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Source link: http://archive.mises.org/4931/where-would-general-motors-be-without-the-united-automobile-workers-union/

Where Would General Motors Be Without the United Automobile Workers Union?

April 19, 2006 by

What the UAW has done, on the foundation of coercive, interventionist labor legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labor-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations. FULL ARTICLE

{ 85 comments }

Vince Daliessio April 21, 2006 at 1:06 pm

I said;

“The GM (and Ford)situation is totally different. Here, the management and the unions, together with the government, acted extremely irresponsibly, putting the company so far behind its obligations that it will never again have an operating profit.”

Proof;

http://tinyurl.com/lxryh

NEW YORK (CNNMoney.com) – General Motors Corp. finally got some good financial news, posting an operating profit in the first quarter excluding all special items.

The embattled automaker reported that it earned $152 million, or 26 cents a share, excluding all special items in the period, such as a $1 billion pre-tax charge related to an agreement to change health care coverage for hourly retirees and their families.

Vince Daliessio April 21, 2006 at 1:10 pm

I said;

“The GM (and Ford)situation is totally different. Here, the management and the unions, together with the government, acted extremely irresponsibly, putting the company so far behind its obligations that it will never again have an operating profit.”

Proof – GM says that losing $948 million in the first quarter of 2006 is somehow an improvement over losing $998 million in all of 2005;

http://tinyurl.com/lxryh

NEW YORK (CNNMoney.com) – General Motors Corp. finally got some good financial news, posting an operating profit in the first quarter excluding all special items.

The embattled automaker reported that it earned $152 million, or 26 cents a share, excluding all special items in the period, such as a $1 billion pre-tax charge related to an agreement to change health care coverage for hourly retirees and their families.

This is beyond apple-polishing – this is full-blown dementia. If a company half of GM’s political drag tried this kind of financial shenanigans, it would be in SarbOx prison this fast.

Jim April 21, 2006 at 7:29 pm

“It takes 5 years to build a car in the US from the big 3 from concept to showroom. Yet we won WWII in 4″ – H. Ross Perot.

I think it was a combination of both Union and Management. Unions for fleecing GM. Therefore GM had less capital to reinvest in future cars like hybrids. GM for have white collar employees without forsight or vision to create cars people will want to buy.

If you really want a true insight into the automobile industry, read the following book “The Reckoning” by David Halberstam. Fascinating book about the entire auto industry from Henry Ford to rise of Japanese automakers to the crisis at Chrysler in the 1980′s. You’ll get a true understanding of the industry.

Jim April 21, 2006 at 7:31 pm

“It takes 5 years to build a car in the US from the big 3 from concept to showroom. Yet we won WWII in 4″ – H. Ross Perot.

I think it was a combination of both Union and Management. Unions for fleecing GM. Therefore GM had less capital to reinvest in future cars like hybrids. GM for have white collar employees without forsight or vision to create cars people will want to buy.

If you really want a true insight into the automobile industry, read the following book “The Reckoning” by David Halberstam. Fascinating book about the entire auto industry from Henry Ford to rise of Japanese automakers to the crisis at Chrysler in the 1980′s. You’ll get a true understanding of the industry.

Vince Daliessio April 21, 2006 at 10:26 pm

“The Reckoning” was indeed a good book – Halberstam picked a bad “good example” in Nissan, however, which went on to be bailed out by…Renault.

Kenyon J. Hull April 22, 2006 at 10:51 am

Ah, the glory days when von Mises gave Austria a free market system that efficiently saved the country along with the individual freedom of the people. To realize we do not have such a free system and society in America should sadden us.

If von Mises’ system had won over Keynesian economic theory, what a wonderful result that would have been for America.

If you would substitute America for GM and our economic system for UAW in the article, this is where we will be before this century ends. Bankrupt with no futute to look forward to and no leadership in sight to bring us out of the morass.

Just now, we cannot even see that the social security system is beyond being broken but our wise elected ones choose to stonewall a cure for the problem. We cannot even protect ourselves properly what with government lawyers throwing up walls to keep our police services from talking to one another about our enemies. What folly.

