Megan McArdle, blogging at The Atlantic, explains how much of the blame for why the big 3 built big cars can be placed on unions:

One of the things you hear over and over again from critics of Detroit, especially ones from the left, is that their current woes are all management’s fault because they kept making big cars.

Management has made a lot of mistakes. But making big cars wasn’t one of them. That’s because they couldn’t profitably make small cars in the United States. And the reason they couldn’t is that their labor costs were too high. All in, Detroit was paying about $30 more an hour than other companies to make cars. At that kind of differential, you have to concentrate on large cars with big profit margins, not economy cars where consumers fight to save $15 on the headlight bezels.

The full article can be found here.