Wednesday, January 25, 2012

Unions in the Global Work Force

It looks like a new topic has found us per my last post and I am very busy, so here we go.
"As for my Union comment. As long as compensation is based on "Years of Service" instead of "Results and Effectiveness", companies in competitive fields are doomed to failure. This is why Unions are only proliferating in the Public sector."   G2A

"Republicans have a problem. There economic policies fail when they are put into practice. Eight years of the Bush Administration cost this nation millions of jobs and plunged us into the worst economic crisis since the Great Depression. How, exactly, do you spin that? The Republican answer is to find scapegoats. So they blame the housing crisis. Not of course the free market environment that led to the easy money policies that they so fervently supported, and which inflated the budget. Instead, they blame Fannie Mae and Freddie Mac, whose major blunder was to join the party late. Republicans also blame, basically us. We shouldn't have bought homes, we shouldn't have taken out mortgages. We should have been content with our lot in life. And finally, Republicans blame unions. The fact that the union movement is in irreversible decline, a decline which, by the way curiously coincides with the decline of the middle class begun with Ronald Reagan's assault on PATCO, doesn't seem to faze them. It's better even for the Republican attack on unions, that unions are in such a greatly weakened position. It means that they find it very difficult to defend themselves."  --Hiram

31 comments:

Anonymous said...

Define who is meant by "Republicans" before condemning 50% of the population for wrecking the economy, total blindness to having done so, and blaming everyone but themselves. Frankly I don't know anybody like that. Unless maybe you mean Democrats.

John said...

Anon,
I agree that Hiram was applying a very broad brush. I find this typical from people as they get further Left or Right.

One request just to help our discussions. Would you please sign your comment with some name like Hiram does. It helps the other commenters and myself understand your perspective better. Thanks in advance.

Anonymous said...

Heh. No, it doesn't. :-) When I sign my name, the bells and lights saying "radical right-wing wacko" go off over at G2A Central, and my comment is dismissed as such.

And it isn't so much the overly-broad brush that I object to, it's the total disconnect from any reality I know.

John said...

G2A encourages and appreciates comments from Whacko's of all Race, Religion, Sex, Sexual Orientation, Political Affiliation, Financial Status, Union Status, Country of Origin, etc. As long as they stay polite and respectful of the other Whacko's version of the truth /reality. I think I have only moderated 1 comment in ~3 yrs and ~520 posts. (knock on wood)

Maybe you have found a good name to use "RRWW".

Anonymous said...

The people who were in charge from 2001, until 2008.

But I don't necessarily have to paint with a broad brush. It was President Bush, who responded at long last, to the financial crisis in the fall of 2008. And of course, Democrats bear responsibility for the easy money policies that inflated the bubble too. No politician campaigns on making home ownership. Only Mitt Romney seems to be campaigning on promise to foreclose more. No politician says vote for me, and I will make sure the value of your principal asset is trashed. These are in fact reasons why some of the crucial decisions relative to these matters are taken out of the hands of politicians and made by the federal reserve.

--Hiram

John said...

Regarding Unions, I am not against them in concept. It just seems that they continually try to raise the total compensation of their employees significantly above what the market rate is, and they seem to want to reward people for years served rather than results/output. And to me this seems self defeating in our highly competitive world.

I mean if everyone in the world was in a "Union" and the compensation for everyone increased, then maybe it would work. Yet it would be somewhat pointless because all of our costs would increase accordingly. Therefore eating up the gain.

However since Unions are limited in number, there are only a certain number of people that gain. Which therefore attempts to transfer higher costs to the non-Union personnel in society. (including raising cost for the poor)

And this may be somewhat sustainable for Public employees since they have little or no competition. It just means we all pay higher taxes.

However Private businesses usually can not pass the higher costs forward to their customers, since other service or product providers will not have to pay these higher than market costs. And I don't know of too many Americans that will pay more for a product with a "Union made" sticker on it.

For consideration, if the given the choice of paying $10,000 for a new "Union made" roof for your house or paying $7,000 for a roof of equal quality made by non-Union labor, would you really pay the extra $3,000?

This would be the same for the steel mill industry, since their output is pretty much a commodity. Therefore their customers go to the least expensive source, and if they don't then their customers will not buy their product.

John said...

Also, if you have never worked in a traditional Union shop you would never belief some of the wastes that are generated due to titles, roles and responsibilities that are specified by the "contracts".