I used to subscribe and donate to Foundation for Economic Education and wait at the mailbox for the monthly publications. But now the articles have become rigid as “educational publish or perish stuff often does”, and one has to pay a dear price even to get the annual bound materials. Not worth it anymore, sad to say. So the foundation dedicated to von Mises bites the dust with a thud and score another win for socialism.

Thomas April 22, 2006 at 12:59 pm

A great article Dr. Reisman! It deserves the widest distribution. Written with honesty. And with a passionate outrage at a sheer irrationality that indeed pervades our entire culture.

LeBaron Smith April 23, 2006 at 10:56 am

Companies came into being before Unions. Unions came into existence because of poor management. Poor management still exists in many U.S. Corporations because they put money before product! They are more interested in Stockholders and the next quarterly profits then they are product. Without an excellent product, sold at a resonable price with excellent customer service the company will suffer and so will their employess. If a company makes a good product, and treats their employess properly they will never have to worry about being Unionized. A good company to watch, and take lessons from on how to run a large Corporation is Woodward Governor. LeBaron Smith, retired Mechanical Engineer

banker April 23, 2006 at 12:05 pm

“reasonable”? could this mean the same as “fair”?

Stockholders (who actually funded the company) own the company. They hire managers to run it. Managers attempt to maximize profit for the benefit of shareholders, if not then they are summarily dismissed. What does this have to do with unions? How do unions help managers maximize shareholder wealth?

Lincoln Electric is a good example of intelligent management and no unions. Also, the fact that auto companies are building factories in the South, away from union strongholds, and the fact that these auto makers are profitable show that unions are not needed. Those workers repeatedly refuse to unionize.

Dave April 23, 2006 at 8:59 pm

Bottomline: The overpaid UAW has forced the Big 3 to cheapen the quality of each and every part that when assembled produces a cheap quality vehicle. Sad, very sad indeed.

Joe Someone April 23, 2006 at 10:04 pm

so you want us to all work at walmart wages? no health care, no vacation, no retirement? then only the bosses get that stuff.

GO TO HELL!!!!!!!!!!!!!!!!!!!!!!

Sam April 24, 2006 at 1:10 pm

Joe Someone:
It sounds like you are already there.

Albatroz April 25, 2006 at 5:13 am

As far as I noticed nobody mentioned one of the most important aspects of this whole question: the fact that countries like China are already capable of producing goods of a quality similar to ours with much lower costs, namely labour costs. To remais competitive many western companies would have to impose on their workers conditions similar to those prevalent in China. Something workers are obviously not eager to accept. Truth is that we cannot afford a global economy until all parties have similar labour costs and labour laws. Until China, India, Brazil and others have reached our labour and environment standards, we must go back to a limited globalization, limited to those countries of similar level of development: USA, Europe, Japan. Together, those countries represent 1 billion people, more than enogh to sustain our economies for a long time. We should stop all trade with the rest of the world (sort of…), which would preserve our prosperity and allow other countries to move towards a higher level of development, free of our intervention. If we insist in keeping a global economy, many firms will go bankrupt, social benefits will disappear, millions will become unemployed, while big firms will simply move to Asia, Latin America or even Africa. Of course we have an energy problem, but nothing like being cut off from the cheaper oil sources to force us to put alternatives on line. But as long as big oil companies can profit from higher oil prices, there will be no alternative on the market. There are technical and cost problems with hydrogen as an alternative, but why is so little done to overcome them? Think about it.

Peter April 25, 2006 at 6:07 am

We should stop all trade with the rest of the world (sort of…), which would preserve our prosperity

How, pray tell, does paying more for stuff preserve your prosperity? In fact, if that were true, you wouldn’t need to stop all trade with the rest of the world: just toss most of your money in the sea each week and you’d soon be richer than Bill Gates!!

and allow other countries to move towards a higher level of development, free of our intervention.

Hmm. Well, I guess if paying more for stuff raises your prosperity, it makes sense that not buying from someone would raise his prosperity!

