I think this Wall Street Journal editorial (shockingly!) understates the way that management captured the auto industry during the good times and milked it dry for its own benefit (the price of which was to allow the UAW unfettered access to the other teat). But it captures something about the collapse of both the auto and financial industries which we ought to take very seriously.
For more than 40 years, a 25% tariff has kept out foreign-built pickup trucks even as a studied loophole was created in fuel-economy regulations to let the Big Three develop a lucrative, protected niche in the “passenger truck” business.
This became the long-running unwritten deal. This was Washington’s real auto policy.
For three decades, the Big Three were able to survive precisely because they skimped on quality and features in the money-losing sedans they were required under Congress’s fuel economy rules to build in high-cost UAW factories. In return, Washington compensated them with the hothouse, politically protected opportunity to profit from pickups and SUVs.
And that point – that the issue isn’t too much regulation or too little regulation, but regulation that is captured by and for the regulated – is something we ought to be damn thoughtful about as we contemplate an immense expansion of regulatory authority in this country.