Some I have observed included:
- Paying a "warehouse employee" Saturday wages because a "mechanic" grabbed a part out of the warehouse while working on a Saturday. Rules said the "mechanic" was supposed to call the on call "warehouse employee", wait for them to arrive and get the necessary part.
- Holding up a whole Railway Maintenance crew and multi-million dollar machine for an hour because only a certain "Title" of employee could perform a simple task.

And some folks wonder how a Union could bankrupt a company that exists in a highly competitive commodity business? How in the world does one achieve efficiency gains with these types of anchors in place?

And I forgot "job security"... If the market cycle reduces sales, the company can often only layoff the young inexpensive employees. Where as the older and often over compensated relative to productivity employees retain their positions.

Fascinating...

John said...

Hiram,
I am not sure too many had fore warning of the Fall 2008 economic mess. My company's sales were booming and all of a sudden the spiggot was shut off over a 3 month period.

Not saying Bush did not make his share of mistakes, but I don't think many saw the boom times ending so quickly or harshly.

His key mistake in my mind was letting the National Debt go nuts. Cutting taxes and entering into 2 wars just does not make much sense in hindsight.

Anonymous said...

It just seems that they continually try to raise the total compensation of their employees significantly above what the market rate is, and they seem to want to reward people for years served rather than results/output.

And presumably, employers try to pay employees less. That's what bargaining is all about. Why should labor be treated differently than any other commodity or service?

The fact is, old companies are in trouble today, not necessarily because union wages or union work rules, but very often because they struggle with legacy costs, such as pensions, and costs their foreign competitors don't have to bear, such as health insurance. Mitt Romney got rich by finding ways to shift these costs to us, making the companies he owned and advised more "efficient", and increasing the burden on the rest of us.

The problems in our economy have been long in coming. We have been an aging country for a long time, and it's clear enough we haven't come to grips with that. The Republican solution, as always, is to put off the decisions we need to make about that. They did it all during the Bush administration, the Republican health care plan which puts everything off to 2020 does that now. We have had enough historical evidence that Republican policies don't work, that the result of 8 years of them was a loss of millions of jobs and a collapsing economy. Since then, we have had a recovering economy, not at a pace I would like to see, and one not invulnerable to sabotage as we saw in last summer's partisan and artificially induced debt crisis, but one that has performed far better than the Republican alternative.

--Hiram



--Hiram

Anonymous said...

Here is the model of capitalism, Republicans seem to want to offer to American workers.

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&ref=general&src=me&pagewanted=all/

--Hiram

Anonymous said...

I agree that unions are a good thing in principle, but they left that principle behind once they started paying their union leaders. Those leaders get paid even when the workers themselves are on strike and not being paid, and continue to be paid only while the workers perceive that said leaders are fighting with management and calling strikes.

My experience has caused me to be very anti-union, and I love to collect stories where the unions have gotten their comeuppance in some fashion or another, preferably with minimal harm to the union members they claim to represent and, supposedly, care about. Hiram points out the general case in which the opposite is true, blaming "aging industries" for the problem of uncompetitiveness of US industry. Let's take General Motors as a prime example. For years and years, GM gave the UAW pretty much anything it wanted by way of salary and benefits and kept raising the price of cars because it had not enough competition. When competition arrived, General Motors had not made the investments in design and quality that it would have had it not been for those union demands. Indeed, union pensions and health benefits were what finally bankrupted the company.

Unions, being monopolies themselves, do not understand business competition and therefore are ultimately destructive of the businesses they latch onto, like leeches. They bleed the business dry and then blame the business. Just like Democrats.

J. Ewing

Anonymous said...

Here is an interesting story. Note that it seems to be a company that can't find workers because it's unwilling to pay a market wage.

http://minnesota.publicradio.org/display/web/2012/01/26/skilled-worker-shortage/

John said...

For your convenience.
NY Times Squeezed Middle Class
MPR Worker Shortage

Hiram,
I think I see a key difference in our perception of reality based on this question. "Why should labor be treated differently than any other commodity or service?"

I don't see employees as a vanilla homgeneous commodity or service. I see each individual as unique and special, therefore deserving compensation unique to their capabilities and contribution.

And even if they were equivalent to a piece of steel as you imply. The company is free to change suppliers, change terms, etc as the market changes. Where as the Union will try to blackmail with a strike before agreeing to a less than favorable change in terms, even if the industry is falling apart.

I haven't read the links yet, but I do believe that if you can not get good employees to work for you, you are either an annoying person or your compensation is too low. That is the power of the free market.

