Unions and the Auto Industry

RUSH: All right. Bob in Livonia, Michigan. You’re next here on the EIB Network, sir. Nice to have you with us. Hello.

CALLER: I finally get a hold of you. (chuckles) Say, I’m one of those retirees from Ford, coming up on two years in December.

RUSH: Yeah.

CALLER: And I was watching some of the hearings there in Washington, and nothing’s changed. I saw the same arrogance that I saw when I worked there.

RUSH: Management arrogance?

CALLER: Management and union — and union. Look, I hired in ’75 at $4.42 an hour, and you remember 1980 what happened. I was laid off for four years. Okay? We got subpay back then, but it ran out very quickly in four months and so did the unemployment at six months. You know, 26 weeks. My health care, I think that stayed for about a year, but the dental went right away, within that first month, at the end of the month. And, look, Rush, I had to go out and get two $5-an-hour jobs, okay? My wife had to work. So, you know — and, look, you’re looking at a 15 1/2 percent unemployment rate; you’re looking at a prime rate of, what, 21 and a half. This country was really screwed up.

RUSH: Now, that was during the Carter years. You said you hired —

CALLER: ’80 — ’84.

RUSH: No, you said you hired on in ’75. What was your hourly?

CALLER: $4.42 an hour.

RUSH: $4.42 an hour.

CALLER: Yeah. In ’68 when I hired the first time, was $2.28.

RUSH: $2.28. Okay.

CALLER: Yeah, and then I went in the service. But, see, wages went up over the years. I made a good wage, but, look, I went out and I spent my money wisely. The only thing I owe right now at 58 years old is four years left on my mortgage. I don’t owe a dime to anybody, okay? I put three kids through college. I spent almost like 10,000 bucks in Hawaii on a vacation, another 10,000 in Alaska. I’ve been to California, been to Disney World, been on cruises. My money is gone into the economy to help jobs for other services in this economy. It’s not that it just went away.

RUSH: Yeah, that’s what the old days we called it trickle down.

BREAK TRANSCRIPT

I want to continue here with Bob from Livonia, Michigan. Bob, you’re still there, right?

CALLER: Yeah, I’m still here.

RUSH: What you were describing here was trickle down. You’re running around spending the money that you’ve earned and therefore you’re helping other people stay employed.

CALLER: Right.

RUSH: You’re spending money in Hawaii and Disney World and so forth, so you’re facilitating other businesses operating.

CALLER: Right.

RUSH: So you got a good handle on it. But, look, strip all that away for a second. You’re retired.

CALLER: Yep.

RUSH: You gave us the circumstances of your retirement. Are you still depending on Ford? You said you worked at Ford.

CALLER: Yeah. Well, the last years that I worked there I was placed in that jobs bank. I was unhappy with it. I worked, so I —

RUSH: I just wanted to specify Ford. Are you still being paid —

CALLER: Yeah, yeah, yeah, yeah.

RUSH: — a pension?

CALLER: I get my pension, yeah, right. You know, 3,000 a month, whatever it is, with the survivors benefits, all that stuff.

RUSH: And health care?

CALLER: Yeah, I get the health care, too.

RUSH: You get health care. So when you watch all this, when you watch all this take place and you hear that some people think, ‘Look, we just need to let ’em go bankrupt and redo these union contracts that just can’t be honored. You can’t continue to pay people that do not produce anything, that kind of money,’ what do you think when you watch people say this?

CALLER: Well, the retirement’s one thing, but the jobs bank is the other thing. See, Rush, back in the eighties, I went to Minnesota after four years. Ford called me up one day and said, ‘Hey, we got a job for you, but guess what? It’s in Minnesota,’ and I had to make the gut-wrenching decision to root up my family and go. The way it is now, you could sit in this job bank and you could turn down an offer for another state. You don’t have to go. To me, Rush, they’re trying… They got socialism mixed up with capitalism, you know, with the business. It’s like a socialistic thing. It just doesn’t mix. You can’t do that.

RUSH: Wait a second. I just want to understand here. You’re in the job bank. Are you being paid while you’re in the job bank?

CALLER: Yeah, we were paid in the job bank, but I got out of it.

RUSH: But —

CALLER: I retired. I flat-out retired.

