Saturday, January 05, 2008

Fixing the Car Company Problem

My last post on GM and Ford said that making employees even more distant from the ownership of production is not the answer to the angst of the American worker. The solution is move them closer to meaningful ownership.

The UAW is not the sole problem in the industry. The primary problem in automobile manufacturing, and other industries, is the monopolistic thinking that led to this situation where there are only two automobile companies in the US.

In many cases unions are part of the problem as they are concentrating on gaining political power. The path to political power is to destroy competition.

If the aim of the employee organizations was to enhance the financial status of its members, then the employee organizations would be working to find paths to meaningful ownership by the employees.

I don't think employee organizations are inherently evil. I think they are very good things. The problem is with structures whose primary focus is garnering political power. These organizations inevitably concentrate power in the few, and start impoverishing the people they disenfranchise.

It looks like Ford and GM might completely implode in the upcoming years. The way our Democratic process works, there will be a big bailout for the car companies. A superior way to solving the problem would be to break Ford and GM into a structure where there's multiple small companies producing cars. The problem with trying to break things up is that all of the mechanisms that demand massive consolidation are still in place.


Scott Hinrichs said...

Employee owned business ventures can also go very wrong. Remember how many Enron employees lost their retirement savings when the crap hit the fan?

y-intercept said...

You are correct that employee ownership exposes employees to accessive risks without sufficient compensation.

My post was not about employee ownership. I put the full response in the next post titled Distance From Ownership.