Catering to unions is hurting U.S. economy

June 18, 2011


— “Shovel-ready was not as shovel-ready as we expected,” observed President Obama this week, enjoying a nice chuckle about the unhappy fate of his near-$1 trillion stimulus. To be sure, Obama has also been promoting a less amusing remedy for anemic growth and high unemployment: exports. In this year’s State of the Union address, he proclaimed a national goal of doubling exports by 2014.

One obvious way to increase exports is through free-trade agreements. But unions don’t like them. No surprise then that for two years Obama has been sitting on three free-trade agreements — with Colombia, Panama and South Korea — already negotiated by his predecessor.

Under the pressure of dire economic conditions and of the consequences of stiffing three valued allies, Obama appeared ready to relent — only to put up a last-minute roadblock. He’s demanding an expansion of Trade Adjustment Assistance — taxpayer money (beyond unemployment compensation) given to workers displaced by foreign competition, something denied to Americans rendered unemployed by domestic competition. It’s an idea of dubious fairness but nicely designed to hold up ratification, while placing blame on Republican heartlessness rather than on political sabotage by Democrats beholden to unions for the millions they pour into Democratic coffers. (A deal reportedly may be near. But the years of delay have been costly.)

Nothing new here. In 2009, Obama pushed through a federally run, questionably legal, bankruptcy for the auto companies that robbed first-in-line creditors in order to bail out the United Auto Workers. Elsewhere, Delta Air Lines workers have voted four times to reject unionization. A federal agency, naturally, is investigating and, notes economist Irwin Stelzer, can order still another election in the hope that it yields the answer Obama’s campaign team wants.

But Democratic fealty to unions does not stop there. Boeing has just completed a production facility in South Carolina for its new 787 Dreamliner. The National Labor Relations Board, stacked with Democrats — including one former union lawyer considered so partisan that he required a recess appointment after the Senate refused to confirm him — is trying to get the plant declared illegal. Why? Because by choosing right-to-work South Carolina, Boeing is accused of retaliating against its unionized Washington state workers for previous strikes.

In fact, Boeing has increased unionized employment by more than 2,000 at its Puget Sound plant. Moreover, the idea that a company in a unionized state can thus be prohibited from expanding into right-to-work states by a partisan regulatory body is quite insane. It violates the fundamental principle in a free-market economy that companies can move and build in response to market conditions, rather than administrative fiat. It jeopardizes the economic recovery, not only targeting America’s single largest exporter in its attempt to compete with Airbus for a huge global market, but also threatening any other company that might think of expanding in any way displeasing to unions and their NLRB patrons.

Obama has been utterly silent in the Boeing affair. Which is understood by all as tacit approval. He’s facing re-election next year. And Democrats need unions.

Of course, unions need Democrats — who deliver quite faithfully. In last year’s nationwide “shellacking” of Democrats, for example, Wisconsin gave Republicans control of both legislative chambers and elected a Republican governor who made clear his intention to rein in public-sector union power.

When the Republicans tried to do as promised, Democrats, lacking the votes, tried to block it by every extra-parliamentary maneuver short of arson. State Senate Democrats fled Wisconsin to prevent a quorum. Demonstrators filled the statehouse for days and nights on end. And when the bill finally passed nonetheless, Dane County’s Democratic district attorney went to court to have it thrown out on procedural grounds.

They found a pliant judge to invalidate the law. A famous victory, but short-lived. On Tuesday, the Wisconsin Supreme Court overturned the ruling, upbraiding the judge for having “usurped the legislative power which the Wisconsin Constitution grants exclusively to the Legislature.” The law is reinstated.

Instructive cases all, demonstrating how those who lose popular support — Democrats at the polls, unions in their declining membership — can subvert and circumvent the popular will by judicial usurpation (Wisconsin) or administrative fiat (Boeing).

The Wisconsin maneuver ultimately failed, as likely will the assault on Boeing. In the interim, however, there is collateral damage — to U.S. exports, to the larger economy, to bankruptcy law, to free trade, to a constitutional system wherein the legislatures make the laws, rather than willful judges and partisan regulators.

But what are those when there are unions to appease and elections to win?

Charles Krauthammer is a columnist for Washington Post Writers Group.


Orwell 7 years ago

God help the rich who profit from others' labor if they should actually have to pay for that labor!

What do you call a banana republic located in a climate too cold to grow bananas? Looks like we'll know pretty soon.

jhawkinsf 7 years ago

This statement is in regards to publicly owned companies, companies that sell shares on the stock market.
They have a fiduciary responsibility to maximize profits. People who invest their money in that company expect them to maximize profits and if the company does not do that, they open themselves up to shareholder lawsuits. And if the company is not upholding it's fiduciary responsibility of maximizing profits, shareholders will win those lawsuits. So, companies buy raw goods in foreign markets if they are cheaper. They relocate factories into foreign countries if wages are less. And they move their corporate offices to foreign countries to lessen their tax burden. It's what companies do because it's what companies are supposed to do. It's what we expect them to do. It's what we demand that they do. Now if unions demand wages and benefits that are well above what companies can get elsewhere and if unions expect working conditions that will cost the company more than if they relocated elsewhere, then you're putting the company in a no win situation. It's like a pendulum, if it goes too far one way, then it will go too far the other.

jafs 7 years ago

That's a good and succinct description of the problem.

