UnionMaine

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Through a Glass Darkly, Wait For It


Through a Glass Darkly

I have been accused of blaming Republicans for too much and not giving credit where it is due. Here is a Post from the right.

Senate Republicans, led by Senators Bob Corker, Mitch McConnell and Richard Shelby, were fighting an auto bailout that was a give away to the UAW. The package did nothing to place the blame for the failure of the Big Three on the bloated and obsolete labor agreements between unions. The straight forward Republican point of view was that by undoing vampire like labor agreements, the car companies could be put back on the path toward profitability.

While this short term thinking may serve the honest Republican effort to put labor unions out of the car business, it is narrow-minded and no substitute for a long-term plan. What was missing from the Corker-McConnell-Shelby argument is long term planning that will dilute or destroy Union influence on Detroit forever, empower business and enlist Democrat support.

Americans should celebrate because President Bush defied Corker, McConnell and Shelby to keep the carmakers alive.

George Bush single handedly threw a Hail Mary pass that had to be caught. The auto bailout that appears to be a giveaway to pay back the UAW is really a last attempt to let free market capitalism intercept the union agenda of the left. The Unions are torn, glad to keep their industry killing jobs, but complaining about being asked to finally do their part. While some are calling this a gift, it is actually a loan that comes wrapped with opportunity for business. When the government gives money it has the opportunity to attach conditions that will better the country.

The UAW bosses are trying to sell this package to their members as a chance for Unions to keep up their old greedy ways and deny the possibility of compromise. This loan will not be a a disaster for conservatism if this loan and the opportunity it brings can be seized by the right and used to end the unfair taking of wealth from those who created it.

Connect the dots; organized labor has been an roadblock to progress and profit for corporations since the New Deal. Work rules, overtime, OSHA, destroyed American capitalism by siphoning money from the shareholders and until the last eight years the Dept. of Labor have been the enemies of profit.

Timely proof of the failure of big labor greed is the announcement by battery maker turned Auto maker, BYD who announced a $22,000 dollar electric car to be sold by China. The Chevy Volt is expected to come in at nearly $40,000 yet the Chinese without big labor and Federal interference in the workplace will be able to produce and sell an electric car with fifty percent more range, at half the cost and have it ready for the US by 2010. China has given us a model to make American labor competitive.

Unions still see the loan as free money, look closely and you can see this is not a gift but an ultimatum, the Unions must fold. During the 90s, when auto companies made billions rather than invest in the US they were forced to send money out of the US and invest in Mexico, and locations more friendly to business, such as Europe and Asia to defend profits from Democrat taxes and Union demands for increasing wages, job security, and benefits.

With bold action by only a few Republican Senators, these profits can now remain protected with no demands on manufacturers to invest in the US. Democrats can not stand up to a filibuster. The last two years have been proof of their inability to defend their policies. It does not take a majority to stop the Democrats.

The government has in effect, undermined Union dominance, allowing the corporations to set wages under the guise of necessity. Under these “emergency conditions” auto makers can import cars to Americans. GM, Ford, and Chrysler have small cars made in Mexico, Asia, and South America ready for import. Federal regulations demanding unfair pollution, safety devices, and archaic labor laws stand in the way of the American Public getting one of these vehicles.

Advance planning by Detroit destroys the claims of poor management, in a far seeing plan they are ready now to import cars. General Motors is prepared to free themselves form the costs of dealerships and close costly unionized plants. Instead of a grab bag for Union graft, Congress is going to help force the unions into releasing the strangle hold and drop unsustainable demands for job security, pensions, and wages.

Unions will be forced to help wipe out legacy costs.There are hundreds of thousands of retired Union “workers”, a term used loosely with UAW work rules, expecting to live for free off pensions and health care for who knows how many years.


This is the time to free the companies from this burden. Union members like to compare pensions and retirement benefits to a mortgage, when you pay off the mortgage you own the home. They are right but they don’t go far enough. You may own that home but ownership does not relieve you from the need to pay property taxes, education taxes and the need to meet zoning laws. When conditions change new laws are passed and you need to bring your home into compliance.

The world has changed and they must be forced to bring their unrealistic demands into compliance in order to strengthen the economy. Wages for the UAW have not hurt only the Big Three, but have even hurt the new plants in the South. In the effort to protect themselves against being organized, and thereby destroyed, the imports have been forced to pay the same or even higher wages than unionized workers. By destroying the UAW plants in the South will be able to return to an even higher level of profit since they will no longer need to protect themselves from organizing. The EFCA won’t matter if there is no Union to join.

How much damage do these legacy costs do? GM workers don’t earn $73 an hour; their wages are comparable to Toyota and Honda workers. We get to $73 an hour by adding on the unsustainable demands of the retirees onto current employees. This is a Union Ponzi scheme where new employees pay old employees with current funds, the retirees free ride comes at the expense of current current profits.


The retirees have aged, all of those skidoos, new cars, kids in college, and vacations are long gone. Now the the retirees want hip replacements and prescriptions. They want to continue their ride at no cost to themselves.

If the employees had been forced to invest in the stock market and secure their own futures while they were working, they would not have to depend on someone else to pay their way.

Without the extortionate demands of the Unions General Motors could have set money aside, invested in the stock market, or even bought treasury bonds, but if they had it would have been seen as weakness and caused even higher Union demands. The corporate responsibility was to the investor and foreign investments guaranteed a continuing return. Further damage was caused due to the need to charge higher prices based on Union greed and incessant calls for healthcare and pensions, in turn making American cars less competitive.