Anonymous said...

I agree that unions are a good thing in principle, but they left that principle behind once they started paying their union leaders.

I believe people should be paid for work they perform. However, I do think the principle here has other applications.

"I don't see employees as a vanilla homgeneous commodity or service."

Unfortunately, management of companies tends to, especially where layoffs are concerned. As long as workers remain unorganized, there is a power disparity between workers and management. This isn't necessarily a bad thing, but it requires good faith on the part of management, and this power can be abused. According to the Wall Street Journal, American wages have been flat since 1997. This in an era, were Mitt Romney makes north of 40 million over two years in unearned income. I just don't think the fact that these disparities happen in an era where the labor movement is in sharp decline is a coincidence.

--Hiram

John said...

I think we are back to correlation vs causation.

You would say that weak Unions cause stagnant wages. I would say that intense global competion and American buying behavior causes stagnant US wages and weak Unions.

The only way this turns around is if US citizens are willing to pay more for "American" and/or "Union" made products and services.

I mean if the Unions drive inefficiency and higher costs without generating an offsetting higher revenue, the companies go bankrupt. Then there are fewer Union jobs. What a nasty little cycle, no wonder Union jobs are decreasing.

By the way, though the market system is far from perfect in ensuring hard working capable personnel are kept during a down turn. Most of the Mgrs I know will fight pretty hard to keep their good employees employeed. They value the employee's strengths and really don't want to start over again once things turn around.

Whereas the Unions seem to see personnel as job titles, degrees and years served.

Anonymous said...

Yes, I don't think correlation can be ignored just because we don't have anything approaching a full understanding of causation. But it is clear enough, for example, that the deficit was caused by lowering taxes, at a time of greater governmental distress, caused by among other things the aging of the country. That's been foreseen for decades. Even Ronald Reagan foresaw it, and set in motion the Social Security reforms of 1983.

The articles in the Times on Apple, last Sunday and yesterday have been instructive. And that Mitch Daniels would cite Apple as a success story in creating jobs is ironic since the jobs it creates are in Socialist China. And if you look at why they are successful, apart from the whole slave labor thing, you find that it's because they benefit from industrial planning easily obtainable in a Socialist society, but not so much in an economy driven by random, short term market forces.

If the higher costs and inefficiency unions insist upon require that workers receive more than a biscuit and an extra ration of tea before working a double shift, I am all for such higher costs and inefficiencies.

--Hiram

Anonymous said...

hiram, you are just plain wrong about why China is eating our lunch. They are, at this point in time, a MORE capitalist and far less unionized economy than we are. The government controls only certain segments of the economy, like energy and housing, while the rest are left pretty much to themselves. Even those government "businesses" that produce a product, like steel, see their competition as outside the country, rather than considering themselves a monopoly. It has a lot to do with attitude, and in the US the unions see themselves in competition with management, rather than united with them to face external competition.

The Japanese have a different model, too. Before they went flying past us in manufacturing efficiency, they would license our products and technology. Each visiting team would always have at least 3 people, one from government, one from management and one from labor. They would then sit down and AGREE what it would take to make the business successful in Japan-- labor, regulation, investment.

I don't blame unions for destroying the US economy, but I'm darn sure it can't be blamed on the Republicans or even on tax cuts. If you want to blame "government" feel free. That's run by Democrats who never seem to learn.

J. Ewing

John said...

Hiram,
I agree that the tea and biscuit seemed a bit lacking. However could you imagine the delay Apple would have encountered in the USA...

The Union and Executives would still be trying to develop the glass... And deciding which employee has the seniority or title adequate to cut it. And that phone would cost $1000.

So are you ready to sell of your Apple devices in protest? Unfortunately my Motorala Droid was also assembled in China.

Remember major appliances are slipping overseas as we speak... Buy American.

Anonymous said...

They are, at this point in time, a MORE capitalist and far less unionized economy than we are.

China is a socialist country, one where there is no real dividing line between capital and the government. It's not just that they don't have regulations that stand in the way of development, they don't have laws either, certainly none that meaningfully protects the interests of anyone other than the government. When they want an industrial complex built, they simply order it built, and it gets done, and not with a whole lot of reference to the generally accepted rules of accounting.

