Attacks On Labor Continue in USA

There is a false premise: there are unions, therefore there are problems. The correct premise is: there are problems, therefore there are unions. Industrialization came before the unions (although one can argue unions are reconstituted guilds).

Nonetheless, show me a unionized house, and I’ll show you poor management. Show me a union-free business, and I’ll show you a well managed business. Click on to read more...


I’ve worked briefly on the docks as a longshoreman which means I have some seniority in the ILWU, and I also busted an ILWU house, so I worked both sides of the issue.

Austrian economists spend as much time on what is missing as what is, so there is some debate as to whether unions would exist in a free market. All can agree in a free market unions would be generally more honest in the measure they are responsive to market forces. Austrian objection to unions seems to be of the same sort as the objection to big business: both are in bed with big government. Government unions are doubly evil, and would not exist in a free market (but then, government would not exist.)

My view is on balance unions are a good in a distorted market. I understand they are unduly leveraged, prone to gangsterism, and distort the political landscape. But all to the good. Imagine big business without the unions’ choke hold.

What unions have done is taken a cut of the loot of empire the Hamiltonians would keep for themselves, and proven to be a restraint to some degree on war, class or otherwise. Union workers are the first to admit their success was suicidal, by bringing the working poor into the middle class, solidarity flagged, and union management found love in the arms of politicians.

Now, how could it ever be more clear than right now that the problem is management in the USA? Nonetheless, it is labor and immigrants to whom invective is directed. Here is a typical slam on the UAW, common arguments, which I would like to respond...

“We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive.”

Why not? It may mean less for management, but it is not impossible. But more to the point, why did you agree to pay $65 an hour to begin with? An explanation of the genesis of this result would reflect very badly on management.

“For Delphi [auto parts maker], this idled labor cost $400 million in the second quarter of this year alone. Facing similar numbers until the contract's end in 2007, Delphi took refuge in bankruptcy.”

Naturally, to avoid responsibility for living up to the Delphi agreed contract. By going bankrupt, Delphi avoids its responsibilities, and in effect those people who thought they were making $70 an hour end up yielding only half that for their tenure, resulting in wages exactly what workers in the South are being paid at Honda, Toyota, BMW over the same tenure. The workers in the South have it better since the cost of living is lower, due to the fact workers were not being paid nominally inflated wages in their states.

Why did Delphi agree to this 400 million cost? There is no such thing as an outrageous union demand, only outrageous management concessions. Labor law in USA only requires that the parties meet and confer, not meet and agree. Delphi and others agree to the “labor pool” so workers do not go find other productive jobs, just in case production jumps up again. Knowing they will be bailed out by taxpayers on the one hand, and they can just repudiate benefits through bankruptcy on the other hand, management followed the path of least resistance and entered the moral hazard public policy handed management.

Another dimension is ignored. Under democrats, competition problems are solved by taxing imports, which was the proposal on the table when Reagan entered office. A putative free-marketer, Reagan pushed for “voluntary restraints” instead of taxes. With “voluntary restraints, Honda agrees to limit its exports to USA, below what the market demands. If fewer cars are imported, those that do get into USA command a higher price than otherwise. As Honda prices rise, GM can follow the price up when marketing Pontiacs. With taxes, the US govt gets more money. With voluntary restraints, the Japanese manufacturers get more money. In both instances, the consumer gets screwed.

Now the Japanese can take those outsized profits and build auto manufacturing plants in USA, using non-legacy labor. Which they did, and now we see the result. Republican policy benefits the big business side of big biz/ big govt, and democrat policy benefits the big govt side of big biz big govt. The taxpayer consumer is always ripped off.

Another reality: There is so much waste fraud and abuse in this system, that executive compensation seems irrelevant in all of this. Surely if management were to forgo their millions, it would do nothing to address the hundreds of billions in shortfall. True, but the problem is one of the motivations.

These managers, and their enablers in government, have only so much experiential capacity. Even counting 24/7/365 there is only so much “la dolce vita” can cost. Potemkin perfection is achieved at each meal, private jet flights with compliant staff, skiing at Christmas in Vail, swimming at St. Barts at Easter... Aspen institute in August, completely ersatz business meetings where nothing of import or consequence is achieved, but ritual and form is awesome, for both manager and political ally. (We know all of this is ersatz, because it has to be bailed out. In a free market, nothing is bailed out.) The total cost of this, including outsized paychecks, would be an acceptable rounding error if overlooked on a P&L, such is the vast expense of empire.

For these people, there is no interaction with the market. This lifestyle, the goal of hamiltonians everywhere, is the payoff. This system supports the few who are afflicted with libido dominandi, and as we saw first in 1 Samuel 8, there is no shortage of people in history that line up to follow these leaders. People beg to work for such “leaders.”

