Originally Posted by Yakk

The auto industry failing is a problem for the UAW and people with auto-industry pensions.

By squeezing their own bottom line and tossing money at dividends and other 'get the cash out while the cash is good' plans, they can leverage their own worker base into lobbying for bailouts. Because it aligns their worker base with their own interests.

Similarly, when the going is bad, the UAW either capitulates and gives a better contract, or the company goes out of business and UAW members are out on the street.

If the auto industry built a long-term viable reinvestment plan, the UAW could continue to hold profits for ransom with strikes, and continue to drive up wages, until the reinvestment proved fruitless: the dividends of the reinvestment would go to the workers, not the owners. So -- get the cash out, keep the industry lean, beg for money in concert with the UAW when times are bad, and use bad times to push back against the UAW.

Think about it -- if you had 100$, and knew you could either reinvest it to produce future profits. But if you did, that future profit would be stripped by your workers demanding a raise equal to the increase in profits... would you take the money and run, or reinvest it?

Labor union power is proportional to the amount of _damage_ they can cause by ceasing work. The amount of damage you can cause is based off of the operating profits of that work-chain. Increasing the operating profits of the given work chain thus increases labor union power: and if it stays uniformly high, then the temptation to do a strike grows.