Albatroz April 25, 2006 at 8:18 am

Peter,

I have encountered your objections more often.

First, our prosperity does not depend on the price of goods we buy, but on our ability to buy them. Goods are very cheap in Bangladesh, but people do not have the money to buy them, so there isn’t much prosperity. Closing our borders to most foreign trade would preserve our capacity to enjoy a high standard of living – because it would preserve our jobs – even if everything (which would not necessarily be the case) was say 10% more expensive.

Second, third world countries do not become more prosperous if they have to buy most goods from us, while selling us only pineaples, bananas, coffee or tea. If they couldn’t buy from us they would have to produce those goods themselves, which would be an essential step towards development.

You seem to think that what is good for GM is good for America… Forget it. GM – or any other large corporation – can get rich while you, and most Americans, get poorer. We have been brainwashed into thinking that free trade is a panacea for all economical evils. Forget it. Fair trade would be important, but free trade seldom is fair…

Vince Daliessio April 25, 2006 at 10:54 am

Albatroz;
You seem to be laboring under the misapprehension that we and they are participating in a system of free trade. It could not be further from the case. It is the current LACK of free trade that both makes goods unaffordable for poor coutries and drains jobs from richer ones. More strictures on trade will simply make things worse all around. If thatis what you want, then by all means advocate for “fair trade” or other such nonsense.

Albatroz April 25, 2006 at 1:16 pm

Vince,

Enlighten me: how would REAL free trade (whatever that is) enable people in poorer countries to have earnings high enough to afford consumer goods, and at the same time allow for jobs to be kept in the richer countries? Free trade rewards the more competitive economies and, to my knowledge, most less developed countries are not competitive. Those which are, as result of size, very low wages and lack of environmental laws, like China and India, will use free trade to take away jobs from the industrialized countries.

Yancey Ward April 25, 2006 at 1:56 pm

Albatroz,

You might spend some time perusing the resources of Mises.org to find the answers to your questions.

M E Hoffer April 25, 2006 at 2:07 pm

“so you want us to all work at walmart wages? no health care, no vacation, no retirement? then only the bosses get that stuff.”
Posted by: Joe Someone at April 23, 2006 10:04 PM

Who here would care to wager the ol’ Joe shops @ Wal-Mart?

btw, the response by “Sam” was poetic on multiple levels..

Albatroz April 25, 2006 at 2:33 pm

Yancey Ward,
I have spent the last few years looking for those nonexistent answers. Why don’t you tell me what those answers are?… Or maybe you can’t find them either…

Yancey Ward April 25, 2006 at 2:36 pm

Albatroz,

I have told you where to look. Why not do it?

Albatroz April 25, 2006 at 2:44 pm

Yancey Ward,

I see. You can’t find them either… That’s understandable, because there are no answers that fit your bible…

Yancey Ward April 25, 2006 at 3:11 pm

Albatroz,

Why don’t you try here first? Now, do you want me to read some of it for you?

Your problem is that you think economic progress is a zero sum game.

Albatroz April 25, 2006 at 4:14 pm

Yancey Ward,

Let’s go beyond the slogans.

In a free trade environment the more competent firms and the more competitive economies will prosper, the others will go under. If competent firms were evenly distributed, among all countries, all would benefit from free trade, and all would grow at comparable rates. However, we know that some countries have a much higher percentage of competitive firms than others, which means that they will grow at a higher rate than the less competitive countries. In fact, there is a real danger that the more efficient economies will completely stiffle the less competitive ones. If things are left to themselves, some countries will grow richer and others will grow poorer. Some of you people seem to think that poorer countries, having lower labour costs, will eventually become competitive, based on those lower costs. But you forget that lower labour qualifications – and much lower levels of investment – will more than offset the lower salaries, making it virtually impossible for those countries ever to become competitive. Those countries will be caught in a poverty trap from which they will never escape.

