Tag Archives: Union

Government Economy: Ignoring Facts

In our increasingly government-controlled (-manipulated, -throttled, -ridden) economy, we get to see how people who do not believe in the free market expect the engines of American capitalism to run.

It’s not like we haven’t been able to see this before. After all, the 20th century is littered with the corpses of Command and Control Economies.

But this is the first (second: FDR tried really hard too with the alphabet soup of government agencies he successfully wielded to lengthen the Great Depression far beyond what it should’ve been) time we get to see what happens when our own beloved economy is ridden by the government to extremes we’ve not seen before.

Exhibit A is GM. Now bankrupt and after accepting huge loans from the government, the government will shortly own a majority of this company.

And now the revisionist history begins.

Today’s Bloomberg report on the bankruptcy, paragraph 1:

General Motors Corp. won court approval on its first day in bankruptcy to sell assets as soon as next month after collapsing under $172.8 billion in debt and failing to adapt to consumer demands for smaller cars.

All well and good except for one thing: Consumers are not necessarily demanding smaller cars.

Google “best selling cars” and you get a pretty consistent picture: trucks are selling well, and so are full-size sedans. The only compact cars in the top 10 of any list are the Honda Civic and Toyota Corolla, and they’re in the middle of the list. In the worst 10 selling lists are bloated SUVs such as the Hummer. No surprise there.

Green machines (hybrids and ultra-compacts) have always been a lethargic segment of the auto sales and they’ve suffered as much as anybody else with the economic issues.

The Bloomberg article was reworded shortly after initial press this morning and has dropped the bit about demand for small cars. (you can still find the original wording at this splog (spam blog) site that rips headlines to create content for itself. Not actually linking to prevent follow spam: http://itsp.info/index.php/2009/06/02/gm-bankruptcy-judge-approves-asset-sale-on-first-day-bloomberg.html).

One of the major plans of the now government owned GM is to increase production of one of the most lethargic segment of vehicle: ultra-compacts and small hybrids. FromĀ  Bloomberg again:

One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29.

Now what kind of business is run by making cars for which there currently isn’t a real market?

Especially for a company emerging from bankruptcy, this kind of action is pointless and worse.

Unless the leadership of that company is aware of changing market conditions well beyond the awareness we’ve seen to date, or they know something we don’t.

Unfortunately for what appears to be the deepest desire of most the leadership in the Obama administration: you cannot control demand so long as there is choice.

The only way communist countries control demand is by controlling the entire market. And even when presented with only one option, they still usually get to choose whether or not to take it.

Because the government will very likely own 60% of GM, they will be very interested in one or both of these two options: running the company according to the ideology, and making a return on their investment.

The ideology of the current government makes those two options almost completely exclusive. You cannot control the market and demand in what is still, essentially, a free market.

My prediction: GM will continue hemorhaging money. Lots of money.

Our tax dollars will continue to be poured into the black hole of stagnating demand segments and poorly made vehicles.

Until the price fixing monopolistic unions are torn free and GM is free to hire talent at wages the market supports…

Until GM recognizes the necessity of meeting the market where it is instead of where it ought to be according to some Command Economy wet dream…

Until the free market is allowed to destroy those who do not adapt and innovate…

…We will continue to be force to send good money after bad. And we’ll be told we like it.

The Day The UAW Died – Or Not

And they were singing: Bye, bye miss American pie…

Yesterday the US automakers, the UAW, and the US government failed to reach an agreement that could have secured a bailout for the “Big 3”. GM is consulting with bankruptcy lawyers. Chrysler is considering selling itself. Ford is apparently mostly OK and will survive with little change.

Senate Republicans and several Democrats followed their constituents calls and stood up to another free money day for American business.

I don’t believe Darwinian Biological Evolution is likely have occurred but there is scant proof indeed than anything besides a Darwinian approach to business is dangerous to liberty and allows for bloat and growth of government both in the breadth of responsibility and the expectations of the populace. The dying ought to be allowed to die to make room for new and fresh ideas.

It is not a closely held secret, the fact the UAW does more harm to GM than it does good for its members.

The entitlement mentality of many die-hard union members I know of is something to behold. I make an honest wage for a job I truly enjoy. I’m expected to contribute to my insurance costs and my employer does as well. I’m given the choice which benefits I wish to make use of, and I have a marginal cost for each one. But for each additional cost, my employer also contributes amounts and so while I’m paying more (or taking home less in each paycheck) I’m actually earning more. The benefits are delayed but there nonetheless.

The union workers I know are decent people, no worse nor better than many others I know. However, they have become used to two paradigms at least which are either wrong or detrimental. They are used to a conflicting relationship between themselves and the management and they are used to a level of coddling by their employers at the behest of the Union.

The relationship of the employer to the employee ought to be one of shared and communicated goals and observed ability and process communication and refinement and achievement recognition. This is admittedly an optimal goal, but it is not unattainable and for it’s optimal nature it ought not be dismissed.

The Union infrastructure destroys both directions of communication necessary to the successful and profitable enterprise. By setting up a default adversarial relationship between the average workers and the management, with the workers via their Union trying to get more and more of the company ‘pie’ for themselves with deeper and longer guarantees of remuneration and the managers trying to get concessions and extra work from the increasingly insulated employees.

When you have cases where GM has shut down a factory and is still paying full wages and benefits to thousands of people there is something obviously wrong.

You may say that GM owes it’s employees something: I would get severance if I was fired, but the idea is to make me WANT to get a new job. Paying me as much as I made previously as part of some inactive workforce is sound business sense only to those without sense or with an incredibly skewed set of priorities.

Now that, directly because of the UAW’s actions, GM is in free-fall and will likely file bankruptcy, they will be firing a lot of people. There will be thousands fewer jobs. People will be in REAL hurt. Good union people too. And the UAW will be unable to to anything about it.

GM will be restructured and without the UAW in their shops.

Congressmen were quoted saying that if the UAW had only agreed to wage cuts they would have been able to salvage the bailout. Thank God they did not.

Greed and avarice are light labels for the UAW.

I will rise again…

But look out.

Barack Obama will be president soon, and the unions are virtually guaranteed that federal law will be changed to allow “card check” which will set the bar for unionizing agonizingly low. With public votes, strong arming and union thug pressure will thrive and the UAW will be able to unionize the Toyota and Honda factories.

So they’re not dead. They know their payday is coming soon.

If you don’t know Chicago politics you don’t know that corruption is the norm, and the appearance of honesty is a closely honed art. Unions run Chicago arm in arm with the Democrat political machine. They’ve delivered Obama to the White House and they are expecting a high return on investment.

My union friends have a problem, they refuse to see the forest for the trees. They are used to the safety and coddling in benefits they receive because of the Unions work, but they refuse to acknowledge their accepting the benefits of the Unions come at such a price.

Unions served their purpose, and in some cases they may still haveĀ  a valid place. Federal law for the most part has codified the reasonable purposes of the Union. But Unions are about power, and their continued presence in America is without merit.

The internet and the vast web of information and advocacy outside of the Union are quite capable of keeping accountability within the workplace without the need for the stultifying and parasitic presence of the Union.

Until the UAW dies, American industry will fail.