goose

Killing the Goose

On November 21, 2012, in Barack Obama, Coal, by AimeeGhosh258

Killing the goose that lays the golden egg is one of those old fairy tales for children which has a heavy message that a lot of adults should listen to. The labor unions which have driven the makers of Twinkies into bankruptcy, potentially destroying 18,500 jobs, could have learned a lot from that old children’s fairy tale. Many people think of labor unions as organizations to benefit workers, and think of employers who are opposed to unions as just people who don’t want to pay their employees more money. But some employers have made it a point to pay their employees more than the union wages, just to keep them from joining a union. Why would they do that, if it is just a question of not wanting to pay union wages? The Twinkies bankruptcy is a classic example of costs created by labor unions that are not confined to paychecks. The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load either of these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa. All of this was obviously intended to create more jobs for the unions’ members. But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs. The union is killing the goose that laid the golden egg. Not only are there reasons for employers to pay their workers enough to keep them from joining unions, there are reasons why workers in the private sector have increasingly voted against joining unions. They have seen unions driving jobs away to non-union competitors at home or driving them overseas, whether with costly work rules or in other ways. The old-time legendary labor leader John L. Lewis called so many strikes in the coal mines that many people switched to using oil instead, because they couldn’t depend on coal deliveries. A professor of labor economics at the University of Chicago called John L. Lewis “the world’s greatest oil salesman.” There is no question that Lewis’ United Mine Workers Union raised the pay and other benefits for coal miners. But the higher costs of producing coal not only led many consumers to switch to oil, these costs also led coal companies to substitute machinery for labor, reducing the number of miners. By the 1960s, many coal-mining towns were almost ghost towns. But few people connected the dots back to the glory years of John L. Lewis. The United Mine Workers Union did not kill the goose that laid the golden eggs, but it created a situation where fewer of those golden eggs reached the miners. It was much the same story in the automobile industry and the steel industry, where large pensions and costly work rules drove up the prices of finished products and drove down the number of jobs. There is a reason why there was a major decline in the proportion of private sector employees who joined unions. It was not just the number of union workers who ended up losing their jobs. Other workers saw the handwriting on the wall and refused to join unions. There is also a reason why labor unions are flourishing among people who work for government. No matter how much these public sector unions drive up costs, government agencies do not go out of business. They simply go back to the taxpayers for more money. Consumers in the private sector have the option of buying products and services from competing, non-union companies — from Toyota instead of General Motors, for example, even though most Toyotas sold in America are made in America. Consumers of other products can buy things made in non-union factories overseas. But government agencies are monopolies. You cannot get your Social Security checks from anywhere except the Social Security Administration or your driver’s license from anywhere but the DMV. Is it surprising that government employees have seen their pay go up, even during the downturn, and their pensions rise to levels undreamed of in the private sector? None of this will kill the goose that lays the golden egg, so long as there are both current taxpayers and future taxpayers to pay off debts passed on to them. COPYRIGHT 2012 CREATORS.COM

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Killing the Goose

A Cynical Process: Part II

On May 2, 2012, in Barack Obama, Stimulus, Unemployment, by CliffordMitchell

A small headline in the 2nd section of the Wall Street Journal last week told a bigger story than a lot of front page banner headlines. It said, “U.S. Firms Add Jobs, but Mostly Overseas.” Just as there is no free lunch, there is no free class warfare. Some people may be inspired by President Obama’s talk about making “the rich” pay their undefined “fair share” of taxes, or taking away corporations’ “tax breaks.” But talk is not always cheap. It can be very costly to those working people who are looking for jobs that the Obama administration’s anti-business policies are driving overseas. According to the Wall Street Journal , “Thirty-five big U.S.-based multinational companies added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas.” All these companies have at least 50,000 employees, so we are talking about a lot of jobs for foreigners with American companies overseas. If the Wall Street Journal can figure this out, it seems certain that the President of the United States has economic advisers who can figure out the same thing. But that does not mean that the president is interested in the same thing. In this, as in so much else, Barack Obama is interested in Barack Obama. Whatever bad effects his policies may have for others, those policies have had a track record of political success for many politicians in many places. To put it bluntly, killing the goose that lays the golden egg is a viable political strategy, provided the goose doesn’t die before the next election. In this case, the goose simply lays its golden eggs somewhere else, so there is no political danger to President Obama. Unemployment may remain a problem to many Americans, but that only provides another occasion for the Obama administration to show its “compassion” with extended unemployment benefits, more food stamps and various interventions to save home buyers from mortgage foreclosure. This can easily be a winning political strategy. Franklin D. Roosevelt won his biggest landslide victory after his first term in office, during which the unemployment rate was never less than twice what it has been under Barack Obama. The “smart money” inside the Beltway says that a high unemployment rate spells doom at the polls for a president. But history says that people who are getting government handouts tend to vote for whoever is doing the handing out. The Obama administration has turned this into a handout state that breaks all previous records. Lofty rhetoric about “stimulus,” “shovel-ready projects,” “green jobs” or “investment” in “the industries of the future” all give political cover to what is plain old handouts to people who are likely to vote to re-elect Obama. At the local level as well, history shows that some of the most successful politicians have been people who ruined the local economy and chased job-creating businesses away. Mayor Coleman Young of Detroit in the 1970s and 1980s was not worried when affluent whites began moving out of the city in response to his policies, because they were people who were likely to vote against him if they stayed. Of course they took their taxes, their investment money and the jobs they created with them. But that was Detroit’s problem, not Coleman Young’s problem. Barack Obama may win re-election by turning the United States into Detroit writ large. Something similar happened in earlier times, when James Michael Curley served 4 terms as mayor of Boston, and 2 terms in prison. As the non-Irish left the city, in response to Curley’s policies, that increased Curley’s likelihood of being re-elected. This kind of cynical politics is even more likely to succeed when political opponents fail to articulate their case to the public. And Republicans are notorious for neglecting articulation. The phrase “tax cuts for the rich” has been repeated endlessly by Democrats without one Republican that I know of saying, “Folks, I don’t lie awake at night worrying about millionaires’ tax problems. Millionaires have lawyers and accountants who get paid to do that. But I do worry about jobs being lost to millions of American workers because we make the business climate here worse than in other countries. That’s a high price to pay for rhetoric.” The case can be made. But somebody has to make the case. COPYRIGHT 2012 CREATORS.COM

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A Cynical Process: Part II