Now, if you take China and India, you will see two countries with such large domestic markets, and with such restrictive legislation, that they were able to atract colossal investments from foreign firms to tap those domestic markets. Those investments and a substantial number of highly qualified people enabled those countries to master state of the art technologies and to become suppliers of increasingly sophisticated goods. Little by little those countries became competitive in the world markets, and became capable of undercutting the prices of American and European firms, based on much lower labour costs. Contrarily to smaller less developed countries, China and India became winners in a free trade environment. Little by little American and European firms will either go out of business, or will move their production lines to China and India, or will try to squeeze labour costs in America and Europe to Chinese or Indian levels. In any case workers will get poorer, will loose their jobs, will consume less. Sooner or later this will generate a crisis situation.

Doing away with free trade except among countries of similar levels of development, would save jobs in the industrialized countries and would create conditions for industrialization of poorer countries. Both rich and poor countries would then be faced with more expensive goods. The industrialized countries because of higher production costs, and the poorer countries because of production inefficiencies. In the industrialized countries high revenues would make these increases in prices relatively harmless. In the poorer countries those inefficiencies would disappear over time.

Eventually, production costs would become more similar throughout the world, and we could revive free trade arrangements.

Your liberal fundamentalism will only ensure that most of us will loose. The only winners will be China and India, and those firms that moved their production lines to those countries.

Joseph Karniewicz Sr April 30, 2006 at 10:50 am

re: Where Would General Motors Be Without the United Automobile Workers Union?

George Reisman is a complete idiot!

For one, the GM offer of “$140,000 per man, just to get them to quit” is not a fact!

Actual Fact: By accepting that amount, the worker gives up all of his health benefits, and after taxes receives about $88,380.00.

Example: Last year my insurance paid in excess of $72,000 for my spouses hip replacement surgery. I would have to be a complete fool to accept that $140,000.00 offer, and pay for my own family health insurance policy, or spend that money on some frivolous whim.

“Monday-morning automobiles” and them being “poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do.”

I don’t know how long ago this may have been a problem within the automotive industry, or if this problem ever indeed existed, but there isn’t any way that the above is true now, or has ever been true in general. There may have been some problematic employees over the years, but to put this kind of label on a group of people is absolute liable!

The quality of american made automobiles and trucks has improved dramatically over the years, and there are many safeguards in place to prevent any possible sabotage attempts, and most workers do exactly what they are paid to do, and are very proud of the work that they do!

Many labor union contracts, and not just the U.A.W. have a wage adjustment provision called the Cost-of-Living Adjustment (COLA) which makes hourly pay adjustments every quarter to
compensate for inflation. This alone is directly responsible for a huge percentage of wage increases since it was first established a long time ago. Even monthly Social Security payments for retirees have COLA. The Consumer Price Index
(CPI) directly affects the incomes of almost 80 million people as a result of statutory action alone. If your employer doesn’t offer COLA, then you are most likely seriously underpaid. As an example; what would the current minimum wage be if COLA was applied over the years?

It is important to note that housing, utilities, education, taxes – are not included in the calculating the Consumer Price Index, and COLA adjustments.

If our President, Congress, and the Federal Reserve Board are directly responsible for formulating fiscal and monetary policies, then how can any labor union be held responsible, or for that matter made the scapegoat for current market conditions? An educated person would place the blame on government policy, and the bad decisions they made trying to keep inflation in check.

People seem to have forgot just how many industries and jobs were lost in this country since the early 70′s. I remember a time when we produced such things as photographic cameras
and televisions, and even when we had a great steel industry. How much did environmental standards add to the cost of a product? How many times more are excutive salaries today as to what they were back then? How many times have you
heard of a ridiculously over paid executive managing their company to the brink of bankrupcy, and then being absurdly paid even more millions of dollars to leave?

I have never seen the price of an automobile lowered because of increases in worker productivity, or the increased use of automation such as robotics; but I have seen fewer workers.
The only thing the Free Trade agreements have accomplished is bringing up the standard of living for workers in other countries at our expense, and most importantly, jeopardizing the futures of our children and grand children.

