A Question for Tax Cut Advocates for Getting Out of the Recession

When I gave the inefficient union argument, I did not intend exclusivity. It is one factor, but a major factor.

When you have unions demanding exorbitant wages and exorbitant benefits for people that in essence can be paid to do nothing, then you skew supply and demand. Wage and price controls cause supply shortages, which then inevitably leads to rationing of resources.

During the 1970's following the collapse of the Bretton Woods agreement, the effects of guns and butter spending took its toll on the dollar rather than on the nations accepting the dollar as gold at $35 per oz. The effects of inflation hit hard on gas prices. Naturally, Carter blamed the effects of government intervention on "price gouging" and imposed price fixing on gas. Inevitably, this led to supply shortages because the price could not match the demand. Rationing and long lines followed the supply shortages.

The same principle applies to labor unions and unreasonable wage and benefit demands. When required wages and benefits are too high to match the output, supply shortages result (in qualified labor hires and output). Honda and Toyota more accurately reflect market supply and demand regarding labor supply, labor demand, auto supply, and auto demand. However, the Big Three labor unions will not allow the market to determine reasonable wages and benefits so that the labor supply will meet the labor demand.

For the argument that criticism of labor unions demonstrates unconcern for working people, I say that the labor union special interests demonstrate unconcern for working people. Excessive union demands benefit the "tenured" few and deprive new entrants of an available labor supply.

Regarding the CEOs of these failing companies, I agree that there are problems here. I actually agree with Ralph Nader that the "personhood" of corporations presents a problem with "golden parachutes." I think that the "personhood" of corporations should be eliminated and require that the CEOs of failing corporations bear the brunt of bankruptcy along with the shareholders and employees.

The solution is to encourage risk and investment for profit, allowing entrepreneurs to reap the benefits of success; and allow failure to happen. The solution is not to discourage risk and investment by capping profits and prop up failing corporations with taxes and/or deficit spending (inflation).

 

I agree with your post but want to add a couple of things...

The union can't have anything management doesn't agree to. Whenever the union is blamed you have to also blame the member of management that said ok. You can bet when the union deal seems sweet that management is either in on the deal or have something better. There is no way the workers pay/benefits will ever exceed management (upper level).

My solution is a two pronged approach, I believe the CEO should not be allowed to be Chairman of the board. That is a conflict of interest. How can the CEO and his oversight group be one in the same. Do you remember Bernie Ebbers?

I also feel the board of directors should be majority compensated with stock options. Currently they make $3 or $4 million if the company tanks or not. What do they care. They are just a figure in place to protect the stock holders. Now if their compensation was directly tied to how well the company performs I believe they would do a much better job of keeping the CEO in check without the need for government regulation.

 

It beats borrowing more money from China to fund a bunch of pork barrel projects for democrats that stimulate nothing and lengthen the recession.

 

Libbies do not mind borrowing money form China to fund their unconstitutional spending spree. But out of the other side of their face they complain about cheap labor and products we buy from them.

 

I care about the working man or woman. I live around them every day, and my church is made up of them. So take your silliness and keep it to yourself.

The facts are the facts. The labor union served a good purpose in their day. But if you look at the Big Three, you will see that many of their problems stem from the unions and the power that the unions have. The recent American Axle strike was a step forward, and hopefully one of many more. The UAW has finally begun to see the light here I think.

So you think labor unions should be able to intimidate working men and women? I thought you were for the working man and woman.

Turns out, you're not. You just use them as a prop in a (very bad) argument.

 

Yes, but the union has all the leverage. They can strike, and management can't stop it or hire replacement workers. So the workers can idle the company, kill profits, and hold out until the management agrees.

The laws need to be changed to allow replacement workers. That will enable management to have some options. It will be costly, in terms of retraining workers, problems with new workers, etc. But I think it is a step in the right direction.

The recent American Axle strike was a good example of union abuse. They tried to strike. They were out almost 3 months, and in the end, got about what the company had offered to begin with. The company simply didn't have any more money. But in the meantime, the workers lost huge in wages, and they hurt the company itself.

