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Tuesday, April 28, 2009

Chrysler, GM, the UAW, the President and Myriad of Conflicts of Interest

When I read it this morning, I couldn't believe what I was reading. The whole idea is so corrupt and absurd even a business school class wouldn't study something like this. It's too absurd to imagine being done in real life. The UAW, the United Auto Workers, will now become majority shareholders in Chrysler and significant shareholders in GM. Meanwhile, the U.S. government will become majority shareholders in GM. What Fiat is thinking in merging with Chrysler I can't figure out.

So, the man that only two weeks ago said he had no plans of running an automobile company is now on the brink of becoming the biggest shareholder in GM (that's the president). Meanwhile, the UAW will now represent both the workers and the management. This sort of corrupt conflict of interest is the type of thing I covered in the Grady scandal and Robert Brown, then head of the board of Grady Hospital, rewarded his own architecture firm several sweetheart contracts. Now, we are going to have the same party represent both labor and management. Think about it. We are going to have a government deeply tied to the unions as the majority owner of GM and the unions themselves will be the second biggest owner.

The UAW has been a significant and early supporters of the President. Just think about the dust up created by the ties between Dick Cheney and Halliburton during the Iraq War. Now, we have a president that was supported significantly by a union, and he's in the middle of orchestrating a deal in which the exact same union gains signficant control over two automakers. This is brazen Chicago style corruption and it's right in front of us.

This is the sort of corruption the MSM claimed just about each and everyday the Bush administration was engaged in. Now, it is being done right in front of us and no one is pointing out the obvious. Everyone is looking at this with peculiarity. It isn't peculiar. It's corrupt. This is payback plain and simple. The president rejected an earlier restructuring plan, fired the CEO, and now he's on board with a plan that gives the unions 40% control of the company. The worst part is that this isn't done in some backroom and hidden from the public. He's doing it right in front of everyone. He's brazenly paying off the unions, and he's doing it with a major announcement that the entire press corps can write about. The president is able to do all of this because he knows that the majority of the press corp will pay no attention to the obscene corruption that he is laying out right in front of them.


Gail said...

Some things must be permitted to happen. I can't think of anything more amusing than to watch the President and the UAW attempt to run a company.

The costs of this experiment will more than pay for themselves as the results of their management abilities become manifest.

Just watch the UAW's tune change when they are the ones who have to decide whether to pay themselves (the shareholders) or the will be a hoot!

When my children were small, I allowed them to make bad decisions in areas not involved with their health and well being so that they could observe cause and effect. It was a way of helping them develop judgment.

Now, we have a gaggle of adults who have never acquired any judgment running the nation. I am certain they honestly believe they can manage a company better than those who have actual successful businesses. This will be one of the less expensive experiments of this administration and one of the most entertaining.

Best regards,
Gail S

Anonymous said...

Problem: The government gets to make all the rules. So what's to keep them from making rules that only GM can benefit from / abide by once the government controls them? Now who's going to be able to compete in this unfree market? The answers respectively are: Nothing and no one.

Anonymous said...

Great points you make. Here are more from a letter to the editor I wrote that I am reluctant to submit under my name. I like my house, and my knee caps, left intact. Share it if you dare.

Becoming the majority stockholder in Chrysler LLC should terminate the United Auto Workers union's legal status as a recognized labor union. To represent Chrysler employees in collective bargaining while holding a controlling interest in their employer is a clear conflict of interest, and creates countless opportunities for employee abuse.

Furthermore, UAW is sole representative for laborers at all major American automobile manufacturers. Since labor unions are exempted from antitrust laws, this creates an environment where the UAW could profit greatly from engaging in anti-competitive behavior on Chrysler's behalf, even ultimately monopolizing the American automobile industry, with complete immunity from prosecution.

So long as substantial union ownership interest in Chrysler is maintained, the UAW poses a grave and unacceptable risk to this fundamental American industrial sector.
Best regards,