Tuesday, December 16, 2008

the republican promise to filibuster the auto industry bailout

Due to a lot of public pressure especially from the constituents of the Republican senators, those senators rightly bending to their PAC and elector pressure have threatened to filibuster as in not allow to pass the massive bailout of the auto industry. Both sides have a case and if one really looks at the case fairly, it seems that it is really due to the intransigence of the unions not to give in to some realistic compromises in order to receive the money that has put paid to the bill.

One must realize that the auto industry in the US must seriously reform itself as the Japanese car makers in the US making cumulatively as much as the big three are doing it with less than half the labor force and costing about two thirds of a big three worker, in total payroll costs. While some of this cost is due to the high retiree pension and health benefits, that is not the whole answer. We are not denying that they work hard, but in order that their jobs be saved, they must accept some reduction in their benefits as sacrifices need to be made in industries that are struggling or are not competitive in the market today.

I do accept the argument that a bailout will cost the government far less than the bankruptcy of the auto industry. However if bankruptcy is what will take to reform it then so be it. Once bankrupt, individual car marks can be sold to investors who will build cars with less cost and half the labor force, and so the unions would have got their comeuppance. The union’s purpose is to safeguard the long term interest of their members and I do not believe they are doing it at present, and are willing to play poker with the government to obtain what they want and if they fail they are toast with no one else to blame.

I suspect the President elect at the back of his mind will be pleased with the sequence of events as he can reform the industry, something he would have found hard to do if just called upon just to save the big three who continue with their same old habits. Unions must realize what the times are telling them. Namely, if they are to survive they have to be flexible, as the whole world is changing and in order to survive the upheaval there has to be a lot more give than take if one is to preserver the jobs of one’s members. In the rough and tumble world of playing poker with politics this time the unions unquestionably lost badly to common sense and reason. So instead of blaming the Republicans, thank them for making Obama’s job easier.

1 comment:

american cambodia blogger said...

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