare that prevents profitable, fuel-efficient cars from reaching market." Ford, they say, has begun selling a car that gets 65 mpg, but they're not selling it in America. Why? Because it runs on diesel fuel "and environmentalists in the U.S. have fought to keep diesel taxes high and refinery capacity low."
More government intervention in private industry will bring us closer to socialism. Better to renegotiate the labor contracts, re-train workers for other jobs, or help them get hired at the Japanese auto plants in America than to subsidize a failed economic model for the sake of political gain.
Cal Thomas is co-author (with Bob Beckel) of the book, "Common Ground: How to Stop the Partisan War That is Destroying America".
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