Brilliant Art on Mises.org
One of the pleasures of writing a Daily Article for the Mises Institute is the satisfaction of having one’s article accompanied by a well-chosen graphic. However, none of my previous experiences of this kind could have prepared me for the absolutely brilliant graphic that accompanied my most recent article “Where Would General Motors Be Without the United Automobile Worker’s Union?� This is a graphic that deserves the kind of commentary usually reserved for paintings, and in fact is more deserving of commentary than are most paintings.
Consider the starting point of the graphic: the actual logo of the UAW (whose use was suggested by Jeffrey Tucker). Contrary to the intent of those who created that logo (but true to its actual meaning), its presence in conjunction with my article depicts a collection of goons linked arm to arm, in a mindless circle.
The artist—Chad Parish of the Mises Institute—has taken a liberty, however.
He’s had several of the goons detach themselves from their mindless circle to go and do some good old-fashioned union dirty work—the kind of work they do best. (Some might say that it’s the only kind of work they do. But that would be an exaggeration.) Using nothing but GM’s logo, as representing the whole actual company, he shows the goons busy at the work of destroying the company. This is communicated by their act of tearing down the logo, which looks as if it’s ready to fall. One goon is on the ground, pulling on the logo with a rope that is hooked around its top, and another is standing on top of it, in a triumphant posture, holding what looks like a rifle; or perhaps it’s only a club. A third goon is just completing his graffiti message announcing “UAW WUZ HERE� Two other goons seem to have no function. Perhaps they are included in deference to the UAW’s insistence on the employment of unnecessary workers, represented here by the employment even of unnecessary goons.
In every way, down to its misspelling of the graffiti, this graphic is an incredible visual depiction of the mentality that has decimated or destroyed one American industry after another and is now on the verge of destroying what was once the leading manufacturing corporation in the United States and in the world.
Comments (52)
I have "saved" several of the graphics over the time I've been reading Mises.org, indeed you'll find my comments lauding the artistry have been posted from time to time.
The Thanksgiving Turkey with an ice-bag and thermometer springs to mind as one I saw recently in my archives. (for private use only, don't want to offend copyright!)
Sorry to be pedantic, but should it be "devastated" rather than "decimated" in the last paragraph? I'm not sure we could estimate that the UAW had reduced an industry by exactly one tenth...
Published: April 21, 2006 10:23 AM
I don't understand the aversion to collective bargaining, after all, don't workers enjoy the freedom to associate if they so choose?
With regard to GM's travails: it might be convenient to take potshots at the union but the heart of GM's problems are on the revenue side. They make dull products which few would purchase without the incentive of massive discounts or rebates. This brain dead sales strategy eliminated the profits from automobile sales. It only worked because the highly profitable GMAC could make up the difference through auto loans. And this was only possible while short term interest rates were very low. You see GMAC would borrow money short term at around one percent and loan it out to auto buyers at around eight to fifteen percent and pocket the difference. This worked fantastically until the yield curve flattened and the spread between what GMAC could borrow and lend became nil along with the profits for GMAC. That's why GM is so anxious to get rid of GMAC now.
Blame the unions if you like. But blame the management for betting the company on such an idiotic strategy. Blame the engineers for producing such boring cars. Finally, blame the dealer sales force for relying so heavily on rebates and discounts to move vehicles out of the showrooms.
Published: April 21, 2006 11:41 AM
Jardinero, Although you make valid points it overlooks the fact that the UAW has been a major drain on GM. Now it is not a shame that GM needs to shrink it's production, but it can't freely do so because of 20 year old union agreements. They would have decreased their production gradually overtime to compensate for competition, which would require freezing wage rates, or firing some people, and closing some plants. They couldn't do it gradually, and now they are in a tough position. I don't actually feel sorry for them - big businesses clamor for big regulation so that they can cartelize the market., but long term economic reality bites back.
It has been estimated that productivity and wealth not created because of union legal privileges stands at 50 trillion over the last 50 years. There are other estimates that come within 15% of this figure.
"I don't understand the aversion to collective bargaining, after all, don't workers enjoy the freedom to associate if they so choose?"
They are free to associate, but you are forgetting one thing. The freedom of association of the employer. They don't have it. Unions have legal privileges, and there in lies the problem. No libertarian should have a problem with voluntary unions, as long as the employer still has ability to fire some or all of them.
Published: April 21, 2006 4:06 PM
GM makes boring cars? Well that depends on which model you are looking at. Some of them are excellent (certain of the Cadillacs and of course the Corvette is world-class).
It does not help that there are so many regulations in place that the essential architecture of the car has been fixed for decades. What creative engineer wants to invest a career in an industry enmeshed in so many arbitrary rules and regulations as the car industry? So many of the rules are plainly foolish. Surely getting into IT or a real R&D outfit would be so much more interesting and rewarding.
