28 April 2009

Now that UAW owns GM and Chrysler, what's next?

The government and unions have got themselves some car companies, but no one has to buy those cars. But there's no guarantee it will be a profitable venture, like Amtrak. This ownership isn't going to work very well if Americans decide, in one of those great paradoxes that adds sweetness to life, that buying American, when it comes to some automobiles, may be, well, un-American.

Not to worry. A government subsidy here, a tax increase on "foreign" and imports there, a promise to make your car payment for you for nine months if you lose your job and it just might work. In other words: artificially decrease the cost (and, thus, the price) of the union-owned product, and artificially increase the cost (and, thus, the price) of the private-owned product. Why, I bet the taxes on your purchase of a GM or Chrysler product will be just about zero, but not the taxes on your foreign auto (say, for example, a Volkswagen Group product, like your Lamborghini, Bentley; or your Porsche, whatever). The taxes on those products will likely increase. But that might start a trade war.

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James Frank SolĂ­s
Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
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