As this blog correctly predicted last November (http://www.shoutbits.com/2008/11/gm-cant-be-saved.html), General Motors’s failure has become a political circus. As with the Chrysler looting (http://www.shoutbits.com/2009/05/obama-commander-in-thief-or-you-cant.html), the Obama Administration’s main goal is to bolster the UAW, which helped elect the Democrat supermajority. The law has been turned inside out, and the US looks more like a thuggish banana republic every day.

GM will become the new Amtrak, a permanently subsidized quasi-government entity that serves as a conduit for government influence throughout its industry. GM may never again earn a profit, but that hardly matters. Politicians will use GM to push their environmental and labor agenda for the entire nation, making a perpetual subsidy well worth the taxpayer expense. Once GM becomes a ward of the government, any suggestion of reducing its annual subsidy will be met with cries of turning hard working Americans out of their homes. The US industrial policy will look very European indeed.

Worse still, history suggests that the government will mandate similar cost structures for the Southern US auto makers, such as Toyota, BMW, Mercedes, and Honda. The government will recognize Detroit’s comparative disadvantage with the South, but rather than clean up Detroit, the sure response will be to legislate the same cost structure into the competition. The government has a long history of mandating compensation and benefits for all employees in order to equalize costs with union contracts. The cynic would say the government’s motive was to protect union shops from competition more than aid employees who clearly didn’t want a union.

Surely a part of Obama’s GM strategy is to force ‘green’ cars on Americans. However, another important element is to ally with unions to expand their reach where they have never been welcome. GM will receive a perpetual subsidy to allow it to sell cars few Americans want at well below their cost to produce. Apparently Obama has not heard of the UK’s debilitating industrial policy before Thatcher cleaned house.

So, GM is a nation-threatening disaster on many levels. What to do? Boycott GM. This blog calls on anyone who cares about the rule of law, prosperity, or the US system of capitalism to avoid GM. Do not buy the government cars sold by GM. Do not patronize GM dealers for maintenance of existing GM cars.

Won’t boycotting GM just make the government bailout costs higher? Won’t boycotting GM put more workers out of business? Perhaps, but these arguments rely on the socialist-family conceit that values stability over freedom.

If GM is boycotted now by enough people, the cost of keeping it afloat will be too high for even the trillion dollar man, Obama, to bear. Rather than pump billions upon billions into GM in perpetuity, a boycott would force the government to accept its sunk costs as a loss and move on. A boycott will save taxpayers in the long run.

Likewise, boycotting GM will create jobs, not destroy them. The UAW kills jobs by enforcing inefficiencies and imposing higher costs on consumers. The US will need the same number of new cars with or without GM, so manufacturing and jobs will simply transfer to more efficient competitors. While those new jobs might pay closer to their real worth, the savings to consumers, who will receive better value, will create more prosperity.

The GM of American legend is now gone forever. No matter what, GM will never again sell fun or extravagant vehicles that fit the American notion of car. The new GM will be a wing of big labor, big government, and activist environmentalists. The best resolution for GM is to kill it off entirely before it becomes entrenched with powerful special interests. Freedom loving consumers should stay away from the new GM.

A very logical commenter pointed out an analysis error in the Airline Unions blog. The original blog claimed that thousands of people were killed each year because higher flying costs pushed them to drive instead of fly. While this blog stands by the effect of unnecessary costs like the TSA and airline unions as a factor that shifts people from flying to driving, the estimate was too high.

The commenter considered the price elasticity of demand for air travel (surprisingly high), along with the number of hours an experienced pilot flies each month. By his better calculations, the number of people killed each year due to excessive pilot wages is probably around 500, not 2,000.

Still, driving is so dangerous compared to flying, anything that discourages flying kills people. Pilot and flight attendant compensation are far too high. Mechanics are overpaid by double. Even the people who allegedly clean the planes between flights earn more than most college graduates. The government makes flying an immense hassle through abusive TSA practices and inefficient air traffic control. Of course Ken Salazar’s outlawing most domestic oil exploration drives up the cost of all travel. All these factors combined might bring the number up to 2,000 deaths per year.

