Detroit / unions

Discussion in 'Chit Chat' started by nutmeg, Sep 17, 2010.

  1. Nice story, a little dated (2006). A few quotes.

    When I mentioned that the perverse incentives of compulsory unionism receive little attention from the press, he said the reason is simple. Many journalists are themselves members of unions. In the interests of a perceived solidarity they prefer to sidestep the issue.

    “The development and testing of a new vehicle cost close to a billion dollars,” he said, “and Japan has done this behind a tariff wall."

    He went to Japan recently and found that a new-model Jeep that you can buy here for about $25,000 costs at least $50,000 there. By the time a Toyota Camry is sold in the U.S., its development costs have already been defrayed in a market of protected, loyal, and patriotic consumers. “Then it is sold here at a two- or three-thousand-dollar cost advantage,” he argued. The costs imposed by Big Labor were minimal compared with this disadvantage, he said.

    As far as the UAW was concerned, Howes told me, the big wake-up call came with the declaration of bankruptcy by Delphi, the auto parts company. It had been spun off from GM in 1999 but by 2005 was seeking Chapter 11 protection. The breakthrough came when the company’s CEO, Steve Miller, held a press conference and said that Delphi could no longer go on paying laid-off auto workers “$65 an hour to mow the company’s lawns.”

    Delphi had been giving “4,000 idled workers in its ‘jobs bank’ full pay and benefits amounting to about $100 million a quarter,” he said. He also practically defied the workers to go on strike. He didn’t blame them for being angry. “But neither do I fear production disruptions. They are adults, and they understand that industrial action can only hasten plant closures, and further jeopardize their pensions.”

    Michael Barone’s prognosis is also gloomy: “The whole metro Detroit real estate market is depressed right now because of the woes of the Big Three, and I think will remain so.” His Detroit experience led him to develop “the proposition that high crime is a confiscatory tax on the wealth of black people. Black homeowners in Detroit have accumulated almost no equity over the last 40 years.”