Sunday, April 10, 2011

Union Reforms

Everybody has an opinion about unions. They might blame unions for the loss of manufacturing jobs overseas, or maintain that unions are the only thing preventing a global corporate takeover. As usual, the truth is somewhere in between. A friend of mine maintains, and I partially agree, that the government has assumed much of the role that unions once played – providing employee protections such as OSHA and MSDS requirements, minimum wages, anti-harassment laws, and so forth. He therefore feels that unions should just go away to allow us to compete in the global free market. I, however, feel the time has come, not for union destruction, but for union reformation, and I want to share those ideas with you all. See if you agree.

First, some historical background. Unions claim that they were responsible for the building of manufacturing jobs in America. But were they?

On balance, no. The Great Depression came as a result of imbalance in the money supply (too few at the very top had all the cash, causing the economy to grind to a halt due to the friction caused by most people having no money to spend), and the unwillingness of industries to produce more and make more jobs. The second problem stemmed directly from the first. Business owners were financially comfortable living on interest without producing, so why should they have to build plants and/or hire workers just to make merchandise nobody could afford anyway? It was a deeply-rooted problem.

Unions did help to move the machinery of industry somewhat, but not enough. Furthermore, they were led by Marxist writings, which advocated revolution. This started a tradition of combativeness within union leadership. Industrialists quite rightly feared an assault upon their wealth, and responded to unions with violent force. Union leaders were often killed. Industrial leaders were sometimes attacked. Police were sometimes called in, persuaded by the politicians who had accepted Corporate money, to beat picket lines with truncheons. It was a frightening time. The inner war between workers and manufacturers threatened to topple the United States as a nation.

FDR realized that money supply at the lowest-rung was the problem, and put in a program based on Keynes’ economic model – that an influx of government money can break the deadlock. He put Americans to work with the “Alphabet Soup” of government employment programs, building roads, building infrastructure such as the Tennessee Valley Authority, even building entire communities such as the Milwaukee suburb of Greendale.

It started to work, but slowly. Sometimes unions helped, but sometimes hurt, FDR’s efforts. More people had more money to spend, but it was five loaves and two fish given to a multitude. The miracle needed to make this feed all the masses, and have twelve basketfuls of fragments left over afterward, came in the form of war.

World War II did several things: First, it forced industry to build, train, and hire workers. Second, it hired and paid hundreds of thousands of young men as soldiers, outstripping any previous government work-hire program. Third, it made the wealthy more willing to pay a fairer share of their taxes, knowing that such money was for the war effort. Fourth, it took out a significant percentage of the populations of the U.S. and Europe, relieving the population surplus which was hampering economic growth potential. Fifth, it made government and industry invest heavily in research and development – the lifeblood of a growing economy. In short, the war led to the biggest investment of government and industry both in the American economy. When the war was over, the rich were paying their fair share, and everyone had money to spend. What followed was an industrial boom, a housing boom, a baby boom, and an investment boom.

But America wasn’t done. There was another war to keep the trend going. The Cold War made sure that research and development never ceased, fueling NASA and the space race into developing the computer technology that would make our current wealth possible. It forced politicians to invest in education – something no government hoping to maintain itself can do without. Furthermore, fears over nuclear war caused us to build a network of interstate highways so that people could flee cities rapidly in the event of nuclear attack. The unintended consequence was to make our national transport network the most advanced in the world, thus ensuring our economic dominance for decades to come.

That’s what built America’s industrial dominance in the late 20th Century. Government employment programs, combined with corporate willingness to train and hire, and the wealthy willing to pay their fair share.

Well, if unions weren’t responsible for building American industry, what about the opposite? Are unions responsible for the loss of manufacturing jobs in America?

Again, on balance, no. Unions did tend to demand wages that are higher than non-union wages, but non-union wages still were higher than wages overseas in nations such as China, Mexico, South Korea, Indonesia and elsewhere. That meant that the manufacturing jobs would still eventually have gone overseas had unions not been there. The process would have been slower at first, but the ability of banks to wire money in seconds to the other side of the globe meant that businesses could hire abroad and fly goods out that were made cheaply.

What ended manufacturing in America? Internet banking and globalization. The jet power brought about by WWII eventually made it possible to move goods from overseas to America in record time. But when the Internet made it possible to pay overseas workers with a mouse-click, the exodus of American jobs really began. Ultra-competitive retailers such as Wal-Mart accelerated the process. Fueled by a consumer-lust for lower prices and damn the quality, jobs moved overseas. (The subject of Wal-Mart is enough for an entirely separate blog-post. It’s not that the retail giant is evil. It’s merely a “catastrophic success.”)

So where does that leave unions? Well, with globalization, unions are a non-factor. Any corporation can simply go around any labor strike by moving manufacturing to a different country. Before technology made this possible, companies couldn’t move, and union demands had to eventually be acquiesced to. But today, even if a union strikes and wins, all they’ve done is make a competitor better able to manufacture for lower prices and thus seal their eventual job-loss doom. They might also strike and bring down the entire company at once, leaving everyone out of work. We saw this with Schlitz beer, Allis Chalmers, and several others. It seems that unions are done, and we are all doomed to see ever downward-spiraling prices and wages, coupled with an increasing dependence upon government to protect the labor force, or make welfare for those that get squeezed out by this new service-based economy. The only unions left will be those of billionaire sports athletes.

Not so, I say! Here are two lessons from history that show why:

First, General Motors. Oh, they’ve had their labor problems, but if you look recently, you see few strikes, and an air of cooperation between union leaders and corporate executives. This shows what wonderful things can happen when unions drop the young-Marxist ideology of combativeness towards business owners.

Second, look at a German industrialist of old, named Krupp. He hated unions. So, to keep unions out of his company, he took a radical approach. He paid his workers! Figure that! If you want to keep unions from forming, just make them too happy to bother. It worked! Krupp’s company gained fantastic success, and working for Krupp meant having your own company house, car, school for your kids, even a company church where you had your own funeral plot pre-paid. This shows the power of what happens when business owners have beneficence towards their labor.

So, with that in mind, here are my ideas for unions:

1.) Establish a tradition of cooperation between unions and corporations. This may involve re-naming unions altogether. Maybe we can call them workers guilds, or some such. But combativeness between executives and union leaders must end. Workers’ strikes should be rare, or non-existant. Nothing can legislate this. It can only come by patience and wisdom.

2.) To that end, union leadership must be radically altered. As it is, unions are often despotic, with a centralized leader. That should be outlawed! Unions must be decentralized democracies ruled by many representatives. The laws of our nation must be made to ensure this. No union will vote to destroy their own jobs by striking at the wrong time.

3.) The law must be changed so that corporations must have an open-book policy of their financial positions to union leaders. When a company states that an increase in wages will destroy the company, and show so on paper, the union oughtn’t think it’s a trick. Some state laws and a few federal laws already require this, but these laws need to be expanded and strengthened.

4.) UNIONS MUST GLOBALIZE!!! If corporations go global, then the unions must too. (Duh!) Workers won’t get the higher pay they deserve if corporations can simply move the work somewhere else. Thus, unions must spread to those nations where corporations might be tempted to move to. Then, when negotiations start, there’s no getting around it – wages must increase! It will take time, and much effort, but it can be done if unions get spread abroad – STARTING WITH MEXICO!

These reforms won’t guarantee unions will survive. It may already be too late. But if unions know what’s good for them, they’ll work towards these goals as quickly as possible.

And here's another thought: If unions take root in China, and demand better wages from an indifferent socialist government, it is only a small step for them to decide they want to demand other rights as well. Unions could bring democracy to China!

Sounds like a good idea to me!


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