So there is certainly a tradeoff, and management can be very inefficient and selfish. But so can unions.

 

Compare the auto manufacturing industry (now booming) in Alabama, to the train wreck of an auto industry in Michigan.

Find out the differing factor between the two, then get back to me about the union thing.

 

I remember when Reagan did that to the Air Traffic Controllers. I have to admit, the strike didn't last long...

If the union is being and fair and ridiculous in their demands then management has the obligation to take them before an arbitrator. However, I can count on one hand the number of times I recall that happening. One of the reasons management caves so quickly is because the union can see the books and knows what all they get. The ones with the short end of the stick is middle management.

 

No kidding. Kinda two-faced. If the libbies would let us, we could actually manufacture something right here, besides government.

 

Most Americans alive today have never seen a day of hard times. Why not? because we have been living in freak times since WW2. The world historical norm is half the people living hand to mouth in poverty. We are regressing to the norm.

 

>I remember when Reagan did that to the Air Traffic Controllers. I have to admit, the strike didn't last long...

You personally remember? I personally remember the strike didn't last long because the picket lines were not honored and Reagan felt it was safe to fire the air traffic controllers. Do you feel safer since he did? because he did?

 

Not at the time. Remember he used the military controllers in the civilian towers until he got new folks trained. I wasn't so confident with that move but I guess it worked out.

 

It was just an idea I had. I'm not as knowledgeable about economics as I'd like to be.

I don't see how raising the prices of imports would affect the American made stuff. Unless they just got greedy.

 

I remember that as well, and it worked. Air safety is a bit of a different issue however, IMO.

I don't see the role of an arbitrator. Labor is a market issue. If I don't want to pay what you want to charge for a widget, then I can get it elsewhere. You can't tie me up in the store and make me pay. And an arbitrator shouldn't be able to tell me I have to buy your widget no matter what.

By going elsewhere, I realize that I have to deal with inconvenience of going somewhere else, perhaps getting an inferior widget (or a superior one), and the like, but that's life.

At the same time, labor has to recognize that so long as I can go elsewhere, they need to step up their quality of work and what they are offering.

I don't think so. I think the reason is because of the effects of a long term strike on the business, and the fact that management can simply roll it into the cost of the product. If a company goes out on strike for a couple of days, multiply that by the number of work hours, the number of other factories being idled, etc. and it adds up in a hurry.

I don't have a problem with labor going out on strike necessarily. But the playing field needs to be leveled.

 

Your memory is faulty, and yes...we all were fine.

It stinks when a bully (the union) has its bluff called, eh?

 

You have such simplistic thinking. Unions always bad; companies always right. Government always evil.

In the real world, things are not nearly as black and white as this.

 

1. Never have I said, "companies are always right." It is you, sir, that are simplistic, if you think the only solution for a coproration that is messing up is union intervention.

2. Thanks for putting words in my mouth. That approach enhances my arguments, because your credibility plummets when you claim I have said things that haven't been said.

3. Condescention is not a spiritual gift.


Now...here's a repeat of a question completely ignored earlier:

 

Please don't confuse these O'bamaites with the facts. They were sufficiently confused to vote for him. Any more might push them over the edge.

 

Cut taxes. Then cut the salaries and retirement benefits of the pompous gasbags in DC so they have to live on less than $40,000 a year like the rest of us. Cut the bloated IRS, DHS, etc. in half and make our government run on a budget.

Plus you just ASSUME that tax cuts will be "spent to purchase goods from foreign countries like China."

 

The problem is management doesn't "OWN" the company either. They are employees just like the hourly workers. It is not their widget, they were simply tasked with overseeing the making and distribution of the widget. The ones who really get the shaft are the investors. They get change once the union and management get done.

I agree with you here. I have always wondered why management haven't demanded certain quality and production standards in the negotiations. It would be saying we can pay top dollar but we need a product worth the money or it's a loose, loose situation.