RUSH: Wait, now. You’re not working, you’re in the job bank but you’re being paid. Then they call you up and they say, ‘Here’s a job for you in Minnesota.’

CALLER: No, there was no job bank in the eighties. There was no job bank in the eighties. Everything ran —

RUSH: No, I know. I’m talking about now. I’m trying to figure out how it operates now.

CALLER: Now?

RUSH: I’m trying to figure out how it operates now.

CALLER: Oh, now.

RUSH: My question is: Do you get paid even when you’re not working when you’re in the job bank?

CALLER: Yes.

RUSH: And if today, when you’re in the job bank and they call you and they say, ‘We’ve got a job, and it’s not where you live,’ you can turn it down and still get paid. Is that what you’re saying?

CALLER: Exactly. That’s the way it was set up. See, and it’s disgusting. It’s disgusting. That’s why I left. I bought a franchise in fixing windshields. I’m a franchisee, and that’s what I’ve been doing for the last three years.

RUSH: Well —

CALLER: It’s worked out very well.

RUSH: This —

CALLER: I hire six employees, and that’s what I do.

RUSH: Okay, good for you. You’ve finally entrepreneured it. That’s superb. I love hearing things like that. I love hearing stories like this. Now, here’s what’s tough for me about this. I mentioned this earlier in the program. I am all for everybody earning as much as they can. I am not one of these that wants to sit here and place an arbitrary value on what someone’s worth is. I want the market to do that. Interestingly, this is one of the — not problems; it’s one of my — observations about unions in the past. They’re fine, if that’s for you, and if that’s what you want to do. But when you join a union you have to realize that you’re giving up your individuality and you’re part of a giant unit and you’re not going to earn any more than anybody else there does, regardless how well you do your job; unless you can finagle, you know, lots of overtime, things of that nature.

But at some point when you’re earning more than the market would otherwise say, there’s going to become a day of reckoning. Now, I understand the auto companies. They agreed to this deal in the collective bargaining sessions with the autoworkers. This job bank business where you get paid for not working? (laughs) If you just strip it all away, who wouldn’t take that? (laughing)

‘You mean you’re going to pay me and give me a pension and health care benefits for not working?’

‘That’s right, son.’

‘Sign me up! And then you’re going to tell me even if a job comes up, I don’t have to take it, and I can still get paid?’

‘That’s right, son.’

Who is not going to take that? So these poor guys in the union — and I’m talking about the rank-and-file now — who wouldn’t take this? The auto companies negotiated these deals. I don’t know what kind of gun was at their head and so forth. I have no clue. All I know is now that the day of reckoning has come, and whatever these labor costs are, particularly the labor costs on top for people who are no longer working, which means they’re not producing anything, that just can’t go on indefinitely. The tipping point here has been reached. (laughing) Snerdley is asking, ‘Why can’t it go on forever like this? Government does.’ The market imposes itself, eventually, here. These companies can’t go print money, Snerdley. The government can. The government can continually run a deficit. That’s why I said the other day, just bail out the government. Screw all of this and just bail out the government.

We don’t need to raise taxes. We don’t need to do anything. Just bail out government. Just bail out the government. If we’re going to bail out everybody else, bail them out, too. ‘Rush, that don’t make any sense.’ That’s right! Exactly right. Now you understand why no bailout works. ‘How do we bail out the government?’ Well, we just bail ’em out. ‘But the government is the one bailing out.’ That’s right. The government should bail itself out. ‘But, Rush, that can’t happen.’ Right. Exactly right. Nobody can be bailed out. All that does is forestall and delay the eventual day of reckoning. Now, as I mentioned earlier, labor costs are as much a factor in being competitive in the auto business as any other business.

If one company making a product (in this case, cars) or if three companies making cars have labor costs that are twice as high as their competitors’ labor costs, well, mathematics and human nature and behavior are quite common, and they’re predictable. And it’s very simple to see that the guy who makes the cars for half the labor cost of the other three companies is going to be able to sell his cheaper — and guess what people are going to buy? They’re going to go buy the cheaper cars, particularly if they think they look better, or if they have whatever. They’re going to find the deal. Everybody loves to tell you how they screwed the dealer, do they not? Everybody loves to tell you how they went to the dealership and they jawboned them and they argued with them and they got to below sticker.

