If the unions are meant to be a counterweight to state-granted corporate privilege, the proper recourse is repeal, revoke, or nullify all the privileges in order to facilitate the the liquidation and distribution of the wealth they have amassed**. Whether this distribution may be achieved to some degree through the state’s legal apparatus is suspect, since the “law” is the capitalists’ primary instrument of oppression.

Although I am sympathetic to many labor causes, and not opposed to their means, I have reservations about their efficacy in achieving desired results.  As an equality of means brings about equality of opportunity, the real challenge is to equalize the means and I’m not convinced this happens.

• If successful in “seizing”, the largest unions would control the “means of production”, employed thereafter for the benefit of themselves. They may be tempted to restrict membership to ensure higher wages, and by restricting membership, the union controls access to the means of production in much the same way that the capitalist-owner does: keeping employment safely out of reach for many.
• Since all means of production are collectively held, a dissatisfied member can’t just walk off on his own because he can’t take his “share” of the cooperative capital when he leaves. Nor can he, or a group of others decide they are unhappy with the union’s stewardship, they probably can’t instigate a micro-”strike” and claim the product of their labor, or a homestead right to a share of the collective assets.
• The individuals would be in a position much like the majority who live hand-to-mouth today: bound to the occupation by the necessity of hunger.  And if they choose to leave, they would leave with nothing***  whereupon they would ascertain that the only thing they have to negotiate with is their own labor power; they would be at the mercy of others.

On the contrary, in a free society with the means more-or-less distributed, the average man being unhappy with his station should have options:

If he has acted wisely and put some money away, if there is freedom to buy, sell, loan and borrow, he should have the financial wherewithal take some modest risks: he can go off on his own or join with co-workers and form a competing enterprise or start a new one altogether. Or he may choose to work for someone else; since there would be no workplace large enough or economically powerful enough to exert appreciable pressure on the markets for goods or for labor. In short there should be plenty of opportunities one could pursue.

What I hope we may one day obtain is an environment where no sector of the economy (including labor) is dominated by oligopoly.

I am all for abolishing the current order of things, but I do not want to simply put the power in another party’s hands (no matter which flag they’re waving). Instead I want to abolish that concentration of power which is so easily abused.

*  I am not suggesting  there is anything inherently wrong with labor organizations. Nor am I arguing against tactics advocated by labor organizations like the IWW (direct action, “If you need a break, take one”, etc.) nor am I fundamentally opposed sabotage, etc. If you want to argue for a syndic or a co-op of a dozen people or so who have a small shop and manage that endeavor “collectively”, be my guest. I am absolutely not debating that.
** In order to make an omelet you have to break some eggs. This is probably going to be a messy process.
*** Barring of course, any prior arrangements which may provide for severance pay, or other remuneration based on length of service, etc.

Dynamite: The Story of Class Violence In America

As strikes and “riots” are often portrayed in the media as unprovoked violence against the employers or scab workers, and haphazard destruction of the employers’ properties, Adamic will not let the reader ignore that in many (most?) cases, it is the the monopolists and the concentrated Big Business who are directly responsible for the opening salvo (i.e., hired thugs to bust the strikes, agents provocateurs, corrupt politicians, etc.). He also notes that while many attempts at labor organizing were demonized and even prosecuted as illegal interference with commerce, etc., the duplicitous nature of the American legal system often ignored equally heinous interference with commerce when done on behalf of organized Big Business.

Dynamite also presents a fairly compelling argument as to why organized laborers believe in a “right” to their jobs, which if you accept it, means that scab laborers would be guilty of violating that right and to some degree deserving of reactions as would any common criminal who violated you otherwise. This was an argument I had not previously encountered, but and it was definitely an “Aha!” kind of moment when I picked up on it.

Adamic is unabashedly anti-capitalist, so his character descriptions tend to favor the champions of labor, and make the enemies of labor seem characteristically repugnant. That said, he keeps a fairly even keel and is not afraid to highlight labors shortcomings, infightings, especially weak leadership, a “We’ll get ours and damn the rest” mentality (which he condemns as a byproduct of capitalism) , failures of the AFL as well as the politicking and racketeering scandals which plagued early labor organizations and it would seem, doomed them for the future.

