If you watched the three automaker CEO's testify before Congress the other day, after a while you started to feel sorry for them. They were like sheep at an Arab wedding. But "
A Car Wreck Made in Washington" concludes something entirely different. It suggests the wrong folks were testifying before Congress about the root causes of failures by the Big Three.
"Why for instance, does the Big Three have profitable operations in all of it's overseas companies?" It was a question Congress did not ask. According to the OpEd:
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.)
All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit's woes other than an improbable series of "stupid decisions" (as another Massachusetts congressman put it) by 18 CEOs over 30 years.
Its a reminder of a lesson that we can already see will be lost on the Obama Administration. Government intervention rarely achieves what it sets out to do. When government "fixes" a problem it always becomes a more virulent and longer lasting one.
As we already know, the Executive branch is rarely the sole source of such misdirection of good intentions. It is more often the realm of the Legislative Branch and why when the two are controlled by the same party so much bad can happen in so short a time.
