The US government will swap debt for equity and take at least half ownership in GM. This amounts to socialization of a large part of the domestic means for automobile production. The UAW will swap debt for equity to cancel out the debt “owed” by GM to a union-run trust. Worker ownership of 39% of this company is syndicalism, plain and simple. FULL ARTICLE
Source link: http://archive.mises.org/9907/the-socialist-syndicalist-plan-for-gm/
The Socialist-Syndicalist Plan for GM
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This article looks like an example of what Kevin_Carson calls “vulgar capitalism”. D.W._MacKenzie takes it as a given that “syndicalism” (worker ownership of an enterprise) is bad. That’s not correct. What’s bad, and what’s happening in this case, is *government manipulation* of businesses and expropriation of them for the benefit of favored constituencies. There’s nothing wrong whatsoever with workers owning enterprises — say, by fronting their own money jointly for a share of ownership — yet you would walk away from this article thinking it’s some kind of inherent evil.
Similarly, D.W._MacKenzie takes it as a given that it’s bad for the UAW to “squeeze the stockholders for all they’re worth”. Again, what’s actually bad is when the UAW uses government privileges to extract what it cannot gain through market processes. There’s nothing wrong with unions negotiating the best deal they can, so long as they don’t rely on coercion.
D.W._MacKenzie is blurring these very important distinctions.
Sorry, that should be “vulgar libertarianism”. In any case, count on this pieces going into Kevin_Carson’s next compilation of Austrians deviating from libertarianism.
Yahoo finance has an interesting story “Hedge Fund Leader Blasts Obama for “Bullying” and “Abuse of Power”
Here is an excerpt:
Stating that he himself is “fearful writing this,” Asness still pulls no punches:
• “Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrificeâ€, they are stealing.”
• “The President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along.”
• “The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”
And its worse for the competitors. Right now there are 3 US based auto manufacturers: Toyota, Ford and Honda. All three trade ownership on major equity exchanges. If these diabolical Obama plans go through then Ford at least is doomed. Ford will have to cut quality and materials to keep their costs down as the UAW squeezes them for more money. They can not compete against GM giving cars away and putting the maintenance on the backs of the tax payers.
Of course the quality leaders Honda and Toyota just have to survive as the socialized companies will be dumping the same crap they did back in the 70s and 80s. Welcome back Chevy Vega and Chrysler K car.
Hopefully Toyota and Honda will weather the storm. But when they do they will jack up prices, remember the “Voluntary Quotas” by that self proclaimed free market guy Regean? Prices for all auto shot up but especially for the voluntary quota’ed folks.
My advice to Ford shareholders:
Sell to anohter company or liquidate immediately. Take what you can get. Obama wants it and is moving to put you in a position where you must give it to him.
RE: “syndicalism” — from “Who Would Be a Free Man? The Political Economy of Noam Chomsky”:
The only remaining political option is the one in fact most associated with Chomsky: “anarcho-syndicalism.” Here we must run our own Gedanken experiment. Let us imagine that there are no ethical or economic problems in a situation where the kids who were hired at a Big Burger outlet Monday, take over the store Tuesday. They kick out the manager and break all ties with the corporate home office, and no property rights-enforcing police respond to these actions. Having truly seized the means of production from the bosses, these workers have at last freed themselves from “wage slavery” and the concomitant “deprivation and reward.” Or have they? The fact is, they still must arrive for work on time, look presentable, keep the place clean, cook the right food the right way and be courteous, or else they won’t get paid — by the only real boss: the sovereign consumer, who pays (or doesn’t pay) the salaries of all the employees of Big Burger (from its CEO to the guy working the fryer) and all businesses, big and small.
Fundamentally, either Smith gives something — food, clothing, medicine, money, acknowledgment, friendship, consent, cooperation, approval, sex, love — to Jones (“reward”) or not (“deprivation”). What isn’t either “deprivation” or “reward”? Chomsky’s terms cover (and condemn) all of the give-and-take inherent in human interaction — “a handy explanation for any eventuality.” That’s what he says of Skinner’s theory, and it’s especially appropriate to quote it, since his own terms are, too obviously, merely commonplace synonyms for Skinner’s technological-sounding “negative reinforcement” and “positive reinforcement.” And like Skinner’s, Chomsky’s contention that we are “controlled” by this either-or, “given the vacuity of the system[,] … can never be proved wrong.”
READ THE ENTIRE ARTICLE.
I recall when Meridan Motors was formed to the harping of union employees who wanted to take over Triumph motorcycles in England. In three or four short years they folded from lack of technological advances and union cronyism stalling production and the desire to compete.