Last February a Continental commuter airplane crashed into a neighborhood outside of Buffalo, killing all aboard plus one person on the ground. After further investigation, the likely cause of the crash was an excess buildup of ice on the aircraft, reducing the airplane’s ability to generate lift and making it difficult to control. While such crashes are often attributed to variables like weather, aircraft capability, and sometimes pilot error, the mainstream media has this time latched onto pilot working conditions. To the extent such media reports are valid, the real culprit is not commuter airlines that mistreat their pilots, but the greedy pilot unions that drive down the pay of junior pilots.

Despite media reports, the crash was not most likely due to unskilled pilots,. The pilot transcripts do show the two pilots discussing their lack of experience in these ‘icing’ conditions, but greater experience probably would not have helped much. When confronted with a buildup of ice on an aircraft, the prescribed remedy is to both activate whatever equipment the aircraft has to remove the ice and to change altitude to where the air is either warmer or dryer. In the instance of Continental 3407, which was on a landing approach, only climbing to dryer air was an option. Unfortunately, the doomed aircraft was propeller driven. These airplanes, as a class, have far less power to climb out of icing conditions than jets, and they also have less effective de-icing equipment. Once the ice was discovered at a relatively low altitude, there wasn’t much any pilot could do with that particular airplane. Pilot incompetence certainly didn’t play the leading role in the crash.

Still the media has latched on to the notion that commuter pilots are inexperience, overworked, and underpaid. As to inexperienced, there is no remedy. The nature of most organizations is that the less experienced are charged with the lower value assets – pilots fly bigger planes as they gain experience. The FAA does require extensive training, testing, and continuing education of all its commercial pilots, but at some point a new hand must take the wheel.

Commuter pilots are, however, paid meager wages for working long hours. Indeed commuter pilots earn less than most menial laborers. Their hours are challenging, and they must spend most of their time away from home. Before earning the right to work for slim rewards, commuter pilots must first fly thousands of hours, usually by working even lower paying jobs as flight instructors or small-time cargo pilots. In short, a commuter pilot’s compensation does not seem nearly adequate.

Why would anyone choose to be a pilot? Two reasons. First, unlike bus drivers, flying is glamorous. Airplanes are pretty and powerful. People generally respect their pilot. Few people without their own licenses realize that any reasonably bright person can fly a plane. Flying does not require any special skills found outside of a quality high school degree, so the respect from piloting comes easier than the respect from being a surgeon.

Second and more importantly, while commuter pilots slog it out, mainline pilots are grossly overcompensated. In yet another example of surprisingly rational behavior, commuter pilots pay their dues to someday live on easy street. Major airline pilots that fly international jets enjoy compensation close to a quarter million per year, receive impeccable benefits, and work a very relaxed schedule. They extract such lavish compensation packages through their pilot unions, which hold complete sway over the airlines. A handful of pilots can ground the entire fleet, and any tough negotiation brings out the safety card (the big bad airline is trying to make flying less safe by making us fly more days per month). Pilots unions have unlimited power over their employers, so who can blame people for standing in line to join?

Rather than some romantic love of flying, commuter pilots’ real motivation for accepting low wages is to gain enough experience to someday earn more and work less. Many would probably fly for free to accelerate the process, since the government grounds commercial pilots fairly young. All this has nothing to do with greedy commuter airlines; it is Adam Smith’s hand of the market at work. If it were not for the obscene compensation at the end of the trail, commuter pilots would surely earn better pay and work fewer hours.

The best way to improve junior pilots’ conditions is to pay senior pilots closer to their real worth, which is probably one third of their current union wages. Of course the media just wants to mandate more pay for junior pilots. In the Obama era there is always a reason to raise union pay and power. Still it is worth noting that flying is completely safe, and any action that raises the cost of flying actually kills people by encouraging them to drive instead. Taken to an extreme, the pilot unions kill thousands of people each year by driving up the cost of flying.

So, if the recent spate of media demands for better pilot pay have you worried, relax. Modern air travel is impeccably safe, and over their entire careers, pilots are well paid. Rumblings to the contrary are nothing more than ill informed populism leaning toward union propaganda.