PATCO in Reverse?

A mostly political weblog.
Dec. 8 2008 8:12 PM

PATCO in Reverse?

Tuesday, December 9, 2008

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[T]he bill seemed likely to stop short of authorizing the broad powers that some lawmakers had urged to allow what could have amounted to an out-of-court bankruptcy proceeding, in which the automakers’ creditors could be forced to accept reduced payments, labor contracts could be rewritten and executives could be summarily dismissed. [E.A.]

Hmm. Why shouldn't the bailout deal include an explicit reopening of labor contracts? If the new "auto czar" can order the companies to restructure, tell them to build smaller cars and veto any expenditure over $25 million , shouldn't he or she be able to require the UAW to give up the precious work rules that have rendered the domestically-owned industry inflexible and inefficient for decades? To be really effective, the bailout deal would have to "restructure" the UAW itself, so that union locals don't have an effective veto over productive labor practices proven in, say, the GM-Toyota NUMMI joint venture in San Jose, California.

I don't know what the actual deal contains ( later  NYT and other stories are vague), but this seems like a useful** bright line for opponents of corporatist bailout-creep to draw: If the taxpayers are going to foot the bill, then the goal has to be a successful industry in the long run--not a Congressional fix designed to protect the UAW from what it would face in a normal bankruptcy. That means rewritten contracts. If the UAW members didn't want that, they shouldn't have let their firms go broke--that is, they should have made the concessions they're making now, and more, years ago, when it would have made the difference.

Requiring painful, bankruptcy-style reopening would set a cautionary precedent. Just as Rick Wagoner's removal will warn timid management, it would warn unions that their function isn't to squeeze the absolute maximum possible from their companies every moment. They need to leave enough of a margin of error so that in a downturn their industry doesn't have to come running to the taxpayers.

It would also be a useful precedent for Obama. Does he really want to have to bailout every slow-adapting union that's contributed to the Democratic party's victory? When Reagan came into office, he was lucky enough to be presented with the air traffic controllers' (PATCO) strike. It was a lucky chance to demonstrate dramatically--at relatively little economic or human cost--that labor doesn't automatically win every strike. (In the PATCO case, the union not only lost, it ceased to exist --an even more effective precedent.) If Obama lets his fellow Democrats structure a deal that saves the inefficiencies in the UAW contracts, it will be PATCO in reverse --a signal to the Democrats labor backers that under Obama they can't lose. Even if they bankrupt their industry. ...

P.S.: I'm heavily influenced in these views by this article. Now if only the type were big enough to read. ...

**--By "useful" I mean sound policy. But wringing a big concession from the union (as well as management) would also be sound political theater , given the public opposition to the bailout deal. If you're a GOP senator sitting on the fence, don't you want to loudly and successfully demand a painful concession at this point? Then you'll have cover for a "yes" vote when it counts. ...   2:50 A.M.

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