Washington October 22, 2008; The NADA newsletter reported that Your government is getting into the auto business.
General Motors, facing the Detroit doomsday scenario, seems close to taking on the extra burden of private equity firm Cerberus Capital's disastrous stake in Chrysler. Don't believe it.
According to the Wall Street Journal, these negotiations are about one thing: creating a political last stand of American auto making that a Democratic Congress and president won't be able to resist bailing out.
Which raises the question: Why don't the auto makers limit themselves to paying competitive wages and benefits in line with what workers could earn elsewhere? Because, in the 1930s, Congress passed the Wagner Act, imposing a labor monopoly on Detroit to keep wages at higher-than-competitive levels.
And why doesn't Detroit bring its desirable, fuel-efficient cars that it sells in large numbers in Europe stateside? Because they don't match our emissions and safety standards, however trivially different from Europe's standards.
Any rescue mounted today in Washington won't be so much a "rescue" as a final admission that the industry can no longer bear its regulatory burdens without direct subsidies. For the full editorial, The Auto Channel
LINK:WSJ: Opinion: GM, Chrysler Merger Talk a Cry for Help?