Kevin Reeder May 4, 2006 at 5:54 am

My father has been preaching this concept for years. I thought it was probably true, but now I know it is!!!

When labor is making $70 per hour, that’s just too much. No wonder GM is going under. Great article. Now the truth is finally being told.
Kevin

Steve O'Keefe May 11, 2006 at 10:33 pm

Will General Motors and Ford merge? It almost happened once, in 1908,
when J.P. Morgan tried to put together a deal between four major car
makers: Ford, Buick, Olds, and Briscoe-Maxwell. The secret meeting
between the heads of those companies is retold in an excerpt from the
new book, “Billy, Alfred, and General Motors,” published by AMACOM, at

http://tinyurl.com/nqf2x

What’s amazing is that all the parties agreed to the merger — even
Henry Ford. It looked like a done deal, then suddenly fell apart. The
reasons are complex, involving the psychology of self-made men vs.
schooled managers, distributed vs. central control, and inventors vs.
the financiers they hate but can’t grow without.

The book is written by National Book Award nominee William Pelfrey. A
veteran freelance journalist and GM insider, Pelfrey recreates the
events of that day using obscure newspaper accounts, personal
letters, and other previously unpublished documents.

Rick May 20, 2006 at 8:44 pm

It is very sad. That is why we have GM XEmployee. A free job posting board where hopefully unemployed autoworkers from any company can find the job they need.

Björn Lundahl October 12, 2006 at 2:56 pm

Free trade, means a strong USA, reliable jobs and high wages

This might sound untrue if you consider, for example, that workers at General Motors these days are pressured with job cuts and reductions in wages and all those sad, but necessarily actions to become healthy and strong again. Partly the cause for this is free trade. At the same time Dell, HP, IBM, Apple, Microsoft and so on are doing very well, this also, partly, because of the same phenomenon, free trade.

When free trade is propagated, certain businesses and companies are not considered but what matters is “the whole picture” or the nation. Free trade makes the nation, for example, the USA more competitive and stronger. The stronger companies will dominate the economy and expand and make use of all that capital, labour and land that are otherwise used by the inefficient companies. Productivity increases and therefore also wages. Jobs are more reliable because employments are offered in competitive businesses.

Generally, though, unemployment will not increase or decrease. If for instance, the USA imposes tariffs on Chinese textiles, the Dollar will appreciate against the Chinese Yuan (the value of the Dollar will increase relatively to the Chinese Yuan). This depreciation (decrease in value) of the Chinese Yuan against the Dollar, in this example, is caused by a smaller demand for Chinese textiles and therefore a smaller demand for Americans to buy the Chinese Yuan. Because of this change in exchange rates, prices of goods from the USA to China will be generally higher and prices of goods from China will be generally lower (apart from textiles). As you can imagine, this will increase employment in the American textile sector, but decrease employment in other sectors. At the whole, unemployment will not change but trade between the regions will be lower. Specialization, competition and living standards in the USA will be hampered. The tariffs will only serve special interest that is the textile manufacturers and their employees.

Above explanation about exchange rates is an explanation of a so called “floating exchange rate” (as the Dollar is).
If you want to know more about floating exchange rates, go to;
http://www.hooverdigest.org/974/friedman.html

the outcome is that Americans can buy cheap goods with high wages and that the USA will be stronger than ever.

Björn Lundahl
Göteborg, Sweden

Björn Lundahl October 12, 2006 at 3:01 pm

The Emperor’s New Clothes

People are led to believe that trade restrictions between regions or countries “create jobs at home”, which they certainly do not. If people had the opposite belief that “free trade” between regions or countries “creates jobs at home”, that would also be an incorrect belief. Trade restrictions or free trade does not cause unemployment or cause employment in a region or country. Trade restrictions only lower the standard of living, hamper competition and restrict liberty. If for instance, the EU imposes tariffs on Chinese textiles, the Euro will appreciate against the Chinese Yuan (the value of the Euro will increase relatively to the Chinese Yuan). This depreciation (decrease in value) of the Chinese Yuan against the Euro, in this example, is caused by a smaller demand for Chinese textiles and therefore a smaller demand for Europeans to buy the Chinese Yuan. Because of this change in exchange rates, prices of goods from the EU to China will be generally higher and prices of goods from China will be generally lower (apart from textiles). As you can imagine, this will increase employment in the European textile sector, but decrease employment in other sectors. At the whole, unemployment will not change but trade between the regions will be lower. Specialization, competition and living standards in the EU region will be hampered. The tariffs will only serve special interest that is the textile manufacturers and their employees. Surely, we want our representatives to serve the common good and the common man and not special interests!

