Bidenomics is the Root of the GM-UAW Strike Evil

From my old perch in the Trump White House

BONUS BREAKING NEWS POST. HOT AS A FIRECRACKER. FIRST TO OUR SUBSTACK! (Will have your market rap out tomorrow!)

In 2019, from my catalytic perch in the White House, I entered into secret negotiations with both sides in a GM-UAW labor strike that had dragged on for a very painful month – painful both to GM and its workers but also to the US economy.  With 48 hours, I was able to help broker  a deal on behalf of President Trump that satisfied both sides.

If I were in the Biden White House today, there’s not a snowball’s chance in Hades I could work any such magic.  Bidenomics is doing so such damage to America’s auto industry and its workers that there is really no deal to make.

From the perspective of GM, Ford, and Stellantis, Bidenomics and the Democrat’s radical “Green New Deal” has hurtled the automaker onto a path of rapid transformation away from the internal combustion engine to electric vehicles.  The primary problem US automakers face in meeting this challenge is that even at current wage and benefit levels, they can’t possibly compete with a whole host of international competitors who have greater technological expertise, better access to the “engines” of EVs in lithium batteries, and ready access to a vast army of slave laborers and pollution havens, principally in Communist China.

Among these foreign challengers, Tesla looms as the greatest existential threat to US automakers along with China’s national champion BYD.  Once hailed as an “American” company, Tesla’s Elon Musk has moved much of his production to Communist China.  Musk now commands the largest EV plant in the world in Shanghai, one capable of producing EVs for export to the US and into  foreign markets where US automakers compete at deep discounts.

Remember here it is not just China’s slave labor and lax environmental regulations that provide Tesla’s edge.  The Communist Chinese government also lavishes massive subsidies on its EV industry, far in excess of anything Bidenomics is throwing at the GMs and Fords of this world.  Fueled by such subsidies, Musk has shown a ruthless willingness to engage in predatory pricing and thereby take out any American competitors.

Remember, too, that EVs constitute an entirely new technology.  Gone from the bottom line of US automakers are the highly profitable combustion engines and parts like pistons that make up the guts of a “gas guzzler” – and gone too are those UAW jobs in the parts industry.  Instead, whichever country can most profitably produce EV batteries will likely win the competition – batteries alone account for almost 30% of the total cost of an EV.  That winner take all country is, of course, Communist China, Inc.

Add all this up, and American automakers like GM and Ford simply cannot afford a contract that generously compensates UAW members while reinstituting massive benefits.  Over the next contract cycle, these companies will not only face a flood of low-cost EV imports into the US under the laissez faire, tariff-less world of Bidenomics.  American automakers will also get their clocks cleaned in export markets around the world by the likes of Tesla and the aforementioned BYD.  This Communist Chinese national champion is already the world’s largest EV maker in the world and a key reason why China is the world’s largest EV exporter.

From the UAW’ rank and file’s perspective, the news is equally grim.  Bidenomics has bred a virulent and persistent stagflation which, over the course of Joe Biden’s regime, has significantly eroded real wages, particularly for blue collar manufacturing workers like those in the UAW.  A flood of illegal immigrants under Biden’s open borders policies is also putting further downward pressure on wages across the blue-collar economy.

Knowing this, and knowing that inflation is likely to continue, no UAW negotiator worth his or her salt would support a contract without a rock-solid cost of living adjustment clause or COLA.  To put this in real terms, the current negotiation is not just about negotiating a significant wage increase in nominal terms, e.g., 36% over the life of the contract.  It is also about insuring that, say, a 9% wage boost each year is not completed obliterated by a 10% inflation rate a year – quite possible under the profligate spending of the Biden regime and America’s looming fiscal cliff.

Of course, US automakers are unlikely to accept the UAW’s proposed COLA reinstatement precisely because of the risk and uncertainty it would impose on the company’s bottom line – the UAW lost the COLA in 2007.  How do you spell “stalemate?”

If I were still in the White House, I would, of course, try once again to broker a deal.  But I would go into that deal with a heavy heart as I would know full well that any “good deal” for the automakers under Bidenomics would leave UAW members likely worse off while any “good deal” for the UAW would further imperil an American company whose days may already be numbered.

Of course, if I were still in a Trump White House, there is also not a snowball’s chance in Hades that Donald Trump would let the Elon Musk’s and BYD’s of this world even into American markets.  Once again we learn that elections have consequences.