Wednesday, June 04, 2008

Unions and Goodness

Unions have always been a mixed blessing. Historically, unions of workers have given us a lot of the things we hold dear. Reasonable working hours, weekends, benefits, living wages and worker's rights against abuse are all valuable things. When the rights and wages of the lowest people on the ladder are improved, we get two main benefits. One is that the wages of the rest of us go up. The other is that unions shift wealth toward the poorest which helps fuel our mass consumption driven economy as well as improve the education and health possibilities for those with lower incomes.

It's a much more reliable method of improving things than, say, giving massive tax cuts to corporations and wealthy people and hoping that this magically improves the lives of poor people through some unspecified mechanism (usually given the implication-laden title of "trickle down").

But unions have also used their heft to prevent innovation by mechanization, to help workers do their jobs poorly (thus "dealer prep") and to protect workers who are actually lousy at their jobs.

I read this article today and I found it idiotic.

GM is laying off 2600 workers at its truck and SUV plant and Buzz Hargrove, the super powerful union leader, has declared that he won't let it happen.
Mr. Hargrove insisted the U.S. market could not possibly have declined so sharply in such a short period of time that GM would have to break that agreement.

Is he insane? The market for SUVs and trucks could not have declined? Has he seen the price of gasoline? Of course North Americans are finally getting smarter and realizing that the giant vehicles they drive are expensive and irresponsible.

What is the argument here? That no one saw this coming? What you should have been doing, Mr. Union Leader, is negotiating for the past several years, on behalf of your brothers, to have those factories slowly converted over to efficient passenger cars in advance of this very, very obvious impending crisis.

It's that kind of behaviour that frustrates me. There is a place for the Union concept. Democracy simply can not react quickly enough to protect large numbers of workers from large scale abuse - especially with the penchant corporations have shown for trust violations. A Union or Federation can step in and threaten to halt production in order to extract fairness from the corporation rather than having all of the workers uproot their lives to change jobs.

But this is not it. This is not what the Union should be doing - attempting to stave off the unavoidable tide of change. I'm not too worried though, about the plight of these particular workers. I hear there are autoworking jobs elsewhere:
The dramatic shift in U.S. demand benefits Asian-based auto makers, which have dominated the passenger-car side of the business since the 1990s, when Detroit focused the bulk of its product development and investment on SUVs.

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Patrick Ross said...

If I may say so,

First off, I agree with you that the things accomplished by unionized labour vis a vis labour rights are important. Also, that unions have long ago lost their way and become corrupt.

However, I think you may have overestimated the amount of influence Hargrove can exert over what GM produces in its plants.

Also, I would take issue with your assessment of wages. If you're suggesting that raising the minimum wage will automatically make the poorest richer, I fear you may be mistaken.

Certainly, it seems that way on basest level. But consider this: when wages go up, entrepeneurs lose profit. In order to recoup their profit (and they will) they need to raise prices, wiping out not only the real wage increases of their workers, but also reducing the real wages of workers making more money.

I think the only way to ensure that a minimum wage increase will benefit those working it would actually be to accompany the increase with a comparable cut in business tax, in order to wipe out the lost profit that provides the entrepeneur with an incentive to raise prices.

Greg said...

Of course you can so ...

Union aren't universally corrupt. The teacher's union, though much villified, was the only group to stand in the way of Mike Harris's attempt to destroy public education in Ontario.

Buzz Hargrove certainly thinks he's powerful enough: “We have power and we're going to use every bit of it.” I meant to be somewhat cynical but I guess that didn't come through. I don't see why he couldn't demand stable, future-proofed work for his workers, though.

I prefer the philosophy of directly helping the people that need help rather than expecting corporate tax breaks to trickle down to them. Trickle-down is a fancy way of saying, "Let me get richer ... you'll get yours ... um ... later. Just you wait."

Yes, we must be concious that the market can only bear so much cost for certain items. That's why we have strong, publicly funded health care and education systems - so that those who are doing well take care of those who aren't. It also helps keep the definition of "living wage" lower because the lowest income earners don't have to pay for educating and healing their children and themselves.

Patrick Ross said...

Which is certainly true.

However, public health care and education don't help these people as much as we'd like it to when they go to the grocery store from some bread or milk only to find out that their bank account is overdrawn.

To me, it's a matter of balancing so-called "trickle down economics" with real benefits for the working poor. Tax cuts for business would disproportionately benefit the wealthy unless they're enacted as a cost-offsetting measure for an increased minimum wage.

It really comes down to this: an extra fifty cents per hour in minimum wage (not nearly enough, in my view, but let's treat this as an experimental number) would do very little to help the working poor if the price of their groceries increases by a comparable amount.

So in this situation something has to give. Raising the minimum wage is one thing, a good thing, but it won't have the desired effect all on its own.

Greg said...

Food is a very special case because of it is both a free market driven commodity and because it is so essential to life.

There are so many factors involved in food production and distribution that it's hard to grab a business tax cut or minimum wage change as the culprit. When you see people starving in African nations while the landowners continue farming tobacco, you know something has gone horribly, horribly wrong.

As it is, we don't put consumption taxes on non snack foods. Beyond that, if our country doesn't have a good food supply of its own, we're at the mercy of free trade. The best we can do after that is subsidize local consumption.

Patrick Ross said...

Well, yes. I can see that.

I guess the point I'm trying to make is that wiping out poverty isn't something we'll accomplish through exclusively left- or right-wing measures. It has be a three-pronged approach (higher minimum wage, offsetting business tax cuts, and an effective and efficient social safety net).