During the last election, Big Labor spent literally millions to get Barack Obama elected. The biggest Labor contributor to Obama’s campaign was the Service Employees International Union, which paid out about $32 million dollars. But another certified “heavy hitter” was the United Auto Workers, which forked over $2.1 million dollars (99% to Democrats) — and that’s just direct cash contributions. The unions are legendary for their ability to get out the vote — nominally in a non-partisan manner, of course, but which just somehow ends up bringing out a lot more for the Democrats.
This week, the UAW is seeing that it might have been money very well spent. The Obama administration’s current plan for the restructuring of Chrysler revolves around the union holding 55% of the company — with the next-biggest stakeholder being the Italian automaker Fiat.
This seems unprecedented — the workers will be running the company. That in and of itself isn’t so unusual, but the way it is being effected — not through a court ruling or a buyout, rather by fiat of the Chief Executive of the United States — is.
The development seems vaguely familiar. The phrase “the workers control the means of production” rings a bell…
This also raises an interesting potential conflict of interest. Every few years, the single most important action the auto makers take is when they renegotiate their contracts with their workers. Now the union is not just the representative of its workers, but also a competitor. Wouldn’t it make good economic sense for them to use their power against GM and Ford (especially Ford, who has refused any government assistance) in the labor negotiations? And does anyone seriously believe that the Obama administration will take such matters seriously and take any action whatsoever to protect Ford and GM?
The one consolation here is that the UAW is getting Chrysler. It’s so seriously in the hole, that the term “pig in a poke” seems an understatement. It very well might take shenanigans like the ones described above, and a heck of a lot more, for Chrysler to start making profits again.
Of course, that’s not really a concern of the UAW. They want the jobs to continue, at very high wages. They understand that a profitable company is better equipped to pay those high wages, but the two are not necessarily linked. They have their very powerful friends in the government to help them out, in many ways.
More bailouts are not out of the question. Also, the government buys a lot of vehicles every year. Should this deal go through, it’s a safe bet that the number of Chrysler products ending up with Uncle Sam plates will skyrocket. There will be plenty of other federal dollars steered towards the company in a multitude of other ways.
Perhaps a joint union-Italian ownership and management of Chrysler is the best solution for the troubled company. But the way it is being done — with the White House dictating the terms of the deal — is deeply troubling to those who believe in the free enterprise system.
UPDATE: “Chrysler to File Bankruptcy”: Pig poked.