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Washington Swallows Detroit, Gives UAW a Piece

The United Auto Workers' (UAW) loud complaining that they're being asked to bear a disproportionate share of the costs of restructuring the Big Three begs the question: How much is their fair share to bear? As Holman Jenkins notes, in his Wall Street Journal column, the UAW may not like the answer.
The two parties that turned the Big Three into a perennially limping freak of unwritten industrial policy now will take formal ownership of their handiwork. The United Auto Workers (UAW) would own 39% of GM. The federal government would own 50%. The creditors will be shafted with just 10%. (In the Chrysler plan being discussed, labor would own 55%, making it effectively a subsidiary of the UAW.) The day after any such settlement is finalized, the clock will start ticking down to the next collective-bargaining session between a monopoly UAW and what remains of the Big Three -- though now the UAW would be sitting on both sides of the table. Nearly 25 years ago, a Los Angeles Times reporter innocently and accurately invoked the "M" word in describing the domestic auto sector, noting that the arrival of Japanese auto plants was "threatening the UAW's traditional monopoly on labor in the domestic auto industry." The erosion of the Big Three's market share since then has really been the erosion of the market for monopoly labor-produced cars. The UAW standard tactic, "pattern bargaining," which it pursues without embarrassment, would have gotten Bill Gates thrown in jail under the antitrust laws.
In practice, monopoly bargaining generally leads to an adversarial relationship between a company' s management and the union that represents its employees, so it will be interesting to see how the UAW "sitting on both sides of the table" affects this dynamic. On the one hand, its members would still expect the UAW to gain the highest pay and benefits possible. On the other, as a major partial owner, it would have very strong incentives to keep costs down to help increase profits. In the public sector, two parties sharing the same goal is common, since government agency administrators and the unionized employees they supervise both want to justify getting more money from taxpayers, who can't go elsewhere. Car buyers, however, can go take their business elsewhere.