Under a regulation known as the “two-fleet rule”, automakers must meet CAFE (Corporate Average Fuel Economy) standards separately for their domestically produced and for their imported vehicles, rather than just hitting the same overall number through an average of both. The economics of production and transport tend to favor the domestic production of large cars and the importation of small economy cars. “For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car,” writes the WSJ’s Holman Jenkins, Jr. It’s “nonsensical” and “a naked handout to the UAW at the expense of the companies and their customers.” (“Yes, Detroit Can Be Fixed”, Nov. 5).
P.S. Of course the actual legislative responses we’re in for will probably be very different. Mickey Kaus: “So the UAW wants a $25 billion bailout and an end to the secret ballot … Because Wagner Act unionism clearly worked out so well for Detroit.”