Although Adamic does not explicitly endorse “dynamite” as a means to achieving labor’s goals, I think he is without a doubt sympathetic to its use; at least under certain desperate circumstances the majority of which cannot be blamed on the working classes.

If you’re a left-leaning libertarian or a big-L libertarian of the American persuasion, or even fancy yourself an “anarcho-capitalist” then this book will definitely give you pause to reconsider some of your positions. Otherwise I’d recommend it for anyone interested in the history of the American labor struggles, or anyone looking for an alternate account of this history.

Dynamite: The Story of Class Violence In America is available via Amazon.com.

Yes, a reorganization or a bankruptcy, a complete failure would be disastrous for the local economy in the short-run. But I’m not convinced that a bailout will make anything better in the long-run, and even if I were so convinced, I’d still be morally opposed to subsidizing abject failure.

On that note, GM would need to triple its 3Q sales volume in order to remain solvent. The plain fact of the matter is, it doesn’t matter how much labor commands in compensation, as long as they’re building cars that nobody wants to buy. As long as their lead time is 25% greater than the competition. As long as their defects per vehicle is 3x the competition. As long as they cost more than comparable vehicles from other manufacturers. IF YOU BUILD CARS THAT NOBODY WANTS TO BUY, YOU WILL QUICKLY FIND YOURSELF IN FINANCIAL DISTRESS.

Some people blame management for the mess. I am certainly not apologizing for, nor do I intend to absolve the Big Three for the errors of their ways:

GM’s management drove the company into the ground, by consolidating many of their suppliers under their umbrella: one problem this created was a concentration of power such that a single Delphi strike could shut down the General. Additionally, because of GM’s enormous market share, it’s possible that they could drive domestic manufacturing to total collapse. If one automotive supplier goes under, the manufacturers simply source from someone else’s stamping plant. If one manufacturer goes out of business, every single supplier under their umbrella takes a massive financial hit.

In all fairness, many of these independent shops should’ve long ago thrown in the towel, and they likely would’ve, had the Big Three not been the beneficiary of many state subsidies throughout the years. There’s an old saying that warns us about putting all the eggs in one basket. This is a big problem with State capitalism which does not merely permit, but actively encourages the oligopolization of industry, as we’ve seen with the domestic auto manufacturers over the course of the last century.

Other people like to blame labor, and the extravagant $73/hour that they all earn. Except they don’t make that much money, which would be about $150k/year. They make (on average) something closer to $30 an hour, or somewhere in the neighborhood of $60,000 annually. Add overtime and bonuses (when times were better, assembly-line workers were getting $20k at Christmas), and the average line worker can certainly be in the upper strata of “middle class”.

The $73 figure, as others have pointed out by now, comes from the current costs associated with retiree benefits. According to the NYT,

These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix

If this is not accounting chicanery, it ought to be. Why don’t the Big Three add their other fixed costs into labor calculations? Plant assets, capital equipment, etc., are all “fixed costs” in a true sense. In any event, the total cost of their compensation is about $55 an hour which is still “twice as much as the typical American worker makes, benefits included” and something like 20% higher than the rest of the domestic (foreign-owned) auto industry.

However, I want to put everything out in the open: The UAW is still a labor cartel, no matter how you want to romanticize it. By directly limiting membership, they are able to indirectly command certain levels of compensation, and control (at least to some extent) the amount of overtime available to them. Especially in Michigan, they have historically been anti-productive and anti-labor and anti-employment:

Unions prefer to keep many able-bodied workers unemployed in order to force their higher wages on their employers. Big Labor in Michigan is continually fighting to keep businesses out of the state.

If the UAW thinks General Motors is salvageable, let them put their money where their mouths are. General Motors real value is approximately zero. The UAW should let General Motors fail, they should be rooting for bankruptcy. The UAW should buy all of the debts and assets and obligations from the bankruptcy at pennies on the dollar. Anything else is just proof that they’d like someone else to subsidize their existence.

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Gilligan left a comment in #27, most likely in response to continued discussion about Who Owns General Motors?

I liked this statement:

“Employees could purchase the company outright in a month, if they were so inclined.”