You say, ‘Wow, how did you do that?’ And they tell you some cock and bull story about how, ‘Well, I offered cash. They’ll take cash right off the barrel.’ (snorts) I bought most of my cars recently with cash. It doesn’t do a damn thing to the price. There are all these myths. When people buy a house, they can’t wait to tell you how expensive it was; but when they buy the car, they tell you how cheaply they got it and how they really screwed the dealer. They knew more about the business than the dealer knew. They went to the website, they found out what the wholesale cost was. They knew where the lies on the sticker were, all that stuff. The point is, people are oriented toward the cheapest price they can get on a car.

So these labor costs have come home to roost. (sigh) It’s a real tough thing, for me, because I am not anti-union, and I am not opposed to anybody making a lot of money. I want anybody to make as much as they can when they’re working, but there’s no way… We’ve proven it in Social Security; we’ve proven it in Medicare. There is no way even a society as large and as prosperous as ours, the most prosperous in history, human history. There’s no way a society can pay people enough money — interminably, forever, to where their life is also prosperous — when they’re not working. It just doesn’t work. At some point (and I fear that we have reached it) the golden goose, it’s come home. I don’t care who you want to blame. At this point, that’s pointless.

Blame the execs and you get all bent out of shape, they’re flying in for these sessions to beg for money on their corporate jets. They’re going to… It doesn’t mean anything. Just it’s bad PR for those guys, but they can’t get in much worse PR shape, so what does it matter? You can get mad at the union leadership, the thugs out there who negotiated the deal. You can get mad at the rank-and-file. All that’s pointless now. This is a situation only the market can repair. And that would appear to be through bankruptcy, either Chapter 11, Chapter 7, or 7 going into 11, however it all works. The bailout is… This bailout, I’ll tell you something. You know what this really is? And I mentioned this yesterday, and this is even scarier.

And I think this is why Obama is happy for even more crisis to come down the road and more volatility, more instability, ’cause Rahm Emanuel said: A crisis is a terrible thing to waste. You don’t want to waste a crisis. Stop and think of that, folks. You don’t want to waste a crisis. Meaning, to these guys, this crisis is an opportunity. It’s not an opportunity for us. It’s an opportunity for them. What they really want to do is use the panicked and crisis mode of the auto industry to set the guidelines by which they reorganize, with bailout money. This is what the Obama camp’s going to do. And these auto companies are going to have to promise to make all kinds of environmentally friendly cars, as designed by environmentalist wacko lobbyists and activists both inside and outside the Obama administration.

The greening of the US auto industry is where this is headed. ‘But, Rush! But, Rush! How do you know?’ Because I know who Obama is, folks. We all do. We know where this guy’s come from. We know what inspires him, what’s informed him, what motivates him. He looks at every problem through the prism of socialism, collectivism, you know, whatever word offends you the least. ‘The government in charge of it all,’ whatever you want to call it. And this is the greening of the auto industry, that’s what’s coming. And in addition to that, there will be limits on what executives can make.

The unions will stay intact. Nothing will happen to them. There will be limits… Barney Frank, I think we’ve got the sound bites. Barney Frank said. ‘Hell, 25 billion is not near enough. They’re going to need a trillion.’ Barney Frank’s idea is that the US government own 80% of the US auto business. The Big Three that get the bailout, he wants the government to own 80% of it. When that happens… (interruption) No, no. I’m not making this up. I read it in show prep today. I’ve got some audio sound bites. We’ll take a break here and I’ll get to the Frank sound bites on this afterwards, when we come back from the break.

But this is going to be loans, and until they pay it back, the government has an 80% stake. When the government has an 80% stake, they write the rules by which the company operates. That’s where we’re headed with the auto business, and any other business that gets bailed out. And then, once the government owns 80%, don’t be surprised if somebody like Frank comes along and says, ‘You know what would be really fair? Let’s us in the government just gift this 80% stake to the unions, and we’ll have the unions own the auto companies. The unions will own 80% of the auto industry, and they’ll get to operate it — and we’ll finally get even with management, after all these years.’ You watch, folks. Don’t be surprised if down this road this is exactly what happens.

BREAK TRANSCRIPT

RUSH: Barney Frank. He was on NPR’s Morning Edition today. Steve Inskeep was the presenter, and he said to Barney Frank, ‘I want to ask you about something mentioned in that report from economists from the University of Maryland. What makes you think the $25 billion for the Big Three would even be enough?’