I don’t see how auto unions can over come their primary goal of self focus to move beyond their chosen aims, and alter their focus, to committing to a product aim without extorting more value with their historical methods of threat and higher costs before market pressure is allowed to judge their value.
When was the last time a Union OFFERED a product of superior value for less??
When was the last time a union criticized itself for lack of quality in a final product and offered its improvements without extorting a higher cost before it is allowed to achieve market comparison to measure its value in the open market?
When was the last time a government/union pact created a better product??
I can’t recall either.
What they are creating is good cop/bad cop so they can extort more value without market pressure and the government and unions taking turns at who will be the actor for goodness on any given issue, but the end result will still be extorted value and cost, not offered value that lets you choose your affordable cost.
This is what socialism sorely achieves. Cost fixing and a castration of citizen pressure to insure government goals not individuals rights or chooses.
This is a blow against the peoples value and using government coercion to FIX an earned economic judgment, that only insures the citizenship will carry more burden without choice, to support a failed enterprise from realizing its market truth.
This isn’t change but unbridled business as usual but highly amplified against liberty, freedom and open markets.
GM is pursing a plan to force common stock shareholders into a 100-1 reverse split. Right now, the company’s market cap is a little over $1B.
In order to justify holding your common stock when the reverse split happens is if you believe the company is actually worth (enter Dr. Evil):
ONE HUNDRED BILLION DOLLARS!
If, on the other hand, you have a functioning brain, and you believe that company is worth closer to one billion, then a reverse stock split of 100-1 puts the fair share price at less than two cents.
I’ll say it again. Less than two cents.
On the news of GM’s plan, remarkably, the stock is only down about 10% today. The remarkable part is how many idiots are actually willing to buy into a 100-1 reverse split. When reality hits…. maybe tomorrow…. maybe never…. the stock will TANK, probably down to less than a quarter, at which point it will still be overpriced!
I wonder just how many of these “Great Leaps Forward” we can withstand?
Worse still, is how many more future opportunities each of these big things create.
Whoever said perpetual motion doesn’t exist never studied government.
Workers have as much right to “own” something as anyone else. This anti worker thing is not anti socialism but plain and simple anti worker.
This is not to say the takeover wasn’t wrong and wasn’t done in a socialist manner and GM shouldn’t have gone down.
But, corporations themselves are socialist, so where is the big stretch? Replace shareholders with workers and what do you have? An entity owned by a cooperative that is protected from the vagaries of the marketplace by “limited liability”, which individuals and partnerships are not protected from and in fact bear the cost of. Virtually the same thing you had before with a slightly different cooperative membership.
Is it somehow different to have government chartered entities that couldn’t exist without special rights granted by the State owned by socalled Capitalists [shareholders who have virtually no ownership rights] rather than workers? Both are cooperative ownership of state franchised and protected institutions and are socialistic.
In a real free market, GM would have been chewed up and spit out long ago, and who knows, we might have twenty or thirty car manufacturers here or none.
All this sentimentality over some socialist corporation is pathetic. Personally I don’t care if the cars come right out of the back shed of the White House and the guys installing the airbags share the profits.
The corporation is an enemy of the free market, it matters little who or what claims their ownership. In fact, the more obvious the socialist connection is, maybe people will begin to figure that out and see them for what they really are.
“Whoever said perpetual motion doesn’t exist never studied government.”
From “Liberalism: History and Future”:
What limits the limited welfare state? Even with socialism discredited both theoretically and practically, state control over society grows… Not only has “liberalism” meant ever greater economic controls, but now it means the application of socialist ideology to social issues. This has always been a dubious dichotomy — Is a book a manufactured product or an expressed idea? — and one that didn’t exist among either the classical liberals or the Marxist regimes. Yet a surging number of voices tell us that “equality” demands, not only a redistribution of wealth, but also the banning of speech — not only an end to “economic violence,” but also the suppression of “verbal violence.” How this rhetoric translates into reality can be glimpsed by looking north. The legal perversity that pornography constitutes the criminal “exploitation” and “objectification” of women — a linguistic legerdemain whereby bourgeois feminists exculpate their own capitalist occupations as the “exploitation” and “objectification” of the proletariat, thus metamorphosing themselves from class oppressors into gender victims — was affirmed by the Canadian Supreme Court. This idea, in turn, evolved into that of “hate speech,” which was extended to “protect” other groups, such as homosexuals. So now when the Rev. Jerry Falwell airs his show in Canada, he must edit his preachings on homosexuality, which are not protected by freedom of religion or freedom of speech. Here is a “welfare state” that has gone well beyond taxing millionaires to house orphans.