Brings up an interesting point. If employees had total ownership of the company, they could fire the management for their decisions to produce products nobody wants. … All the benefits of ownership and vested self-interest would apply.

I worked for one of the big 3 in the late 80’s. I could write a massive post about all of the waste that ranges from comical to tragic, but to nutshell it:

Please do so, I’d love to read it. I’ve heard horror stories from some consultants/six-sigma types that used to work with the automotive manufacturers and their suppliers. Like, “Corporate Jets for everyone!” horror stories.

Management (i.e. engineering) waited for summer students to arrive to throw overdue projects over the fence at them to complete. In the meantime, they used the companies facilities to run their home businesses.

The guys who were making out like bandits were the trades folk. The employee incentive program said that an employee that came up with and implemented X would be paid 10% of what it saved the company in the first year, up to a maximum of 20K. You should have seen the size of their paychecks. Deep into the 6 figures…whew. Senior management used to get outraged and would chew into the salaried engineers, “Why don’t you guys invent this stuff?” Of course, the incentive program did not apply to the engineers…’nuff said.

Where I work, most non-managerial employees are eligible for overtime pay. Once you become a supervisor, however, the OT pay stops, which could potentially result in lower income after your promotion. If you think about it, you only need to work about 3 hours of OT per week to make 10% more than your base salary. If you average 5-8 hours of overtime per week, you’re making a lot of extra money. If you get a 15% raise and promoted to a managerial position, you’ll probably take home less money and you’ll have to work more. Needless to say, the employee churn at the 2-3 year mark (when most people become eligible for this sort of promotion) is pretty staggering.

Papa G, who also worked in automotive, left a comment on A Bailout for Detroit

I hold the Big 3 management teams as the problems for the rust belt states and in particular, here in Michigan. Now they want a bailout…they made the mistakes and they want our money. So does Wall Street . If the Wall Street bailouts work out OK, will the government put some of the profits in the hands of the citizens of the United States….probably not ! If the bailouts of the Big 3 proves to be successful..will the government put the profits in our accounts. Again…probably not !!

As the lean fad took over in the 1980s and 1990s, GM under the leadership of F. A. Smith (and the others) began reducing the number of suppliers that they used to source parts. Some were forced out by GM’s pricing power, others were bought out or consolidated. When the dust settled, where there had been many small, independent machine shops and suppliers, now there are only a few. Some of them (like Delphi) are also bankrupt.

Before, if one supplier went on strike, or couldn’t fulfill the order, there were a dozen others who would fill it. Now, if General Motors’ single supplier of widgets goes on strike, the entire company is dead in the water, wasting through millions of dollars a day. This sort of top-down management has been disastrous for General Motors, as strikes become increasingly crippling.

Bailing out Chrylser twice in the past few decades was a bad idea. Bailing out General Motors so it can buy Chrysler which needs its own bailout is an EPIC FAIL.

There are parts of both companies that are valuable and salvageable, although probably not at any price approaching book-value. The rest of the organizations are junk. You’d practically have to pay people to take them off your hands. The junk needs to be written off, not subsidized, because it’s only dragging down the few strong points these organizations have left.

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Despite the fact that I thought it was probably going to be a boring post (too academic, perhaps), a number of people left comments on Entrepreneurs, the Firm, and the Knowledge Problem saying that they really liked the post and found it interesting. I’m glad to hear that, maybe I’ll do more of that sort of writing in the future.

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Who knew that the Unions are in favor of national healthcare?

Union members and outside experts said the UAW will have difficulty keeping its commitments unless the federal government has a national health care system within 5-15 years.

Always looking out for their members, everyone else be damned.

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Egypt is trying to copyright pyramids “in an attempt to get paid from the sale of replicas…” Even if you are inclined to accept traditional arguments in favor of Intellectual Property (i.e., the inventor/creator’s right to profit from his time and effort), this is utterly absurd. Egypt, a sovereign country, is trying to claim a copyright on something that they basically found, which merely by accident happens to lie within their present-day borders. Could Norway claim copyright on fjords? Can Spain copyright “The Americas”? Can China copyright pork-fried rice, and earn royalties on every late-night quart served anywhere in the world?