Someone might complain that the Chinese are intervening in the exchange markets to keep their currency artificially low and that they are not letting market forces to appreciate their currency, and therefore my statement about free trade, in this case, is not applicable. Free trade, someone might think, is presupposed by freely fluctuating currencies with no Government intervention (also called clean floating exchange rates). Certainly I do not want Governments to intervene in exchange markets, but actually it is the Chinese that are in this case the losers and we are the winners. We should be glad that China is suppressing the rise of its currency, and the Chinese people should be mad about it. When market prices indicate that, for example, a project is unprofitable; investors naturally stop investing in such a project. Otherwise, factors of production such as land, capital, and labour would be wasted. Every government manipulation of market prices is a step toward economic breakdown and chaos. Land, capital, and labour that are invested in the exporting business in China because of a suppressed currency, have changed the economic structure in China and are mal investments, unprofitable for the nation to undertake, and we are getting something free. We don’t need to export anything to pay for this “extra importation of Chinese products”. To make my statement more obvious, we could consider that if the Chinese currency would be suppressed to no value at all (which would not be possible to realize), the Chinese would be working for nothing and we would get goods and services from China for free (which is, naturally unprofitable for China to undertake), then the market forces in the EU (if market forces would not be hindered by Governments) would reallocate land, capital and labour for other uses and to those fields which the Chinese are not able to compete (even if the Chinese were working and exporting to full capacity, that will not, by far, be enough to satisfy all our wants, in other words, their GNP is by far, too small). The increases in production which mentioned reallocation of recourses leads to are our extra bonus. We should applaud this and the Chinese people should revolt!

If you want to know more about floating exchange rates, go to; http://www.hooverdigest.org/974/friedman.html

Productivity and trade will flourish more intensively with one currency than with several different currencies, and even with one currency, market forces will smoothen out any imbalances between regions, cities or countries. We do not worry, for example, about the balance of payments between London and Manchester, Berlin and Munich, Paris and Bordeaux or Stockholm and Göteborg etc. If, for example, London exports more to Manchester than Manchester exports to London, the demand for goods and services will be greater in London relatively to their supply, and also relatively to the situation in Manchester. Because of this, prices will go up in London and therefore will exports from London to Manchester contract, as well as, imports from Manchester to London will expand. This happens all the time and we do not even know about it and therefore do not worry about it. Governments do create problems all the time.

If we really want increased competition, why not adopt free trade between nations. Why does the EU and the USA not follow that path? The reason is that they do not want increased competition.

For an example, I quote from answers.com;

“In the United States, the decade from the mid-1980s to the mid-1990s saw import quotas placed on textiles, agricultural products, automobiles, sugar, beef, bananas, and even underwear—among other things. In a single session of Congress in 1985, more than three hundred protectionist bills were introduced as U.S. industries began voicing concern over foreign competition”.
Go to;
http://www.answers.com/import+quotas?gwp=11&ver=2.0.1.458&method=3

Only Governments can be so silly to reject great offers and bargains. Individuals doing the same thing would be considered mad.

The essence with above statement is that Governments hinders competition, lower our standard of living, promote special interests and they make excuses for this with faulty theories and propaganda.