The president got in trouble a while back when he used the word "lazy" somewhere in near Americans in a sentence. I wonder if we haven't become lazy. With all this high talk of American exceptionalism, and this belief abroad on the land in the miraculous properties of free market capitalism and Adam Smith's benign invisible, I wonder if we are actually committing the fatal mistake of actually believing our own malarkey. Capitalism isn't God's economic system. There is no inherent reason why it must succeed. We have to work at it. Just as China shows that Socialism doesn't necessarily fail. If we want to keep our rights, if we want to keep our way of living, if we don't want to live in a socialist society where you get a biscuit and a extra portion of tea for working a double shift, we have to start doing something. Dead economists won't save us.

==Hiram

John said...

I agree. Though I don't think the solution comes from more government, welfare and union contracts.

Somehow folks have to understand that learning and working hard are rewards in their own rite. Now how to help this is the challenge?

Here is a summary of one of my favorite books that everyone should read. Singapore Dilectic: Life's Greatest Lessons Maybe we could make it a mandatory text in school...

Our if they prefer movies, this a great book that was turned into a movie. Wiki Ultimate Gift

Anonymous said...

Though I don't think the solution comes from more government, welfare and union contracts.

More government totalitarianism and socialism in fact, seem to be the solution of the moment for China and for other countries in the far east. And we must understand that we are competing with entities that receive huge subsidies for their industries from their governments. And the irony is that business, if not the Republican Party, understand this very well. The reason Obamacare passed wasn't because it had Republican support. It passed because it had the support of Republican constituencies, like the drug care and the health insurance industries. Recently, the Twin West Chamber of Commerce devoted one of their monthly legislative forums to health care, and the coming health care exchanges. They are very interested in reducing the burden they bear for the health costs of their employees, and were largely supportive of Obamacare. Not a single Republican legislator attended this Chamber of Commerce event.

Mitt Romney, and Herman Cain, have an understanding of this, although that's not something they discuss on a Republican campaign trail. Both of them were largely in the business of finding ways of shifting health care costs away from businesses they managed and controlled. Cain made a small fortune doing this, and Romney made a large one. But what neither one shows any sign of grasping is that health care burden just didn't disappear. No death panels have been created whose business it is to deny Domino's or Godfather's pizza guys the health care they need and that their employers haven't provided. That burden is placed on us. On the health care we own in our retirement funds, on the charitable institutions we support, and on the taxes we pay.

--Hiram

Anonymous said...

"No death panels have been created whose business it is to deny Domino's or Godfather's pizza guys the health care they need and that their employers haven't provided. That burden is placed on us."

That is the fatal flaw in socialism, right there. So long as we believe the burden is on "us" to provide YOUR health care, or for anybody but ourselves BY FORCE OF LAW (i.e. government), there is no end to the cost and therefore "we" run out of "our" money to pass out "free" health care (or whatever) to everybody. It fails every time it's tried, it just takes longer in some cases than in others.

J. Ewing

Anonymous said...

So long as we believe the burden is on "us" to provide YOUR health care, or for anybody but ourselves BY FORCE OF LAW (i.e. government), there is no end to the cost and therefore "we" run out of "our" money to pass out "free" health care (or whatever) to everybody. It fails every time it's tried, it just takes longer in some cases than in others.

But we do, that's a decision we have already made. When someone comes to an emergency room for care, the law says that care cannot be denied. For better or worse, for capitalism or socialism, we are not a people who leaves people by the side of the road to die. We could change that. We could instituted those dreaded death panels, place their representatives at hospital doors, and give them the power to decide who should live and die. But until we make that decision, we have to live with the consequences, and the moral choices we have already made.

--Hiram

Anonymous said...

We are celebrating this year, the 200th anniversary of the birth of Charles Dickens. In his later novels, I am thinking here of Bleak House and Little Dorrit, he presents a world dominated by a faceless and indifferent bureaucracy, one which never resolves anything. It's a world where bad things are allowed to happen because no one has the responsibility to prevent them or to do things that are affirmatively good. I often think of Republicans that way. They don't mind when bad things happen just as long as no one individual can be blamed for them. They object, for example, to death panels where specific individuals make decisions, but seem to have no problem at all when those decisions are made by "the market", or capitalism in general. This isn't an attitude I have ever understood. Bad things are bad things, no matter who is responsible for them, if no one is responsible for them, or as always the case, it's hard to identify those who are responsible.

--Hiram

John said...

Hiram,
Your last 2 comments make sense to me...

Maybe I'd better lay down and take a nap... hahaha

Now seriously. Great points !!!

Anonymous said...