It’s all really very easy to understand as the philosophic analogue to Mises’ economic analysis. The initial introduction of a socialist law into a liberal society forces the question: Do we accept or reject this violation of the liberal ethic? If we accept it, we set a precedent for the next proposed socialist law. We have made a very clear moral decision — collectivism trumps individualism. In contrast to the cynicism that leads to a deluge of special interest groups, this trend involves taking ideas seriously — i.e., recognizing the mutual exclusiveness of the capitalist and socialist paradigms, and thus the imperative to choose one. It acknowledges the hypocrisy — the incoherence — of bringing the socialist outlook to issue A but not issue B, to the “economic” issue but not the “social” issue.
A commitment to greater statism begets more such commitments, and if what we may call the Ronald Dworkin generation pooh-poohed the “silly proposition that true liberals must respect economic as well as intellectual liberty,” the Cass Sunstein generation repudiates as even sillier the proposition that liberals cannot impose on the free market of ideas the same doctrines and controls they impose on the free market in widgets. (The esteemed professor has insisted that speech, like commerce, must have its own “New Deal.” With Sunstein as thought control’s FDR, who will be its LBJ?)
As the no-end-in-sight march of greater government demonstrates, there is no reason to think that democracy is a check on despotism. An electoral majority can indeed embrace the concept and agenda of unlimited statism. “Totalitarian democracy” exists, not merely as a troubling conjecture, but as a threatening possibility.
READ THE ENTIRE ARTICLE.
Bottom line, it is just a bad investment for the tax payers.
Ford will come out on top because they are free to build what the public wants. GM will loose because they will build what the government wants.
I was watching CCTV’s (China Central TV) Dialogue and they were discussing Chrysler’s bankruptsy and the subject of the take-over of GM etc came up with the comment that “Obama’s socialism” is the exact opposite of what the Chinese have been doing for the last several years; divesting almost all state-owned enterprise, banks, etc. As an American, I was really embarrased that our country is traveling down this failed system that Russia, China and a host of other Communist/Socialist countries have mostly ended in favor of a more market-oriented economy.
Wow, I agree with Silas for once.
UAW demands bankrupted GM, so now they need a deeper pocket. And they have found one–the taxpayers.
Demand for GM cars has dropped, so they need to find a new market. And they have a large one–the U.S. government.
You can bet that UAW wages and benefits will continue and GM cars will be sold. The government will provide for their loyal thralls.
As Dr. Hoppe has stated before, Syndicalism is only justified when the entity is publicly owned and it cannot be returned to its original owner. The example he used to use was a government-owned factory in Eastern Europe. I believe Rothbard advocated this approach during his association with the New Left in the 1970s.
I find it hilarious that China’s state-owned television network is called “CCTV”.
I find it doubly hilarious that their logo looks exactly like CNN’s.
Forgive me for making the prediction, since I’m wont to criticize those with the hubris to do so. Nevertheless, Chrysler was ‘bailed out” several decades ago and, not in time but ahead of time, repaid the government. Five years after that government “loan,” I was asked if I would still have been so opposed to it, had I been able to foresee that it “worked.” You know my answer.
I suspect that GM will weather the recession in the coming few years. In parallel shall come, from GM itself, business adjustments, internal reorganizations and divestitures — typically the kinds of things that any company does when competitive pressures arise.
In time, the “government” equity stake in GM may well dwindle and evolve.
What will be left? Obama as the GM Chairman of the Board? A government-operated car company? A communist-styled manufacturing plant?
No, none of these.
What shall be left and further solidified is simply a mindset: one that maintains that the government’s responsibility is the economy; that the government is arbiter and balancer for economic stability, the trapeze artist’s pole when the high wire begins to shake.
Workers such as the people screwing sheet metal panels together on the factory floor are perfectly free to start whatever business they want. They don’t because they lack broader business and engineering skills.
Only clueless egalitarians who believe the State is the only obstacle to assembly-line workers becoming mechanical engineers and comptrollers think otherwise.
Reading the article I don’t think the author really said much on whether syndicalism would work or not, and relayed Mises’s views on it quite well. I think the article was fair.
Americans have yet to see Castro dead and socialism burried, instead, Castro lives to see America turned socialist.
“Americans have yet to see Castro dead and socialism burried, instead, Castro lives to see America turned socialist.”