Without any incentives that operate to counter that one, we see how destructive it is, as far as American jobs/the American economy.

just_another_bozo_on_this_bus 7 years ago

"It's what companies do because it's what companies are supposed to do. It's what we expect them to do. It's what we demand that they do."

Is that the royal "We?"

Ron Holzwarth 7 years ago

I think jhawkinsf is referring to the stockholders.

cato_the_elder 7 years ago

If you favor free enterprise, this is just another reminder that elections have consequences. While many voters have become increasingly aware of the importance of the fact that whoever is elected president will be able to nominate Supreme Court justices, they still tend to be in the dark with regard to the hundreds of other important positions in government appointed by presidents. Highest on the list is the NLRB, which as the result of Obama's election is now dominated by extreme union zealots. You often get what you vote for, and Obama has done everything in his power to pay back the union bosses for their support of liberal Democrats.

beatrice 7 years ago

My father fought in WWII -- part of the whole Greatest Generation. He and my mother raised six children, kept a roof over our heads and food in our bellies. He worked hard to provide for his family, and was a union member, a proud Teamster. His Teamster's pension helps him pay his bills today.

I can assure you, the men and women of the Greatest Generation were not whiny, lazy, wimps. They were hard workers who made America a great country, and many of them were and are union members.

Name-calling of entire group of people -- none of which I suspect you actually know -- isn't exactly the type of thing an intelligent person does. Unions built our strong middle class. Anti-unionism is tearing it apart.

Randall Barnes 7 years ago

i am not lazy whiny nor self-entitled. i just want a fair wage and decent benefits. and want them protected not cut in half so that some corporate pig can get a bigger bonus or a share holder make a penny more. i work 40 + hours a week i sweat my back side off and this is how i get rewarded.before you think any other way do this for me. every week when you get your paycheck donate half of it to whoever and see if you can survive on just half of your salary. i bet you will be the first inline to the food pantry and first to apply for help.

just_another_bozo_on_this_bus 7 years ago

We should insist on not calling any of these agreements "free-trade" agreements, because they really have very little to do with trade. They are "free capital" agreements, because all they really do is to allow capitalists to shift their capital wherever they think it will give them the greatest return, everyone and everything else be damned.

But I can understand why capitalist true-believers like Krauthummer don't like unions. Because in his world, only capitalists are allowed to look after their own welfare. Workers are merely pawns on the capitalist chessboard, so they have no right to expect anything but to be sacrificed for the benefit of capitalist kings.

just_another_bozo_on_this_bus 7 years ago

Nice anecdote, but as these things almost always go, I suspect there is more to the story, and you likely don't even know what it is.

The reason unions exist is because employers have shown a centuries-long willingness to abuse employees in any and every way conceivable. Hierarchical structures created by capitalism have created the need for workers to develop their own hierarchical structures in response. And hierarchical structures of any kind are prone to abuse.

So as long as there is extreme concentration of wealth among a relatively small number of wealthy people and the corporations they own, don't expect unions to be any more reasonable or sensible than those who hire them.

jhawkinsf 7 years ago

What you're describing is human nature. If you're unreasonable, then I'll be unreasonable. I really can't argue with that. It is human nature. But from the point of view of a CEO of a major corporation, how does he view human nature. Let's see, I can move our operations off-shore to maximize profits and minimize taxes. The company does great and I get a huge bonus. Or I can keep the businesses here, deal with unions which will cost the company more. Profits will be less, opening the company to shareholder lawsuits. No bonus for me, Mr.CEO, in fact, no job at all. What does my human nature tell me to do? The problem is bozo that you're seeing the unreasonable behavior of union members as understandable in light of historical inequities. But the same unreasonable behavior of the CEO is not understandable to you. At some point we need to say unreasonable behavior by both sides is understandable or we need to say the behavior of both is wrong. But one can't be right and the other wrong.

just_another_bozo_on_this_bus 7 years ago

"At some point we need to say unreasonable behavior by both sides is understandable or we need to say the behavior of both is wrong."

I've already been saying that. But you choose to defend the captains of industry, and not the unions.

jhawkinsf 7 years ago

I'm 51% pro-union. They have a place in the market. But while you're looking at centuries of worker exploitation, the last 100 years of American history has seen the trend go the other way. Workers have made huge inroads, which I agree with. But I think the pendulum is beginning to swing the other way by encouraging companies to leave the country. We need jobs here, good manufacturing jobs that pay good wages. If it's GM building cars in Michigan using union workers of Toyota building cars in Tennessee using non union workers, it doesn't matter to me. We need the jobs here. But if textile mills are going to pay some Chinese teen a dollar a day, you can't expect companies not to go there. I'm looking at my K.U. baseball cap made in Bangladesh. Am I willing to pay 5 times as much for it to be produced in the U.S. I'd love to say yes but the reality is that most people won't and I probably won't.

