Tuesday, October 28, 2008
Unionization in a declining economy
The Wall Street Journal, which is doing the work the McCain campaign should have done weeks ago, is running an op-ed this morning that makes the useful historical point that the Wagner Act -- our basic federal union law -- significantly prolonged the Great Depression.
Then, in 1937, the DJIA plunged 33% in what is often called "a depression within a depression." Joblessness skyrocketed.
A principal factor in the meltdown that year was the U.S. Supreme Court's surprise 5-4 decision in early April to uphold the constitutionality of the Wagner Act, which had passed two years earlier. This measure, which is still the basis of our labor relations regime, authorized union officials to seek and obtain the power to act as the "exclusive" (that is, the monopoly) bargaining agent over all the front-line employees, including union nonmembers as well as members, in a unionized workplace.
As Amity Shlaes observed in her recent history of the Great Depression, "The Forgotten Man," within a few months after the Wagner Act was upheld, industrial production began to plummet and "the jobs started to disappear, with unemployment moving back to 1931 levels," even as the number of workers under union control was "growing astoundingly."
Given the reality of unions in the workplace, the law meant that efficiency and profitability were compromised, by forcing employers to equally reward their most productive and least productive employees. Therefore subsequent wage increases for some workers led to widespread job losses.
Suffice it to say that "card check," the Employee "Free Choice" Act that Barack Obama has pledged to sign and Nancy Pelosi and Harry Reid are committed to enacting, will increase the unionization of private sector employees. If you believe that the least competent and diligent employee should be paid as much as you (or, obviously, if you are incompetent or dilatory) and if you work in an industry that cannot easily move offshore or be automated, you should be delighted at the prospect. Otherwise, vote McCain.
6 Comments:
By 
davod, at
Tue Oct 28, 09:01:00 AM:
I don't know whether it is equally as bad as removing the secret ballot, but the mandatory imposition of wages and conditions by a government mandated mediator, for a two year period, is an industry stopper, and a job killer.
By 
, at
Tue Oct 28, 09:12:00 AM:
Monopoly representation and the elimination of secret ballots. No wonder the Democrats like the idea of "card check".
Nancy Pelosi was a member of the Progressive (socialist) Caucus before she was elected Speaker of the House. She is part of a concerted effort to force socialism onto the American people.
By davod, at
Tue Oct 28, 10:27:00 AM:
By , at
Tue Oct 28, 10:52:00 AM:
In 1964, people were afraid of Barry Goldwater and they said, "Vote for Goldwater, and there will be war in two years." The refrain several years later was, "I did and there was."
Similarly, the Democrats are spreading all sort of analogous horribles about McCain. Including something like, "Vote for McCain and the economy will get worse in the next two years." To which we might be saying in the 2010 off-year elections under an Obama presidency, "I did and it did."
Enacting the Employee Free Choice Act as written will be an unmitigated disaster. It's pretty hard, when the economy is sinking and employers are doing their best to save jobs, to create more union "rights." All that will do will be to inflate wages (remember the 70's?), lower margins, make it harder to sell products (because even Western Europe will have lower labor costs -- imagine that!) and create all sorts of work rules that will encourage people to regress to the mean instead of working hard to get promoted.
Believe it or not, those who slam Corporate America, that executives do care about their employees and are working mightily to save jobs. Unless you've walked in their shoes, you don't have an idea how hard it is to make the decisions they do and own them. Sam Rayburn once said, "Never trust a man who hasn't written a paycheck and made it good." All of those Obama disciples who have legitimate gripes against George W. Bush should think twice about their reflexively reactive politics. Because in this particular instance, the cure is worse than the illness.
Pass the Employee Free Choice Act as written, and fewer paychecks will be written, companies will become less competitive, and more people will be out of work. Of course, if you're a Republican and you're looking for compelling arguments to regain seats in the 2010 off-year elections, the Democrats will be handing you this one on a silver platter.
It seems that Big Labor has bought and paid for the Democrats on this issue. With any luck, a "blue dog" phenomenon might sweep the Democrats and compel them to think more logically about this ill-conceived law. Then again, with the broad brushes of the Patriot Act and Sarbanes-Oxley in the background (passed by reactive politicians, most of whom didn't read the legislation they passed), those of us who want a measured, middle-of-the-road government shouldn't get too hopeful.
But when George McGovern, a patriarch of modern liberals, speaks out against this law, legislators should listen. We need good jobs -- and lots of them -- to make our democracy work and work well. The Democrats are just plain wrong here -- and they'll cost us more jobs, not create them.
The Centrist
By , at
Tue Oct 28, 11:40:00 AM:
This election continues to amaze me. My friends who are voting Obama and own businesses know they will have less money to invest, because their taxes are going to go up. They know that their companies could face card-check unionization threats. Obama gets their votes, but their fervent hope is that he's lying on all his positions and won't be so stupid as to raise taxes to penalty levels on the most productive, most hard-working people in the country. Isn't that amazing? People are voting for a guy they hope is lying over McCain. He just cannot close the deal.
By , at
Tue Oct 28, 03:00:00 PM:
Anon,
Yeah, and we know what happened in another place and time when, against their common sense, people still voted for a "blank slate" who continually tailored his political positions for different audiences.
And you know who I'm talking about, don't you?
