Looks like the UAW is not the only politically preferred group that is getting a government sponsored soft landing courtesy of the Obama Administration. Holman Jenkins in Yesterday's Political Diary (subscribers only):
Toyota isn't worried about an invasion of Chinese small cars in the lucrative U.S. market -- because Toyota concludes that the new Obama fuel mileage rules will serve nicely as a protectionist moat against upstart car builders.
That was the analysis outlined by Toyota's Canada boss recently for a University of Windsor audience. Stephen Beatty, managing director of Toyota Canada, said the company's big thinkers now lean to the view that the latest U.S. mileage timetable requires so much technology to be placed in new vehicles that the standards effectively prevent or will long delay the BRIC countries (Brazil, Russia, India, China) from producing for the U.S. market.
"They simply don't have the base technology to meet those requirements," he said, according to an account in the Windsor Star by reporter Chris Vander Doelen.
The bill to meet the new mileage rules is expected to reach between $1500 and $3000 per car. Add expensive western safety requirements such as mandatory stability control, and up-and-coming car makers would have to undertake heavy extra investment and undergo a steep technology learning curve just to bring stateside the small, simple vehicles they build for home-market consumers.
Toyota itself is rolling out a new Prius and stepping up production volumes even though the Obama-friendly vehicle is a slow seller and money loser at today's fuel prices. Part of Toyota's bet is that the cost of participating in the U.S. market going forward will be prohibitive for all but the biggest, incumbent car makers. Nor would it be the first time corporatist favoritism came disguised as environmental regulation. Those grins on the faces of Detroit auto executives at Mr. Obama's fuel mileage announcement last month may not have been entirely plastic after all.
Meanwhile, WSJ's James Taranto bestows kudos on Ruth Bader Ginsberg (!) for upholding her Constitutional duty:
Congress established bankruptcy courts to provide for the orderly restructuring and liquidation of financially distressed companies, and the decisions of these tribunals are subject to review by the ordinary judicial courts. The Obama administration's plan for Chrysler--which involved giving a politically favored constituency (the United Auto Workers) priority at the expense of both taxpayers and legally privileged secured creditors--was an effort to circumvent the rule of law.
In addition to the principle at stake, the Supreme Court has an institutional imperative to intervene in this case. The administration is attempting to seize power that rightly belongs to the courts (and to Congress, since lawmakers could rewrite the bankruptcy law if they chose). We have often criticized the Supreme Court for overstepping its power, but it would be just as wrong for the court to shirk its responsibility to exercise its power legitimately.
And today, Holman Jenkins turns his sharp eye back to GM:
Mildly laughable is the recent published insistence by Obama car czars Steve Rattner and Ron Bloom that GM would be run on a strictly commercial basis while in government hands. Would that it had ever been so.
Already federal money is clearly being used to provide a softer landing for the UAW than labor would have gotten in a bankruptcy reorganization under private investors. The bailout has also deeply politicized the company's business model by privileging its money-losing domestic operations, saddled with the UAW, over its money-making foreign ones. A truly commercial vulture investor would have done the opposite: dumped North America and kept the promising businesses in China, Russia, Europe and Latin America.
(...)
But then GM has suffered from excessive political attention for most of its existence. Wonder where its famously defensive, obfuscatory "culture" comes from? This is where. The company never has been able to launch a model or close a factory without weighing the political consequences. It can't control its dealer network because dealers are a powerful interest group in every state capital. GM cannot market a car without first knowing how regulators will treat it for fuel-economy purposes, so GM can know how many it can afford to sell (if it's a big car) or how many it must sell (if it's a small one).
Most of all, GM cannot sit down with the UAW without knowing that Democratic politicians, on whom GM relies for help in Washington, will only be satisfied if the UAW (with its power over the re-election hopes of officeholders all over the upper Midwest) is satisfied.
Government does not belong in business, because government is not in business; this massive power grab by the Obama administration (and it can truthfully be called nothing else) is nothing more than an effort to dispense government goodies to politically favored constituencies to ensure votes. This whole situation should send a chill up the spines of all thinking Americans.
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