This was written by a reporter for a local paper near Philly. I think he`s right on.
By Henry Briggs
With unemployment at 9% and rising, the news is filled with job losses - this week we’re focused on the American auto industry. Reporters interview anxious UAW members and car dealers, all of whom talk about the end of the American Dream and the irresponsibility of the leaders in Detroit and on Wall Street.
Do I feel sorry for them? Not a bit.
In the 30’s, when Ford and GM built their companies by treating their workers like... today’s Chinese workers, our capitalistic system promptly produced a counter to management excess: unions. For awhile, there was a good balance between the two, but capitalism is a dynamic institution and, inevitably, the balance of power shifted.
By the 50’s the UAW had so much power that, even as they sneered at Europe’s socialism, they were negotiating for universal health care and lifetime pensions. At one point the UAW’s Walter Reuther suggested to GM’s Charles (“what’s good for GM is good for the country”) Wilson, that they were powerful enough to ram through national health care, thus giving the American tax payer the bill. Wilson, whose workers were all young, thought it unnecessary.
For the next 50 years, as unions grew more powerful, their negotiators grabbed more and more. By 2008 UAW benefits increased the average price of a car by $1500; the average UAW worker cost an employer $70 per hour. That’s $145,600 per year - for assembling automobiles.
The result? Innovation and quality suffered and Japanese and Korean carmakers took over the market. Chrysler and GM entered bankruptcy. GM cut over 500,000 jobs (from 600,000 in 1979) and counting. Experts think a million more will lose jobs.... and houses and benefits. Those $70 dollars per hour assembly line workers are now looking at $0.00 dollars per hour. In a classic irony, they also now own nearly 20% of companies they brought down.
What about the poor car dealers? Nope. Not sorry for them, either. I don’t know about you, but I don’t know anyone who doesn’t have a ripped-off-by-the-car-dealer story. The rip-offs started right after WWII when cars were scarce. Dealers would quote one price before the car came in, then add a premium months later when the car arrived. If the buyers didn’t like it, they could wait a few more months.
That’s what started the “bargaining” that resulted in everyone distrusting car dealers- from the sales department to the service department. Remember the put-down: “Would you buy a used car from this man?” Saturn started as a non-union company with non-negotiable prices and a solid reputation for integrity. It didn’t take long for the UAW to get in there and now Saturn is just another GM car.
Unions are profit-making enterprises. They will always negotiate for more- even though their hours, workload etc... haven’t changed much. They do so based on the premise that the employer has an ever-growing pot of money. As the country prospered in the last 50 years, employers went along because they, too, saw an ever-growing pot of money. It’s the same premise under which Wall Street sold all those mortgages over and over again. As a nation, we came to rely on an ever-growing pot of money.
But good negotiators work for the common good, not just winning. Whether they be Walter Reuthers or Charles Wilsons or your local car salesman, they understand the need for both sides to benefit.
Now Wall Street guys are standing in unemployment lines with shares of worthless companies, right next to UAW members and car salesmen with shares of worthless companies.
By Henry Briggs
With unemployment at 9% and rising, the news is filled with job losses - this week we’re focused on the American auto industry. Reporters interview anxious UAW members and car dealers, all of whom talk about the end of the American Dream and the irresponsibility of the leaders in Detroit and on Wall Street.
Do I feel sorry for them? Not a bit.
In the 30’s, when Ford and GM built their companies by treating their workers like... today’s Chinese workers, our capitalistic system promptly produced a counter to management excess: unions. For awhile, there was a good balance between the two, but capitalism is a dynamic institution and, inevitably, the balance of power shifted.
By the 50’s the UAW had so much power that, even as they sneered at Europe’s socialism, they were negotiating for universal health care and lifetime pensions. At one point the UAW’s Walter Reuther suggested to GM’s Charles (“what’s good for GM is good for the country”) Wilson, that they were powerful enough to ram through national health care, thus giving the American tax payer the bill. Wilson, whose workers were all young, thought it unnecessary.
For the next 50 years, as unions grew more powerful, their negotiators grabbed more and more. By 2008 UAW benefits increased the average price of a car by $1500; the average UAW worker cost an employer $70 per hour. That’s $145,600 per year - for assembling automobiles.
The result? Innovation and quality suffered and Japanese and Korean carmakers took over the market. Chrysler and GM entered bankruptcy. GM cut over 500,000 jobs (from 600,000 in 1979) and counting. Experts think a million more will lose jobs.... and houses and benefits. Those $70 dollars per hour assembly line workers are now looking at $0.00 dollars per hour. In a classic irony, they also now own nearly 20% of companies they brought down.
What about the poor car dealers? Nope. Not sorry for them, either. I don’t know about you, but I don’t know anyone who doesn’t have a ripped-off-by-the-car-dealer story. The rip-offs started right after WWII when cars were scarce. Dealers would quote one price before the car came in, then add a premium months later when the car arrived. If the buyers didn’t like it, they could wait a few more months.
That’s what started the “bargaining” that resulted in everyone distrusting car dealers- from the sales department to the service department. Remember the put-down: “Would you buy a used car from this man?” Saturn started as a non-union company with non-negotiable prices and a solid reputation for integrity. It didn’t take long for the UAW to get in there and now Saturn is just another GM car.
Unions are profit-making enterprises. They will always negotiate for more- even though their hours, workload etc... haven’t changed much. They do so based on the premise that the employer has an ever-growing pot of money. As the country prospered in the last 50 years, employers went along because they, too, saw an ever-growing pot of money. It’s the same premise under which Wall Street sold all those mortgages over and over again. As a nation, we came to rely on an ever-growing pot of money.
But good negotiators work for the common good, not just winning. Whether they be Walter Reuthers or Charles Wilsons or your local car salesman, they understand the need for both sides to benefit.
Now Wall Street guys are standing in unemployment lines with shares of worthless companies, right next to UAW members and car salesmen with shares of worthless companies.
