Is the problem we see today the collapse of the New Deal and its successors?
The real story is the frightening extent to which Detroit is just the New Deal U.S. in microcosm...the Big 3 became essentially private versions of the middle class welfare state...social agencies for providing non-market validated income, health and retirement benefits, with a sideline of making cars....and now the model is unsustainable. In part it is because of the burden of the retired UAW workforce, which now vastly outnumbers the actual working members. As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses.
This is not dissimilar to Social Security and Medicare for the U.S. economy as a whole. Both of these entitlement programs are unfunded liabilities of the U.S. government, politically, if not legally, and, on a current basis, consume almost 50% of the $3 trillion federal budget. They were viable on a pay-as-you-go basis only at inception and as long as the ratio of workers to beneficiaries is high. Neither condition obtains today. So it becomes an interesting question and rather soon I think: when the U.S. government becomes like Detroit...who does the bailing out?