The Union as Capitalist

The American automobile workers union, the United Automobile Workers, will become majority shareholder in Chrysler. Fiat will be involved in these latest developments as well.

This deal, if finalized, will be unique in free economy annals. A union will become majority owner of an automobile manufacturing company. The plan was announced Monday afternoon (Eastern Daylight Time), and details were reported by the Wall Street Journal. According to the agreement, the UAW, one of the most powerful unions in the country, will take over 55 percent of Chrysler.

Italian automobile giant, Fiat, earlier reported poised to take Chrysler over completely, will now have a 35 percent stake in the company. The remaining 10 percent will taken over by the United States government and a few as yet unnamed creditors.

Whether the deal is approved depends on two things: Chrysler must first be restructured; then the employees must vote approval of the takeover.

In the meantime, this raises a few fascinating questions: Who represents the workers if the workers, as union members, are the majority owners? Where will they get the necessary capital if Fiat has only a 35 percent share? And which of his minions will Treasury Secretary Tim Geithner send to be on the supervisory board?