Unions Acting in the Best Interest of a Company
On several different occasions Darwin and I have gotten into arguments about the utility of unions. Coming out of that discussion was the argument unions are a more effective method for operating a company because the democratic nature of a union grants each worker some capacity to determine how the company should be ran. It was argued that this would allow the workers a more satisfying fulfilling work experience. When confronted with the notion that the purpose of company is not to make its workers feel satisfied but provide a good to a consumer Darwin would always respond that the workers would always vote in the best interest of the company.
The recent auto worker bailout has proven a great opportunity to see if unions will vote in their best interest. Recently, the liberal president, George W Bush has decided to lend about 17 billion to the auto workers with the implicit agreement that the workers would slash their wages to be commensurate with the other auto workers. Given that two of the big three are hemorrhaging massive amounts of money and are on the edge of bankruptcy you would expect the workers would vote on slashing wages as a means to save the company.
Imagine my surprise when I read this:
Just days before Christmas, the UAW let it be known it’ll fight any concessions on wages and benefits. “An undue tax on the workers” is how union boss Ron Gettelfinger described it as the UAW reneged on the deal almost before the ink was dry.
This will go down as one of the most cynical acts of political manipulation ever. The UAW agreed to one thing with President Bush, knowing full well President-elect Barack Obama and congressional Democrats were big recipients of union largesse and would let them slide. They read the situation correctly.
How does Darwin explain the irrational act of this union? They are making a decision to benefit themselves that is obviously detrimental to the company. Companies do not exist for the satisfaction of the worker, their purpose is to provide goods for the consumer. It’s foolish to think that workers will act in the best interest of the company when the point of a union is to act in the best interest of the worker.
December 31st, 2008 at 1:28 pm
Unions have already taken tremendous pay losses. At this point, the average union worker does not receive much more salary than the average nonunion worker. More to the point, this difference is largely justified by the fact that union workers are on average more senior and experienced than nonunion workers. It is questionable that further pay cuts are in fact beneficial for the company, as they might further discourage competent, sought-after candidates from pursuing an auto industry career with US auto companies. I don’t think I need to tell you why that is bad for health of the company.
By contrast, the average US CEO makes many times more than the average Japanese CEO. When you consider that there is similar disparity in other management positions, it’s easy to see where the money that is being ‘hemorrhaged’ is going. This discrepancy isn’t even justified, as US managers have demonstrated that they are (at best) no more competent at keeping their technology competitive than Japanese managers are.
December 31st, 2008 at 1:42 pm
Cite the sources please.
January 1st, 2009 at 6:20 pm
In what way are the actions of the union irrational? As the article says, unions are big contributors to the democrats, meaning they’ll probably get away with this crooked dealing; just a normal story of pork-barrel corruption (again, campaign finance reform helps this problem alot). I’m not sure where you get the idea that unions are designed to help the company; they’re designed to help the workers. If you want to make hte argument that this action hurts the workers by driving their employer out of business, that’s evidence that the union is either incompetent or corrupt, which I certainly wouldn’t rule out (it certainly wouldn’t be the only corrupt and incompetent entity in the US auto industry right now).
Now if your point is that unions are bad because they hurt the consumer, rembmer that the workers are themselves consumers. What’s the point of goods being really cheap if american workers, do to a lack of bargaining power with their employers, still make so little that they can’t afford to buy them? And wouldn’t most consumers agree to get a few less possesions or pay a bit more in order to have a better or safer work experience, have more money to decide how to spend, have health covergage and retirement savigns, etc etc?
Saying that unions can be corrupt or incompetent isn’t something I’d disagree with, I just don’t think it’s a very strong argument against them without some type of quantification (ALL human instituations are occasionally corrupt or incompetent). Arguing that they hurt consumers isn’t a complete argument unless you include in your analysis that workers are also consumers, and see how the benefits to American workers of being able to unionize weighs against the costs and tribulations that unions sometimes cause.
January 2nd, 2009 at 11:56 am
I’m not sure your response is very relevant to my point.
The unions are irrational in that they clearly have an interest in preventing the company from going bankrupt. At a very basic level, bankruptcy enables the car companies to get out of the onerous union contracts. Arguably this will allow the company to dissolve the unions completely. On this level the union’s uncompromising behavior is inimical to its very existence. Most any one would argue that acting in a way that is dangerous to one’s preservation is the very definition of irrational.
Speaking of political corruption I never did hear you denounce Barack Obama’s choice for chief of state. Given the shear amount of money he has received from special interest groups I would think you would of been more vocal in your disappointment of Barack’s choice.
January 6th, 2009 at 4:25 pm
I explained why unions don’t act in the best interest of companies, which, since it was the title of your post, seems somewhat relevant. In regards to you revised argument about how this could hurt the union members, as I said, I never argued that unions couldn’t be incompetent or corrupt.
As for this equal-time Obama bashing thing you have going, I’ve never suddenly denounced anything on your site… you make a post, I respond. It’s also worth pointing out that before reading that link, I didn’t know any of the cabinet appointments aside from Clinton… I don’t really follow political news outside this site. As for this guy, yeah, my statements about how lobbyists and campaign contributions corrupts politics still stand. I don’t know where you get the impression that I was saying democrats were immune from this criticism, the problem corrputs everyone in politics.