From “Liberalism: History and Future”:
Now no one was too left to be “liberal.” Radio personality Rush Limbaugh used it to describe the once “radical” William Kunstler, and literary theorist Stanley Fish, a “politically correct” leftist who nonetheless is himself often labeled a “liberal,” tagged civil libertarian Nat Hentoff, once the prototypical liberal, as “right wing” — for his uncompromising defense of free speech. One wonders drolly if in a few years the only “liberal” left in the Western Hemisphere will be Economic Democrat for Life Fidel Castro.
Gene,
At least if corporations choose a socialist agenda its workers have the option to leave to another company when they get fed up with it. The same cannot be said of our country unless we decide to leave.
This article was not meant as a general analysis of syndicalism, but anyway… Syndicalism should work better than socialism, since it allows for economic calculation. There is, however, no reason to assume that those who work at a particular establishment are also the most responsible and capable owners. No corporation has a ‘natural’ size, so the matter as to which workers own what capital goods would be arbitrary or political in syndicalism. Naturally, workers in capital poor companies would want to merge with, migrate to, or takeover capital intensive companies. How are these decisions to be made if we have employment contingent ownership instead of normal property rights (i.e. common shares of stock)? Without the stock market and other markets for equity capital ownership would become a power struggle- a political struggle. Worker owned capitalism is politicized capitalism, and this would not match the performance of free market capitalism.
As things are the UAW is deeply involved in politics, so this deal with GM would almost certainly end with the UAW foisting losses upon taxpayers, while retaining profits for themselves. They have been using their government provided privileges in this way for decades, and would probably steal even more through the Obama plan.
I agree with Inquisitor; I don’t see how the article is an example of vulgar libertarianism. I do think that calling ownership by the UAW “worker ownership” is a bit of a misnomer.
Expanding upon Silas‘ point and in response to Inquisitor, the typical Marxian implementation within a given state power structure negates any positives of syndicalism per se.
The reason for this is inherent in the Marxist conception of class conflict critiqued by Hoppe here, and additionally in Agorist Class Theory here [pdf] — that is — rather than Capitalists v. Workers it is State v. Individuals.
The UAW can’t possibly advance the interests of its members by allying with the state since their interests are inherently at odds. The best they can hope for is to become more fully a part of the state and give up the pretense of production altogether.
Filc, great point! It’s not like we can “quit” the country!!
I don’t believe that corporations “choose” a socialist agenda, I think they “are” by nature a socialist agenda.
“limited liability” is socialism pure and simple. what is going on now is everyone who isn’t privleged with “limited liability” is financing the claims filed by those who are privleged with LL and have overstepped their liability.
Semi free market capitalism wouldn’t let these payments occur, our corporatism does.
True free market capitalism has no place for State granted “limited liability”, so all these questions would have little meaning in a free economic system.
Shareholding in a corporation is quasi ownership [unless you have 51%]. It is similar to a bank deposit, your money, they do what they want with it.
My point was only that it is irrelevant who “owns” a socialist enterprise. The risk is spread to all of us like it should be in socialism and obviously like it was before the workers owned it or we wouldn’t be paying for it now. GM is, was and will be a socialistic operation. Little has changed.
“Expanding upon Silas’ point and in response to Inquisitor”
I’m not a syndicalist FYI. I just don’t think it’s as bad as socialism, or even a form of it. Worker capitalism is indeed the best way to characterise it, as much as socialists would hate it.
In socialism, syndicalism is outlawed. Virtually every worker is a slave to the state, all in the name of the common good.
We speak a lot about the Russian and Soviet goulags.
But virtually every worker was a prisonner of the soviet union and could be shot or imprisoned if he failed to report to his job.
Americans who believe in freedom of the individual, small government and sound money can speak out even if they cannot prevent the gross expansion of the federal government. Voters will experience “trickle down taxation” soon enough. Huge deficits will cause severe inflation and higher unemployment. We have been here before with high tax rates, income redistribution and government seizure or control of industry.
You can help by not purchasing US government debt and purposefully working less to lower your tax liability. Working hard and maximizing your income rewards bad behavior by the government.
Hopefully, the Chinese will stop buying any US debt and convert all of their current holdings into gold or Euros. This will force up US interest rates and stop the exponential growth of the US federal government.
This is not exactly a socialized syndicalist plan of action – it socialized and syndicalist, but doesn’t qualify for the standards of s-s. Public ownership of co-operatives is, in fact, frowned upon since it leads to some of the same problems we see in Capitalist society, like the disassociation of responsibility.
In addition, you may say that Syndicalism doesn’t have a history – but you’d be wrong. Some history and theory is covered at the Socialized Syndicalism website.
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