Labor's role in Detroit's disaster
By Henry Lamb
While Detroit's big three auto makers grovel for a tax-funded bailout, 14 U.S-based, international auto makers announced last year's additional investments of $39.3 billion in 69 facilities that employ 92,700 people with an annual payroll of $6.3 billion. Why are the U.S.-based international auto makers expanding, while Detroit's big three are grasping for a life-saving handout? The answer, of course, is labor unions; only two facilities of the U.S.-based international auto makers are unionized, one in California, the other in Illinois. All the others are union-free and are doing quite well.
The big three domestic auto makers have already been granted $25 billion to retool. Now, they want another $50 billion, half of which is needed to fund union-mandated benefits.
Non-union automakers produce nearly one-third of all new cars and trucks. They now control nearly 40-percent of the market, while the union-controlled "big three" are reducing production, losing market share, and going broke. The thousands of union workers who now face unemployment must hang much of the blame on their unions.
Labor unions came into existence to counter the absolute power of employers. The history of the labor movement is boisterous and bloody. In the evolution of American business, labor has, at times, been noble; at times, it has been corrupt. Like every other institution that amasses power, labor has abused its power by requiring its employers to provide more "goodies" than can be supported by a free market.
The government should not use tax dollars to fund these benefits. If the market will not support union demands, then the demands should be modified or ignored.
Union officials are not rushing to the rescue of the auto makers by offering to modify their demands. They are rushing to their favorite well-funded politicians demanding pay-back for their election support.
Labor unions want even more. They want "The Employee Free Choice Act," also called "Card Check." This legislation would remove unionization from the control of the National Labor Relations Board's secret ballot process. Instead, labor bosses would be allowed to put a card in front of an employee and say "sign here." When a majority of employees sign the card, the entity is unionized.
It's hard to imagine that any legislator would even think of voting for legislation that would so clearly authorize the probability of intimidation and abuse. But it passed the House of Representatives 241 to 185 and garnered 51 of the 60 votes needed in the Senate.
Labor unions own far too many politicians. Labor unions, with help from their well-funded and endorsed politicians, have bitten the hand that feeds them. Now the hand, in Detroit, is a bloody nub that can hand out no more food.
The root cause of this problem is interference with the free market. Unions and government are the source of this interference. Since its hey-day in the 1960s, both unions and government have continually required the Detroit auto industry to adopt policies and procedures that could not be supported by a free market. The cumulative effect of this interference is the disaster that now faces the industry, the government, and the nation.
A free market economy, as opposed to a government-managed economy, is a fundamental principle of freedom. Every market intrusion erodes both the economy and freedom, whether the intrusion comes from unions or from government. Sadly, neither unions nor government seem to care about freedom, or free markets. Their actions demonstrate their faith in the Marxist philosophy that government must manage markets.
It was government intrusion into the free market that required banks to lend to unqualified home buyers which caused the housing bubble and the inevitable collapse that has so devastated the financial industry. The consequential credit crisis hastened the inevitable collapse of the overburdened auto industry. The ripple effect from these collapses has only begun to be felt across the entire economy.
The paramount question now is whether to kick the inevitable collapse a little further down the road by confiscating more tax dollars to bail out failing enterprises, or to let them collapse now.
It's hard to imagine the United States without the big three auto makers. It's even harder to imagine the pain and suffering that would accompany their collapse. It's not hard to imagine, or even predict, the consequences of continuing to confiscate taxes or print new (valueless) money to reward the past mistakes of government, unions and industry.
Even a casual look around the world or across history reveals that government-managed economies are a poor substitute for free enterprise. Each new government bailout is another step deeper into a government-managed economy for America. This change in direction from free enterprise to a managed economy has but one destination: total collapse. Ultimately, blame must finally be placed where it belongs - upon the people who elected the officials who decided to make this change.
Get weekly updates about new issues of ESR!