Björn Lundahl
Göteborg Sweden

A.H. van Herp March 5, 2007 at 6:59 pm

This article was written by somebody who never worked for GM, not on the line anyway.
I did and therefore see this garbage for what it is, union bashing. And if the author wants to bash the union which represented me, in 1956 in Australia, that is fine with me as they were as corrupt as the US government now.
We worked like slaves and got not much more money. If you told somebody you worked for GM they regarded you as a mental retard. The only reason I worked there was because there were no jobs, the capitalist system looked after that.
Many times I drew the foreman’s attention to defective parts only to be told to put them in anyway as it would be picked up by the quality inspectors. There were two of them and they drove the cars some 50 yards from the line to the outside. If the car made it that far it was 100%.
I was young and inquisitive and learned all the tasks on the line. This was a disaster. Every time someone left I had to do his job as well till the day came I had to stop the line to catch up. This was not as expected and I got called in the office where I was informed that if I could not do my job they would get someone else. I told this clown that this sounded like the only good idea he ever had. His jaw dropped. I went back but gave notice. I was threatened by the company and a corrupt union official that I would not get another job in Australia. What a bunch of idiots. And then they wonder why decent Japanese cars made such an impact.
A.H. van Herp
11 Vernon Ave.
Gorokan NSW 2262
Australia
0243921611
henkenm@tpg.com.au

John July 3, 2008 at 7:06 am

Just more crap from an author who would lie, steal, and cheat workers of their pensions and benefits just as the auto manufacturers do. Erisa laws were passed to protect employees from unscrupulous companies that would close down just before workers became eligible for pensions. These same companies would open up a new business across the street just to avoid keeping promises they made to workers and their unions. Sure, promise to fund pension plans but don’t contribute money during a time when the market would have immensely increased the amount enabling easy payment to those lucky enough to keep their job long enough to retire. Broken promises is all you hear from companies, and when it comes time to pay, they declare bankruptcy to avoid paying again. This is not a third world country yet, and there is no slave labor in America, is there? The executives of these companies and fascist tyranists like the author ought to be put in prison where Bubba can teach them a little of what it is like to be a blue collar worker with hard earned skills that aren’t appreciated and who are constantly being taken advantage of.

Scott D July 3, 2008 at 11:45 am

John:
“Just more crap from an author who would lie, steal, and cheat workers of their pensions and benefits just as the auto manufacturers do.”

I can see that you feel very passionately about this issue. While I share your anger at the injustice that regularly harms workers in the private sector, we differ in our analysis of the cause of that injustice.

Some people will claim that unions cause wages to rise, when the evidence seems to show the exact opposite cause and effect. I’m not going to say conclusively that there is a definite causation, but I think that the case seems to be logically sound. As wages rise, union membership increases. Workers realize that they can claim a bigger share of the increasing wealth by joining a union. The overall effect is that non-union workers receive a smaller increase in pay than they would have without the intervention of the union. This is analogous to the growth of government in response to increasing productivity from the private sector.

You need to realize that when someone attacks unions, it’s not that they want people who benefit from unions to be worse off. It is simply that unions cause a large number of problems through restriction of freedoms, and that whatever purported benefit they offer is not justified, either from a natural rights or a utilitarian approach. Dr. Reisman is telling you that snake oil doesn’t work, and you are angrily shouting back that he’s a bastard for wanting to let sick people die.

“Erisa laws were passed to protect employees from unscrupulous companies that would close down just before workers became eligible for pensions.”

That’s what you have been led to believe. Complete disillusionment with government “protection” of rights is not something that happened to me overnight. It took repeated exposure and careful analysis of the claims of many different entities to bring me to the truth. It usually takes me about 1-2 minutes of searching to come up with a good exposition of the bad effects of a particular government regulation. Generally, 10-15 minutes more searching yields some non-committal and poorly reasoned arguments in favor of the regulation.

From this site:http://www.erisarights.com/infoerisa.htm

“ERISA is perhaps one of the biggest successful con jobs affecting the American working person since the end of the Great Depression. ERISA, in the guise of protecting the working person’s rights, replaced all state laws that protected an employee’s rights to benefits from an insurance company or employee trust. Under the laws of most states, a wrongful denial of benefits can result in a jury verdict awarding the employee the denied benefits, damages for emotional distress, and punitive damages. Under ERISA, there is no right to a jury trial, and the most that an employee who has wrongly denied benefits can receive is the denied benefits. What has an insurance company or employee benefit trust fund got to lose from denying benefit claims?”