You are correct when you say that at some point The Law mandated that healthcare providers, in the form of emergency rooms, were required to give away their services for free to anybody that asked. But that is pure socialism and slavery by another name, and it is wrong. Of course we do not want people dying by the side of the road just because they lack the means to pay for simple catastrophic insurance or because they could afford expensive medical insurance but chose to forgo it. The problem is that government consistently drives up the cost of health insurance through mandates of various kinds (and because somebody has to pay for all that free medical care being given away). If government would butt out of the health insurance business, a lot more people could afford it. Then all you have to do is to modify the current emergency care law to minimize the immense amount of freeloading now going on. Simply allow the hospital to bill people who use the service but do not have insurance. It's called personal responsibility and we need to give it a try.

The problem, as it has always been, is not that someone will choose "who lives and who dies" by virtue of the medical care they can or cannot receive but rather WHO DECIDES. It should not be some faceless bureaucrat in Washington DC. It should be somebody standing at the emergency room door – on both sides – both taking responsibility for their personal actions. That is what Republicans want. How is that wrong?

John said...

If you use the "Search This Blog" function off to the right, and enter Healthcare. You will see that this is a favorite topic of mine, and we have had many discussions on it. Since it involves money, ethics, religion, personal choice, etc.

I don't think many people here see that as wrong, though I see it as impractical.

Holding the patient who neglected to get health insurance and is broke responsible is easy if society is willing to do it. Let them die. Unfortunately then the ambulance chasers will show up and try to make the hospital responsible for turning them away unless the law allows it.

Holding the ER Doctor responsible is pointless, they don't control the budget and the hospital can't fund all of the Doctor's choices. Talking about responsibility without authority... Or maybe we should have the triage nurse make the choice.

Now if you are a supporter of getting Gov't out of healthcare, how do you feel about physician assisted suicide? And pro-choice/pro-life? Just curious...

Anonymous said...

"The problem is that government consistently drives up the cost of health insurance through mandates of various kinds (and because somebody has to pay for all that free medical care being given away)."

Why health care costs are out of control in America is a complex and little understood problem. Because of the polarized and political nature of the issue, there just isn't an independent understanding of this issue. For one thing, it's not obvious to me that whatever mandates we have in the United States are any more onerous than those in countries where health care costs are much lower. I do believe the inefficient and unaccountable way we redistribute the costs of "free" health care is a factor, but hey that's just my unsupported opinion. Other countries don't have "free" health care, it's paid for in ways that are understood and accountable, which I believes results in a controlling of costs.

--Hiram

Anonymous said...

"Holding the patient who neglected to get health insurance and is broke responsible is easy if society is willing to do it. Let them die."

Or, you could simply treat them and send them a bill. Make them FINANCIALLY responsible and, if they can't pay, you give them easy payments or write off the debt from the hospital's taxes, just like everybody else does with bad debt. This cuts off the freeloaders of both kinds, because they will find (if government would allow it) either that basic non-emergency care is cheaper WITH the insurance, or that serious emergency care is VERY expensive without it.

As for health care costs, we know that getting the government out of health care, in four simple ways, would cut our costs in HALF while improving quality of care.

J. Ewing

John said...

Since most of these hospitals are not big profit centers, especially in the neighborhoods where the poor live. I assume this bad debt would put them in the red pretty quick. Would you advise tax credits to help them stay afloat? (ie write offs don't work without profits)

And how would this be different than today? Other than a bunch of broke folks would get a lot of collection calls. I guess the upside is it would create jobs in the collections and bankruptcy industries.

I don't doubt that it would keep people from getting unnecessary treatment, however I don't see that as a big cost driver. Most folks I know do what the Doctor says, and don't sit around wondering when they can spend more time in the Doctor's office.

Imagine: "Doctor, Please can I have another colonscopy. Pretty please."

Maybe if we had the Doctor pay for any tests that don't yield useful information. That would cut back on the running of tests. Though the consequences may not be desireable.

Anonymous said...

"And how would this be different than today? Other than a bunch of broke folks would get a lot of collection calls. "

The point is that these folks aren't broke, they're freeloading. They can either afford insurance but choose the big flatscreen instead, or they can't afford insurance but could afford something. Going to the emergency room costs the hospital a lot more than a routine doctor visit, but it costs the truly poor a lot less. The incentives are screwed up, here, that's all. By charging them for the full cost of the emergency room, regardless of ability to pay, you drive them into the routine health care system, where maybe they CAN pay. And it is a HUGE problem. Hospitals in California are closing left and right because of unreimbursed care.

J. Ewing