America's overblown sense of entitlement threatens to bankrupt the federal government, the California government and the U.S. auto industry. If not curbed quickly, it won't end there.
I've written before about how the sense of entitlement is forcing California into bankruptcy. How else can California officials justify giving free college and university educations to illegal immigrantspeople who do not even have a legal right to be in the countryand create a Bank of California for illegal immigrants to deposit the cash they illegally earn, when the state faces a $42 billion budget deficit and is putting plans in place to cut state jobs and services? Why are illegal immigrants entitled to special treatment to the detriment of hard-working and legal Californians?
The same mentality led to the Wall Street bailout, which I voted against twice. The underlying reason for Wall Street's troubles is the lax standards it employed for determining who qualifies for home mortgages.
Banks and other lending institutions were giving loans to people who didn't qualify and could not possibly pay back their loans. They did so using gimmicks and sometimes through outright fraud, but more often under the lax regulations or nonsensical mandates imposed by the federal government. That includes giving loans to illegal immigrants with no discernible income.
But rather than impose regulations that would eliminate that entitlement, the Wall Street bailout rewarded greedy Wall Street scoundrels and unscrupulous mortgage brokers, as if they, too, were entitled to continue making bad business decisions without consequences.
Union bosses don't get it
Last week, we saw the sense of entitlement derail the U.S. auto industry bailout when union bosses refused to consider tightening their belts to save the industry. Company executives agreed to cut their own salary and benefits (which they should because of their role in creating the crisis) and stockholders will take a hit (as they should because investments contain an inherent risk), but the union bosses, who may have now negotiated their workers completely out of their jobs, said no, we're entitled to make twice the national average and we demand federal funds to continue.
The language in the U.S. Senate bill that United Auto Worker bosses found objectionable was that the automakers' total labor costs be "on par" with Honda and Toyota. It did not say labor costs should be lower than their competitors, but that they should be competitive. U.S. automakers will never be competitive until wages and benefits are comparable.
Let's break this down to basics. U.S. automakers are not selling cars because they are not competitive. They are not competitive in large part because union bosses have priced their workers out of the market.
If this were a company in Camarillo that created widgets, and its customers were buying 25 percent fewer widgets than a year ago, here's how that scenario would run. There would be no overwhelming national cry for a federal bailout. Instead, the options would be to lay off 25 percent of the work force; perhaps just lay off 10 percent and ask the rest to take a 10 percent pay cut; or continuing operating as usual until the company closed and 100 percent of the employees lost their jobs.
Are UAW workers more entitled to make high wages producing a product consumers won't buy than widget workers in Camarillo? Are UAW workers entitled to have their wages subsidized by Camarillo taxpayers when the taxpayers are already struggling to make ends meet?
Of course, the sense of entitlement is not strictly an American phenomenon. For example, South Korea imports are less than 3 percent while it exports 37 percent of its fleet into the United States. South Korea uses a variety of tariff, tax and nontariff barriers to insulate its domestic manufacturers from foreign competition.
Level playing field needed
I believe American car manufacturers are entitled to a level playing field in the international market. I believe American ingenuity and hard work at fair wages can compete against South Korea, Germany and Japan for supremacy. Our trade agreements must provide a level playing field for all.
But unless American car manufacturers and the UAW get their house in order, until the UAW decides it's better that its members have a job than to be paid more than the market will bear, until the sense of entitlement that has led to the California budget crisis and the Wall Street meltdown subsides in the United States, we will continue down the road to economic ruin. That is in no one's best interests.