The Absurd Report

The wrong folks were in the witness chairs in last week’s congressional hearings on auto doom. A fantastic moment was Massachusetts Rep. Stephen Lynch assailing Rick Wagoner about whether GM was asking China for a bailout too. The implication seemed to be that GM can’t afford its inflated UAW pay packages because it’s squandering money to build cars in China.

Mr. Wagoner mildly answered that GM’s China operations are profitable. They actually help to underwrite the massive losses in the U.S.

Mr. Lynch showed no sign he was actually listening, having illustrated his disapproval of foreigners. He didn’t ask the obvious question: If GM can make cars profitably in China, why doesn’t GM import them to the U.S.?

For that matter, any of the brainpans on the Hill might have asked why Ford and GM managed to build viable auto businesses all over the world but not in North America.

You don’t need the Hubble telescope to tell the answer: The UAW is present only in the U.S., not all over the world.

What you wouldn’t know is that the single biggest factor in preserving the UAW’s monopolistic power has not been labor law but Congress’s fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let’s face it, that’s what other successful U.S. manufacturers do.)

Read more from The Wall Street Journal

The Bottom Line - Can Democrats afford to let Detroit succeed?

Tags: Car Wreck in Washington

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