George Reisman and others here argue on the side of freedom. Loss of freedom, even if it is from the “greedy” corporations, is a bad thing. Balance that with observation that there are a ton of regulations and restrictions that favor corporations and restrict competition. In essence, the whole thing is a mess, but trying to fix one intervention with another only makes matters worse. Better to work to repeal ALL restrictions on commerce.

John July 3, 2008 at 3:46 pm

Scott D:

You’ve done a good job of analyzing my previous emotional comment. A Union is rarely found in well managed companies. It is companies/corporations that pay their executives 7 figure salaries while pushing inhumane conditions on employees that cause employees to form their own unions. The principals of unionism are just and form the basis of workers rights such as an 8 hour day and 40 hour workweek. It is individuals that corrupt both companies and unions. I know few salaried employees that can say they only work 8 hours/day, and/or spend time at home/play with their children, raising their own family instead of letting the state do it for them. I agree with JK Sr. that the government also plays a role in the economy. When they use a substitution method to determine inflation, while printing money electronically at amazing rates, diluting the money supply and bankrupting America, they are to blame as well but then absolute power corrupts absolutely correct? Didn’t JFK say “A rising tide lifts all boats”? Workers wages rise when they unionize which puts them in higher tax brackets so they pay more taxes. The benefits they desire may not be realized, but be sure that here in the Right to Work state I live in, that if a company treated its workers right there would be no union. I’ve talked with many salaried employees who know the Law (Dept. of Labor) guarantees them that travel during working hours is considered time worked which prevents companies from sending them on travel to.., work, travel back, and oh, time to go to work again, all in one day for one days pay and that comp time is paid “Dollar for Dollar, Hour for Hour” at the employees regular salary even though their company will tell them that for their weeks of hard work staying extra hours that they can take the afternoon off! Why no complaints? Because these workers feel the company will blackball them from the community making it impossible to work anywhere else so, they are silent.

Has your pension been cancelled, closed? Were you paid a “Fair Balance” by being given your contributions back while the company keeps all the interest? Courts have determined that pension money can be used by the company at any time for any purpose as long as the money is present when needed to cover current obligations. But what happens when the money is spent and the company declares bankruptcy? Maybe you have a 401k invested in the company stock which is devalued to pennies/share just before bankruptcy. So, Law or no Law people are cheated , promises are broken and the people know that cars don’t build themselves, that Henry Ford himself couldn’t build all them cars, and a union is a collective or workers negotiating for fairness in a corrupt world. The authors gripes about unions isn’t new either, For example, the same has been said about railroad employees featherbedding a hundred years ago… more nonsense whipped up in Tafts time, for example didn’t people lend GOLD to the railroads to build the transcontinental railroad only to be paid back in GREENBACKS? Was gold confiscated? Does fractional banking and the Federal Reserve create money out of thin air? Unions are created by messing with the masses!

Billdacat July 29, 2008 at 12:17 pm

Without the union, GM and the rest of the domestics.. would probably no longer be domestics, they would be paying a lot of mexicans, Chinese, and koreans to build for a fraction of the cost …

Some production would remain in the us.. namely.. a body would be shipped to the usa and a chassis and they would snap them together in the USA ….

That jobs bank kept production in the USA. It also has probably kept this country from having worse economic downturns…

The big reason for the domestic threes troubles is that other companies from foreign countries come in here and don’t pay anything into our social system … they come here and rape and pillage.. no retirement and no retiree health care…no union… less pay and benefits…These people’s social welfare costs all gets dumped on the american public to pay when the foreigners are done with them. they have also caused manufacturers to use temps instead of full time work that provides for stable households and families.

The quality of our automotive jobs has been drastically altered.. for the negative…

To me… having worse jobs.. worse pay and benefits is not a plus for this country…

The unions are a needed evil to balance the forces of corporate greed….

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