Ugh!

Of course, this sort of federal intervention into the transportation markets goes back to the earliest days of the Country. One of the very few differences between the Constitution of the Confederate States of America and the United States of America was the CSA’s plain language prohibition against the CS government financing “internal improvements” to the states. The Southerners believed that US revenue raised largely from tariffs and duties in The South were being used to support the canals and railroads that were moving traffic from the interior US away from the Y rivers and the port of New Orleans to the eastern seaports of New York, Baltimore, Philadelphia, etc. to the detriment of the economies of the Southern states.

It’s obvious that the current President and Congress were not going to try to force it (partly because it would get reversed in a month) and you know damn good and well that the new Congress will not force anything except on management.

So UAW workers will keep getting paid, regular people won’t have the money to buy cars, the Big Three will keep going downhill, and Obama and the Dems will keep voting for bailouts. Only a revolt at the polls in 2010 will change anything. Until then, we know what’s going to happen for the most part.

If the domestic automakers can’t “merger” their way out of this, they will go down. It is up to us to prevent them taking the taxpayers down with them.

And I don’t foresee any white knight corporate tooth fairy mergor or mergee willing to bootstrap GM or Chrysler in this environment.

I liked your idea about GM not operating in North America anymore, it makes a lot of sense. Too bad they wont.

That’s a lot of lost jobs in a weak economy, hence a lot of unemployment compensation.

They’ll also need to screw their long-term bondholders out of maybe 70 cents on the dollar. That’s maybe $40 billion in privately-held asset value that will vaporize. (Actually, the market has already marked this debt down even lower than that, but in a restructuring, existing holders will need to mark to market and realize the loss.)

But labor is a production factor like any other. If you find that you’re overpaying for labor, you’ll let someone else hire the overpriced people and take the losses. That’s how the market clears.

What if there’s a union that forces everyone in a particular market sector to overpay for labor (or a cartel that forces everyone to overpay for oil, or whatever)? Then the labor market will clear at the higher level, but that industry’s customers will make their own judgment whether they’re getting value for money at the higher prices.

And if the overpriced product or service is something you must purchase or are legally required to purchase (such as government), then the inefficiency comes off the top of the economy as a whole.

There’s nothing arbitrary about this. If you try to distort markets, markets will *instantly and automatically* find a way to balance. It very often happens that this is socially desirable. But there should never be any doubt that the cost is real.

What I do think is that you’re massively overestimate their capacity to actually govern and get things done.

One of us will be proven wrong come April.

But I have severe doubts that the Dems can pull off Card Check, the Fairness Doctrine, nationalized health care, gays in the military, defense cuts and higher taxes when the unemployment rate will be hitting 9-10% or higher.

I’ve seen Democrat government in action before – they’re the guys that can’t shoot straight, and they’ll be engaged in a circular firing squad (now, made even worse by the nutroots!) come about February 20.

Don’t expect me to feel sorry for a workforce (and retiree force) that deluded itself into thinking that someone, somewhere down the road was going to figure out someway, somehow for Chrysler and GM to sell enough cars each and every year, to fully fund all those pie-in-the-sky retirement obligations.

Public sector workers at least have some rational basis for believing that they’ll eventually get their pie. If necessary, they’ll simply find a liberal judge who’ll order the government to do whatever it takes to meet its pension obligations to its retirees.

Private sector employees should harbor no such illusions.

If the UAW is unhappy, let it go back to its retirees, remind them that they were knowingly living in fantasyland when they negotiated those sweet retirement benefits—and then cut the benefits. That should safeguard the paychecks of current UAW workers.

How about Dem Senators from states that don’t have strong union presences? For example, Salazar’s appointed replacement in Colorado? Or, Blance Lincoln?

Much, much potential for mischief, if we’re willing to fight a ruthless partisan guerilla war.

Something tells me that Mitch McConnell isn’t in too much of a New Tone mood, after the slime the Dems threw at him this past election.

Now it’s Obama’s problem.

I dont understand this. Could you please explain it? Why would the tax payer be on the hook for GMs obligations to its workers in regards to health and pension funds?

Add to this the dirty politics of Chicago, the likelihood of a great fallout there, and the potential for more union scandals as they try to shore up funds lost in the market… It’s looking like 2009 will be a great time to be a conservative!

I think that you’re right about artificially overpaying being a bad thing. My point was more that this overpaying of the workers was not the heart of the collapse, and that it was corruption and inept management which was to blame. That said, I think that what constitutes reasonable pay is fairly arbitrary, and I don’t feel that a race to the bottom is really a good thing. While $30/hr for someone to sit on assembly line all day may be on the high end, I don’t think that it’s obscene.

So, if I have some Red State governor or AG who’s giving me a hard time, I just have the DHSS auditors drop in and pretty soon that state is a few tens of millions in the hole from disallowed federal costs. Or I have the USDOL guys show up and all of a sudden the government owes its employees a few tens of millions in back wages and treble damages for willful violation of the FLSA. Or, if some private employer is bankrolling opposition, I can show them the tender mercies of OSHA, EPA, ICE, and DOL; they’ll shut up quickly enough. In a unionized state this kind of stuff is all OSHA, DOL, EPA, and DOJ analogs do. OSHA inspectors never visit the good union contractors and the Health and environmental quality inspectors never visit the union houses – except to get a free meal or ogle any new waitresses from time to time. It’s going to be a brave new world.

To the more fundamental issue, if they have the votes to do one of these things, they have the votes to do all of them and they have a labor/community organizer in the bully pulpit to tell the ignorant masses that he’s seving up pink Bubble-Up and Rainbow Stew for them.