"The jobs bank must be eliminated," says Miller. "Paying people not to work is just not sustainable."

Then why did management agree to do so?

The total of all the waste this article complains of is what the unions grabbed, and management agreed to. If union labor , including 103,000 per year forklift drivers, layabouts, featherbedders, and 26/hour grass cutters only accounts for 8.4% of the cost of a car, then 91.6% of the cost is other. If you want to control costs, where to start?

To management, well, step #1, is to get taxpayers to bail out poor management. Path of least resistance. Step #2 is bankruptcy, in which all the promises to the unions are abrogated, netting a actual cost of labor per car being reduced to some 4%, since those health and benefits and pension promises which went into the calculating the cost of manufacturing the car have disappeared. That 103,000 per year forklift driver, turns out he was only earning $51,000 per year over the last 20 years. What a fool!

If labor agreed to work for free for the next hundred years, no pay, no benefits of any sort, this would not be enough to save the auto industry. As a practical matter, the solution lies elsewhere than labor.

And what about all the talk of high paying jobs? How come on one hand it is a political imperative to have high paying jobs in America, but on the other hand, as soon as someone gets well paid in America, particularly labor, all bets are off?

And here is sheer nonsense, because the premises are false, and the conclusion is erroneous:

“When future debts (like health care and pensions) far exceed realistic estimates for future income, there's a problem. The union workers' loyalty is to the Union and not to the company or the stockholders. Hello...there is no Union without the company and stockholders. The Union's argument: there is no company without the worker. It's a good argument but those workers need not be Union. That's the reality.”

Let me take that apart sentence by sentence...

*When future debts (like health care and pensions) far exceed realistic estimates for future income, there's a problem. *

Future debts were agreed to by management. So whose problem is that? Now management wishes to be irresponsible. Labor suffers for that.

*The union workers' loyalty is to the Union and not to the company or the stockholders. Hello...there is no Union without the company and stockholders.*

Simply not true, when Chrysler disappears, the UAW will exist. My nephew, when pursuing his Ph.D. at the University of Washington in philosophy, and serving as a TA to a full professor, was obliged to become a member of the United Auto Workers. Yes we have government unions in the schools, but house unions are mattress-back groups, and have nothing to say when real labor organizers show up. At several leading universities in USA so far, the UAW has organized “labor.” As mentioned earlier, there are problems, therefore there are unions,

*The Union's argument: there is no company without the worker. It's a good argument but those workers need not be Union. That's the reality.*

Two edged sword. On one hand those workers need not be union, but on the other hand that company need not be Chrysler, or GM, or the far more sly Ford.

And the argument misses the point that without the union power, the unions would not have supported the unwarranted growth of the car companies, with all of their subsidies, counter-competitive regulations and wealth transfer programs that unions got 8.4% of, and management got 91.6 % And best of all for management such as GM’s Nardi and others, people with exactly zero business skills can pull down hundreds of millions a year keeping a seat warm in a private jet, going no where in particular, for no particular reason.

And this observation:

“Alas, the Jobs Bank became little more than a casino and lounge, where workers would report for a full day of leisure, reading newspapers, playing cards, and generally not adding value to GM’s vehicles. (Sounds a bit like my job description, actually.) Now you know why a handle falls off or you hear a tinny sound when you slam your Chevy’s door.”

So what? it was agreed to, and is included in the 8.4% of the cost of labor. Those people represent taxpayers and political clout, which benefits big three when we worry about USA labor. And they are back-up workers ready to hit the lines should business pick up. Instead of developing marketing skills and design skills, big three auto makers simply agree to keep redundant workers around at consumers expense in case something goes right and sales pick up. Since the managers know ultimately taxpayers will bail them out, they need not hire the kind of talent that designs attractive cars and projects demand accurately. Why bother?

And the cheap shot regarding tinny sound and handles falling off... since when is quality control not the direct responsibility of management?

And here is a blog comparing wage rates, which if read correctly will graphically show with bankruptcy, any pay differential that big 3 workers were getting nominally, will disappear in actuality.

Hamilton and empire lead to an unwarranted flow of toxic capital. Labor got some, and moved into the middle class.. the symbiotic nature of this organism surely shows that both union and management has benefited greatly from the relationship, management vastly more than labor. Now management by bailout or bankruptcy will cheat labor of the little they received. Expect talk of class warfare to re-emerge.

Too bad, since there is a better way. Cut off all subsidies and regulations to auto industry. end voluntary restraints on imports and rediuce import duties to zero on cars. Let the rule of law force bankruptcies, and let the free market resurrect the industry. The big losers in this plan would be Toyota, BMW, and Honda. the big winners would be USA labor and consumers.

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