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Of Bailouts and Boondoggles: The UAW's Ignominious Anniversary

By Howie Rich

On this week in 1936, United Auto Workers' members occupied a General Motors plant in Flint, Michigan, staging a "sit-down strike" that resulted in the beginning of a thoroughly destructive exclusive labor agreement between the company and the union.

With the eager acquiescence of corporate management, the UAW union bosses quickly set out upon a decades-long policy of bleeding the competitive life out of General Motors (and Chrysler and Ford). That policy helped the union emerge as an unrivaled political force and eminently wealthy special interest. But, the relationship was, if anything, parasitic.

Like a parasite devouring its host organism, the union thugs have finally ended up slaying the goose that laid their golden eggs. In this case, however, it must be noted that the goose willingly laid its head upon the chopping block.

Bowing to each and every union demand with slavish obsequity, the Big Three management all but abandoned even the appearance of focusing on long-term viability rather than the next quarter's profits. As Noel Tichy, Noel Tichy, a University of Michigan business professor and author who ran General Electric Co.'s leadership program 1985-87 and once worked as a consultant for Ford, recently wrote, "There has been 30 years of denial. They did not make themselves competitive. They didn't deal with the union issues, the cost structures long ago, everything that makes a successful company…"

And as was all but inevitable, soon, both the union and the host will begin to disappear beneath the waves of a free market reality that American politicians can't bail them out of - no matter how much taxpayer money they throw at the problem.

It turns out that Reagan was right - you can't consistently turn a profit with a Marxist albatross hanging around your neck. And of course the thick-necked union enforcers don't get it - steadfastly refusing to acknowledge that fattening their pension funds has crippled the sustained employability of the millions of American workers they were created to "protect."

Even as American taxpayers are pumping billions of dollars into a dying industry, there is near universal agreement that this latest round of excess government interventionism is destined to fail.

"This is like taking a little Flintstones Band-Aid and using it on a leg that has been amputated," Ft. Worth Business Press writer Tony Auer wrote earlier this week.

And amazingly, no one in the Bush administration that foisted this mess upon us is seriously challenging the analogy's accuracy.

In fact, even before the president approved the initial outlay of $17.4 billion (previously rejected by Congress), his own Treasury Secretary, Henry Paulson, admitted the long-term futility of the investment.

"If the right outcome is reorganization or bankruptcy, then isn't it better to get there through an orderly process where every effort is made to avoid it, and if it can't be avoided, everyone's prepared for it?" Paulson told a group of New York industrialists shortly before Bush approved the bailout.

Bush's spokeswoman similarly referred to the bailout as giving Detroit a "soft landing."

Of course, some analysts anticipate another $50 to $75 billion worth of "soft landing" being poured into the "Big Three" over the coming fiscal year as a more "labor-friendly" administration comes into power in January.

Not surprisingly, the union bosses remain just as arrogant and the corporate chiefs just as tone-deaf as they've always been; the former adopting a harsh line in negotiations and the latter supinely accepting it as they both race to the brink of extinction. Having chauffeured the compliant carmakers off a cliff by refusing to make concessions to keep them competitive, they are now making certain that the ruinous cycle repeats itself on an even higher-stakes stage.

Specifically, labor bosses are refusing to agree to the wage concessions of the initial bailout, terms which one of their bought-and-paid-for Congressman, Democratic Rep. Barney Frank, recently decried as an "unfair assault on working men and women."

Of course, while Frank and labor's other leftist allies invoke the tired old class warfare liturgy, just last week it was revealed that the UAW was continuing to operate a money-losing $33 million lakeside retreat with its own $6.4 million designer golf course.

And in a particularly juicy bit of irony, the union pays for the facility with interest from its "strike fund."

This is precisely the sort of self-serving hypocrisy that has caused the UAW to lose nearly two-thirds of its membership over the past three decades.

Yet while the costly (and unnecessary) demise of the American automotive manufacturer will no doubt continue this coming year, Washington politicians haven't learned the painful lesson of the "Big Three."

In fact, they're trying to add millions of new workers to organized labor's dwindling rolls by passing the oxymoronically-entitled "Employee Free Choice Act," which actually strips away a workers' right to a secret ballot.

America simply cannot afford to conjure up new ways to bring organized labor back from the dead. As the sad saga of Detroit makes clear, doing so is only to invite further disaster.

The author is Chairman of Americans for Limited Government.


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