Corey Williams 7 years ago

How much did you pay for your hat? How much of that went to the KU logo? Your cap was probably made for a dollar, maybe 2. The rest of that is markup for KU and profit.

There are baseball caps made in the USA for under $15 each, under $10 each if ordered in bulk. So maybe if KU and the printing company cut their profit margins down to about 50% of the cost, it wouldn't be that much more. Hell, even with a doubling of the cost (at $10 per hat), that still places it at $20 with the added benefit that the people making it would be able to buy one for themselves.

Even Henry Ford, bless his little antisemitic heart, understood that the workers need to be paid enough to be able to buy what they were making.

jhawkinsf 7 years ago

You may be right about American good being available. But if they are, they're not too common. I decided to give a quick look. The hat, as I mentioned was made in Bangladesh. My jeans in Mexico and my Grateful Dead shirt in Haiti. Socks and underwear, well, never mind. If American made goods are available, I'm going to have to look harder.

Liberty275 7 years ago

Seriously, how dumb do you have to be to pay a third party for the privilege of working? I don't buy union if possible because the people in them aren't smart enough to not pay bribe money for a job and therefore aren't bright enough to do a good job at work. If any of you union thugs are offended, that's your problem.

Katara 7 years ago

Obvious troll is obvious but I have to bite.

Do you happen to be required to have a license for your particular line of work? You understand that is also paying a third party for the privilege of working, right?

beatrice 7 years ago

In the 20th century, America became the major economic country with the strongest middle class the world has ever known. This was made possible thanks to unions. Many of the problems we are facing now stem from corporate-backed legislation pushing to break unions and concentrate wealthy away from a strong middle class and into the hands of the top 1 percent.

Some people will only be happy when we have nothing but the rich and the poor, with nothing in between.

sciencegeek 7 years ago

What unions?

I know one person who is in a union. I never have been. There are "bargaining units", but they don't affect anything. The unions overreached, and now workers just serve at the pleasure of employers.

Whole article seems overstated.

Ron Holzwarth 7 years ago

I've been an employee at two places where we had a vote on whether we wanted to be represented by a union or not. Once at General Dynamics in southern California, and once at King Radio here in Lawrence.

In both cases, we voted "no", and so the union lost.

MyName 7 years ago

And catering to corporations is helping? Did Kruth sleep through the last recession?

Ron Holzwarth 7 years ago

Zippy, it sounds like you might think this recession is going to be over someday. I think it might never end, and this economic situation is simply the new reality.

pace 7 years ago

It is a pity that some will believe that pay and benefits is outrageous while billionaires and corporations not paying taxes creates wealth. hey it does, just not for the working family.

Flap Doodle 7 years ago

In other news: "CHICAGO (Reuters) – Workers at a Target Corp discount store in New York voted to reject union representation in what would have been the first unionized Target store in the country, while union officials vowed to press for another election. Employees at the Valley Stream, New York, store voted against union affiliation, 137-85, Target said in a statement released Saturday. The vote was taken on Friday...." http://news.yahoo.com/s/nm/20110618/bs_nm/us_target_union The current regime is pushing a process called card check that would do away with secret ballot elections for union certification.

Katara 7 years ago

Workers rejected union representation because they were told the store would close or they would lose their jobs if they voted for union representation. Hardly the union trying to influence their decision there, snap_pop_no_crackle.

FTA, "Waddy said some store employees were told the store could close or that they could be replaced if they voted for unionization. The store also rented vans, manned by security guards, to take the employees to work to vote, she said. "There was a serious level of tension in the store and, obviously, the company ran a really aggressive campaign," Waddy said. "A lot of people were taken aback by the fact that they thought the store was going to close."

Katara 7 years ago

That may be true.

However, it is not the stores' right to influence the vote to unionize by threatening the workers.

Additionally, a union does not have the right to influence the vote to unionize by threatening the workers.

beatrice 7 years ago

Here is the old joke, in case none had heard it before:

A CEO, a Tea Partier and a union worker are sitting at a table. Someone brings in a plate with a dozen cookies and the CEO instantly snatches up eleven of them, then looks at the Tea Partier and says, "You aren't going to let that union worker eat your cookie, are you?"

This anti-union argument is just smoke and mirrors meant to distract from the real problem caused by the imbalance of wealth in this country, which is controlled by a small few.

Ron Holzwarth 7 years ago

This reminds me of an old Firesign Theater comedy bit:

Statement: "France wasn't built in a day!"

Reply: "Aaaark! Because of the Unions!"

Commenting has been disabled for this item.