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New home sales are at a 12-year low. This is not particularly good news, especially when it is combined with the number of adjustable rate mortgage loans (this is not limited to subprime loans) which have yet to reset, and are scheduled to do so throughout 2008.

Not good at all. Looks like 2008 is going to be one hell of a year…

After learning he was a recall target, [Steve] Bieda said today: “We’re facing some huge challenges in this state. We’re trying our best to accomplish these changes. Some of them are painful and some of them are uncomfortable to do. But we have the responsibility to balance the budget and the responsibility to put the state back on sound financial footing.”

No, Mr. Bieda. You had the responsiblity to run the State with a balanced budget, a task at which you and all of your colleagues failed abysmally. These changes are only painful for you insofar as you might be recalled, or may not be re-elected next time around.

The Teamsters are, well, being Teamsters. What’s new? The current attempt to exercise unauthorized power over others is happening at the casino down the street from my Alma Mater.

The Saginaw Chippewa Indian Tribe, which owns and operates Soaring Eagle, may take the position that the NLRB has no jurisdiction.

This was my first inclination – that they’re grasping at straws if they think they can get away with this. The Casino is one of the better paying non-manual-labor employers in the entire County of Isabella. Every year, college students line up for lucrative jobs as ushers, dealers, and bartenders at the resort. And the ones who are selected are in turn, paid far more than they’d make elsewhere in town. Unfortunately, the article cites that the NLRB has usurped tribal sovereignty since 1984, effectively allowing for unionization. As if it weren’t bad enough that we gave them all smallpox, and took all their land, and killed all the buffalo…

Finally, the potential libertarian victory – however small – Michigan’s House is attempting to repeal (to an extent, and conditionally) the law which requires motorcyclists to wear helmets. Riders who want their Fabio-esque locks to trail in the wind behind you, you’ll have to pay an annual fee – in addition to your license and registration fees – prove that you carry a certain minimum amount of insurance, have attained 21 years of age, have at least two years of riding under your belt (how this is determined?) and take a safety class. Whew!

Unfortunately, it will probably be vetoed (again) by our Governess. So much for “representative” government.

I found this John Stossel quote at the Brussels Journal:

The fall of the Soviet Union deprived us of the biggest example of how socialism works. We need laboratories of failure to demonstrate what socialism is like. All we have now is Cuba, Venezuela, North Korea, the U.S. Post Office, and state motor-vehicle departments.

Unfortunately, Stossel went for all the low-hanging fruit.

I’ll keep it local, to get the ball rolling:

1. Highways – ours in Michigan are in constant need of repair, funneling 4 lanes into two, three lanes into one, or just simply closing major urban thoroughfares for months at a time. Work is typically done during the day, which incidentally is when most people have to drive. Their public nature ensures that no number of lanes will ever be enough to prevent congestion for more than a few weeks.
2. Urban planning – Detroit. Need I say more?
3. The UAW. Perhaps, unions served a noble purpose at one time in history. Perhaps. But coupled with “good-faith” bargaining laws (i.e., the negation of free-enterprise), “ALL YOUR MOTOR COMPANY ARE BELONG TO US.”

Come up with your own short list of “bad examples” – it shouldn’t be that hard, because all examples of socialism are bad.

Many of the Flint jobs bankers worked in a plant that no longer exists, the sprawling Buick City complex that closed in 1999.

General Motors Corp. has paid them between $70,000 and $85,000 annually.

They also received health care, which ups the total significantly. I’ve blogged extensively about collective bargaining, work rules, and the so-called jobs bank.

Adding insult to injury is the fact that worldwide capacity to produce automobiles is something like 90 million units, whereas global demand is in the neighborhood of 60 million units. This is a disequilibrium of epic proportions. There’s not much more that I can say about the fate of American manufacturing – it needs a complete overhaul, and paying people for a job they haven’t done in 10 years is nothing short of retarded.

It suggests people who want to guarantee the delivery of important items should switch to other courier services… The Royal Mail will use managers to keep the Special Delivery service running as best they can…However, they will not offer the usual money back guarantee of delivery by a specified time.

When was the last time you heard of a UPS, DHL, or FedEx strike? When was the last time, barring national disasters, that either of these companies failed to honor their money-back guarantee?