In an attempt to earn their way out of the hole the UAW had put them in, that extra money was not put in some dusty “lock box”. It took courage but instead of gathering moss the money was invested overseas and used to pay dividends.

Due to good planning GM and Ford now have more plants abroad than they do in this country. They stand ready to import cars to the U.S.and make American industry leaner by shedding the unpayable legacy costs to the workers that placed them in these hard times through greed.

Bold action was needed. employee retirement funds could have been placed into stagnant accounts and slowly accrued interest, but in a bold move the money was invested abroad as a hedge against Union greed and to prevent harm to stockholders. For years this allowed the industry to continue showing profits. The Big Three wasted the opportunity by investing employee retirement funds into retirement accounts, but to protect investors, they opened up plants overseas that will now guarantee the survival of the auto industry no matter what happens in the US.

For a short time we have the chance to eliminate all of the legacy debt and properly restructure labor costs, even under a Democrat president. By encouraging the Big three to increase imports and allowing them to free themselves of blackmail payments to retirees we can allow them to return to profitability. The UAW played politics in the big league, but never expected to face Ronald Reagan, George Bush senior, and his son. Now after the inning, mighty Casey has struck out. The UAW lost and we can finally change the rules so that those who would destroy capitalism will not be rewarded for blackmail.

In this time of recession Congress will act. Congress has for too long subsidized Union greed and laziness. Outsourcing was seen as an evil rather than a tool for profit. Those are things that must be changed.

In the past with huge Union membership numbers work rules benefitting only employees and not the bottom line were passed under pressure from Unions. The Democratic party can be enlisted. They see the Unions weakening and campaign funds drying up. Remember, the Dem hero John Kennedy started the destruction of the teamsters. They will be on board in enough numbers under guise of necessity to make this a golden chance for reform.

The labor costs of the UAW have ballooned to as much as ten percent of production costs, while the money left to encourage management has never risen above 20 percent of production costs, thereby stifling the creative talent that could have grown the Big Three. Rarely is any attention paid to that aspect of compensation. Until now the drive by media and Congress never really looked at management needs, showing their left wing slant. No credit is given to the fact American industry employees three to four times more supervisors than either Germany or Japan. This level of management does not come cheaply and corporations need more capital to provide this level of oversight.

The Big three don’t get credit for containing costs, people don’t understand. In 1992 General Motors built 4.4 million cars and GM employed 265,000 UAW employees. In 1992 the unions were still fighting downsizing and efficiencies needed to compete.

GM, through good management reduced the workforce by over 154,000 workers by 2005 and still made 4.5 million vehicles. GM had forced efficiencies on the UAW that allowed the industry to produce 4.5 million cars with only 111,000 employees, instead of 265,000. The Unions howled that increased productivity entitled them to a share of profits, but GM avoided pay raises except minor cost of living increases. Productivity doubled and the car companies continued to reign in labor costs. Again the investors were rewarded.

Business and the Big Three must seize this chance to put an end to “labor-problems” by closing Unionized plants in the US or closing the UAW. They must be freed of onerous payments to unions, to dealerships and be relieved of unfair taxes. They must not be forced to compete while meeting the demands for health care, pensions and wages, resulting in Union labor costs that slow growth and kill flexibility.

If George Bush had not seen this opportunity, this chance to strike back at Union greed would have been lost.

After evaluation we can get beyond the spin calling this loan a gift to the Unions and recognize the time is ripe to lay the blame where it belongs, on generations of employees for demanding too much while not admitting how much they added to the costs of manufacturing. With so many Americans out of work it is no challenge to paint Union demands for wages and benefits as greed. This is not a socialist country and American workers can not demand the same health care as a socialist Sweden, France, or England, where nanny state competitors are forced to give their workers unearned benefits like National health care.

At stake is the very existence of American manufacturing. Tax rates for investors could go as high as that paid by the average overpaidaid line worker, further choking investment while stopping the economy cold. Finally, breaking the greed of the Unions will have a trickle down effect all the way to the smallest business, all of which will be affected by doing away with the need for Union negotiations with the Big Three. Business will be free to folllow the Wal-Mart and MacDonalds road to success.

In reality, this bailout can turn out to be the complete return of free market capatalism where wages are set by those who own the companies.

This Xmas gift to the Unions instead of building the UAW will reverse the decades old Redistribution of Wealth from the investor who is willing to take risk, to the unskilled. The amount of stolen wages returned to the investor class is incalculable. It is not just on the Federal level where the chance to return control to the ones who built the wealth is available. States have budgets in trouble. Many State governments are unionized and need some type of help. The Employee Free Choice Act is looming like a thunder cloud threatening destruction. States are looking for ways to trim their budget and with the South leading the way States can pass “right to work” legislation and fight back against Union blackmail.

Between the chance on the Federal level and actions by the States this could mean the end of Union blackmail. The Unions will wither because they will no longer be supported by the public tax dollars and they will no longer take a bite out of products we purchase.

In a best case scenario all States would adopt the right to work legislation that has been so successful in keeping Union presence at a minimum in the South.

If you found yourself nodding in agreement with this post please stand in front of an unshielded nuclear reactor with no lead underwear. Do the world a favor.

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January 14th, 2009 Posted by narsbars | Uncategorized | no comments

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