A Modest Proposal: Let GM, Ford, Chrysler, and the Rest Form a Union of Their Own

Now that the auto industry bailout has failed, I think it might be time to step back and ask if there might be a better way. We all know that the feature that has defined the auto industry is its love of collective bargaining: the only way to hire a good auto worker, it seems, is to let him and all of his friends agree that nobody will be hired unless everyone is hired, and at terms they dictate. That’s done just fine for the unions, so it’s time to share the wealth. Here’s why the Big Three (and their foreign competitors) should for an autoworker-hiring union, and should go on strike (i.e. fire everybody) if their collective demands aren’t met:

1. No more wasteful competition. Normally, if Ford wants to cut wages, union members will object, and possibly shut down a Ford plant — so Ford loses market share to GM. But if Ford and GM collectively agree that if one plant gets shut down, all of them get shut down, this simply won’t happen. If a strike is that costly to the union, the union will do anything to avoid it, including

2. More sensible wages and benefits. The auto companies pay such ridiculous compensation ( $73 per hour, according to one estimate*) that they really ought to get a break. They could bargain salaries down to the national average, but why stop there? If the unions can use the threat of a strike to make $30/hour work cost more than twice as much, why shouldn’t the Big Three aim for, say, a 50% discount to whatever fair wages would be. It’s not hard to negotiate: $15/hour from the automaker’s union, or $0 per hour and no transferable skills.

3. More political involvement! The UAW is a very good citizen indeed, and spends member money on plenty of political activities that happen to represent its interests. Imagine what a relief it would be for union leaders if the playing field were levelled out a bit, and the Big Three (and their friends) could play the same active role in electing and reelecting their chosen politicians. Why, one could imagine a situation in which the auto companies elect their friends, who give them more money and more political influence, which they use to elect even more friends, ad infinitum! It certainly would make politics less confusing if we used these feedback loops to shut competitors out of the system.

As you have doubtless figured out, the Tax Rascal is having a little fun at the expense of the unions, who have done so much for our auto industry these last few decades. Of course, the auto companies have done their part, thanks to a less-than-deft PR touch and an insistence on selling cars with all the aesthetic appeal of a scaled-up, chromed-out manatee. And I should even note that the unions are scaling back their benefits — they may — may — give up their policy of making auto companies pay thousands of workers to sit around not working.

But the real point is not that the unions are in the wrong, or that the auto companies are — it’s that our political system allows the dangerous, destructive feedback loops that can turn a minor problem into a catastrophe. It isn’t hard to imagine an American auto industry in which people have well-paying jobs making cars people actually want. But this would be an industry in which someone could get fired, and in which, if they were fired, they wouldn’t keep getting most or all of their compensation. But it’s hard to imagine such an industry coming into existence with the auto industry’s management or the unions’ leadership. And the current bailout is just way to pay them to make the same mistakes all over again. Surely, there’s a better way.

* It’s hard to make estimates like this, because so much of the compensation is in the form of benefits that pay out years later. But it’s possible to just borrow someone else’s estimate, and ask what you’d have to pay to get a health plan like the one GM offers, to buy an annuity that mimics GM’s pensions, etc. The $73/hour number isn’t a reference to actual wages, but to total compensation. For whatever reason, this is a very hard concept to grasp for people who don’t want it to be true.