FRANK: We don’t think it would be enough. The way we have this structured, they will get $25 billion if the bill passes with a lot of conditions. If on March 31st the president does not believe that this is going to get viability with energy efficiency cars, they have to repay the loan, they get no more money. If they can show by March 31st a plausible way to go forward, then we would consider giving more money under, again, equally stringent conditions.

RUSH: Are you hearing this? Give them the $25 bill, they have got ’til March 31st to move forward on energy efficient cars as designed by Barney Frank and the government. They can’t retool that fast. Then they’ve gotta give the money back. But if they can show plausibility to the (unintelligible), then they’ll get more money. Now, here’s more. So 25’s not enough. How much you going to need?

FRANK: AIG, which I don’t think anyone would think was as important to the American economy as the auto industry, got $40 billion just now to make it up over $100 billion. To some extent let’s not have a white-collar/blue-collar bias in our public policy. There are those who say, hey, go bankrupt so you can cut back on what the unions have won. The unions have already made some concessions, but, you know, we’ve had enough anti-union activity and enough increase in increment equality in this country, I don’t want to set a precedent that bankruptcy now is the way in which you undo what gains unions have been able to hold onto.

RUSH: So you can see how this is shaping up, we don’t have any blue-collar/white-collar bias in our bailout. This is the chairman of a House committee now, hundred billion may not even be enough, and he wants an 80% stake in the company for that. He didn’t say that.

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RUSH: Auburndale, Florida. This is Don. Don, I’m glad you waited. Welcome to the EIB Network.

CALLER: Hi, Rush. How are you doing today?

RUSH: Just fine, sir. Thank you.

CALLER: I spent 26-1/2 years working for this corporation, and I was offered an early out at 55.

RUSH: Which corporation? For which did you work out there, Don?

CALLER: Do you want me to get killed? (chuckles) I don’t know if I should tell you that, Rush.

RUSH: Okay, okay. Was it auto company?

CALLER: Yeah, yeah, yeah, yeah.

RUSH: Okay.

CALLER: I’m 84 now, and I have been drawing a pension longer than I worked there. So that’s doing pretty good, but I think the party is over. I really think that they’re going to have go bankrupt, to save the companies.

RUSH: Well, ultimately, yeah. See, if that’s the objective. If the objective is to save the unions, then they won’t go bankrupt. They’ll do bailouts and continue to do bailouts and if the objective is to save Jennifer Granholm, if the objective is to save the state of Michigan.

CALLER: It’s not going to happen, though.

RUSH: If the objective is to consolidate power for the Democrats and Obama, they’re not going to let it go bankrupt. They’ll keep bailing them out. There will be a bailout next year. There will be.

CALLER: I would probably lose about two-thirds of my pension, but I’m willing to sacrifice if I have to, to save the companies I worked for.

RUSH: That’s awfully big of you, Don. There aren’t too many people that would do that.

CALLER: Well…

RUSH: Especially not at your age.

CALLER: Well, I have an IRA. I went into job shops after I retired for ten years, and I saved quite a bit of money in IRAs, although they’re in the tank now; and all my stock market investments are in the tank. (laughs) So I don’t know, Rush. We’re just hanging on by our teeth.

RUSH: Yeah, but you’re still laughing about it. What else can you do, I know. But you still have a great frame of mind about it.

CALLER: Well, there’s no sense. I have my health, so what do I care?

RUSH: Well, that is number one. People sometimes forget that. But the older you get, the more you realize that. I’ll tell you, the only honorable thing I think these auto execs can do now to save their companies and to save capitalism is to go the bankruptcy route. Because if anybody thinks that Harry Reid, Nancy Pelosi, Chris Dodd, and these clowns up there, Durbin, Schumer — if anybody thinks they know the first thing about running the automobile industry, then they deserve what they’re going to get.

CALLER: They can’t… Rush, they can’t put enough money in to sell cars at a thousand, 2,000, 3,000 more, then the Japanese are. It just will never work.

RUSH: Well, you’ve gotta get the operating costs down. If you don’t have competitiveness in all of your cost areas, then your goose is cooked and that’s what’s happened. Don, you’re a big man. I’m glad you called. I’m proud you’re in the audience.