Was Saving the Chevy Cruze Worth $10 Billion?

Did America want to spend $10 billion to save the Chevy Cruze? That’s almost $200,000 for every worker still on GM’s assembly line. For that kind of money, you’d better like the cars an awful lot.

Megan McArdle sums up how much the American taxpayers paid to bail out the Detroit GM unions.  

 (…snip…) A lot of those decisions were driven not by management idiocy, but rather by the need to make cars at margins that could absorb their extremely high labor costs. Which meant, first, large cars that people paid a lot of money for, and second, small cars that had lower-quality components than their competitors.

Now that GM’s labor costs are closer to industry averages, it can afford to put better components in its cars. (…snip…)

In this short piece Megan does not have space to tally up all the costs of the union bailout. In particular the money owed to senior bondholders that was essentially stolen to pay off the unions. The rule of law does not always apply in the land of politics.