Dear Prof. Wolff, Happy birthday, tomorrow. My questions have to do with the decline of Detroit, the car industry bailout and the role of the unions. I notice that there is a recurring narrative in the US in which unions are being blamed for demanding too much and being a contributing factor in bringing large companies down. In detroitbankruptmovie.com , for instance, a large section is dedicated to complaining about how the UAW didn't take a hair-cut and wasn't forced to adjust to the new economic realities of America in the bailout process. It is indeed true that car manufacturing plants were moved to other states (often right to work states) or low-wage countries (f.i. Mexico), but I don't see how this is the fault of the unions. There are strong unions in the German auto industry and they are not blamed to the same extent when there is overcapacity or an economic downturn. What are the real reasons for the structural decline of the US car industry? Why is it that GM cannot turn a profit in Europe, and has just sold off Opel and Vauxhall? It would seem to me, as a layperson, that the European compacts and more energy-efficient cars are exactly what the US needs. Selling off the European parts of GM would also take away the R&D located in Europe? There are many questions wrapped up in this, but I am trying to get to the real reasons of the decline of the big three (and the City of Detroit with it) and to a balanced view of how unions may or may not have played a part in this process. Kind Regards, Thomas Wensing
The auto bailout, the decline of Detroit and the role of the unions.
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