I think what happens is that the smartest engineers go elsewhere. They avoid the car business (or leave it once they find out what it is actually like). That leaves the time servering plodders and the most important type of engineer of all; the enthusiast who really always wanted to be in the business of developing and manufacturing cars. This latter type of engineer starts out really liking cars to the point of being excited by them. Usually they get frustrated and leave the business. Those that stay become resigned to seeing all sorts of pointless compromise to their contributions. They get cynical and eventually don't really care.
Three stories about the car industry.
I once pointed out to an American car industry manager that most of his engineers drove 'foreign product.' He said, "We build what we're allowed. We drive what we like." He gave me a lift to the hotel in his Mercedes.
I knew a top rate engineer who worked at one of the big three as a product development engineer. He would develop cars in preparation for production. He'd devise the final specification (stuff like what seats were used, spring and damper rates, suspension geometry, steering characteristic, ergonomic and human factors issues etc.). He told me how for his entire career he would have a car set to perform at world class level and back would come the instructions from on-high. Can't do this. Can't have that. The end result would be a vehicle that he'd consider so inferior it'd have to crash and burn in the market. Each time the competition introduced a new model he'd wait in expectation of his company's product taking a major sales hit. For months afterwards he'd watch the sales charts waiting for the inevitable crash. It never came.
The domestic opposition would counter each of his company's new models with one of their own. The miracle would occur. Their car would be just as flawed and inferior. Every time. So for model cycle after cycle they'd get away with it.
What he later realised was that the likes of Toyota, Honda, BMW etc. kept learning and expanding. They just kept on getting more and more sales. The crash he expected is coming. It's just that it's the whole company that is going to crash and burn, not merely a single model.
He's retired now and once mentioned he should not have stayed in the car business as long as he did. One wonders what he'd advise a budding young engineering graduate to do...
I met a leading manufacturing engineer who introduced me to a machine operator on the line. Later I discovered the machine operator (a UAW man) was earning more than the engineer. Is it any wonder the engineer vacated the company?
And now a question. Had any of you ever considered that US built cars are almost unsaleable overseas? They are exported in vanishingly small quantities.
Sione
Published: April 21, 2006 5:33 PM
It's not the lack of creativity of the engineers. No, the GM engineers' creativity is stifled. GM designs (the aesthetic part) are determined by focus groups, thus the cars are mostly suitable for rental fleets, and are quite unmemorable.
Published: April 21, 2006 6:10 PM
Sione,
Your story explains a lot to me and makes sense. Thanks!
Published: April 21, 2006 6:45 PM
I absolutely love reading George Reisman's writing, and I much admire his eagerness to hit irrationality and thuggery head on. This was a beautiful case in point.
To Jardinero: I am sure Professor Reisman does not oppose voluntary organizations of workers, just as he does not oppose voluntary organizations composedof any kind of person. The problem is that American labor law, as it stands, enforces an entirely different system, whereby all workers in a given bargaining unit must join the union that is certified in NLRB-sponsored elections, or at least pay dues to that union, even if these individuals would rather join another organization or none at all. (Yes, plenty of workers prefer to be free of union shenanigans altogether.)
The entire system of "collective bargaining," as reflected in current law, is shot through with coercion and a contempt for the classical liberal conception of rights.
Published: April 21, 2006 7:06 PM
I love reading Reisman (and Woods too). The demise of US auto manufacturing is sad to watch. I always think of Tucker -- the man who wanted to throw his own idea into the mix and was destroyed by Auto Co and Union controlled Senators. GM, Ford and Teuton-controlled Chrysler will all die, and they will die because those who made decisions did so on a short-sighted basis of least resistance and highest short-term gain.
I was up in Reno recently. It is a ugly city that reminds me of a cancer ward. Decay and death everywhere. Compared to Las Vegas, Reno was once a thriving metropolis with virtually every advantage you can imagine. What went wrong? A local told me that many years ago the city passed an ordinance essentially outlawing additional casino growth. The "big boys" essentially got a monopoly. Oh sure, they had to kow-tow to unions and drop some money in the political kitty, but they got zero competition and easy profits. Now Reno is a big urinal. Vegas didn't restrict competition, and, as is nicely detailed in "Sharks in the Desert," all sorts of innovators came and conquered -- and made Vegas a booming metropolis with some of the flat-out coolest casinos in the world. And you know what? Even the lowliest downtown dives (on par with the finest Reno establishments/urinals) make more money. At every turn, like it or not, time offers you two choices, life or death. Most lazy folks, CEO's or otherwise, typically choose death. It's the more serene choice. Life is just too sloppy and unpredictable. Death has a nice, steady and effortless feel to it. And so, with the blessing of the uneducated and thoughtless masses that constitute our political and business elites, GM, Ford and Chrysler will slowly die. Bye. Didn't really like you to begin with.
Published: April 22, 2006 1:52 AM
Again with the vulgar libertarianism. Reismans articles reek with the tainted odor of worshipping of the capitalist class and its interests. Why do you think it is that so many of the poor find libertarianism wanting? The views espoused by Reisman have nothing to do with the free market, but rather with exploitive capitalist system. GM does not operate in the free market. The UAW merely responds to the constraints presented to them.
What ever happened to the the libertarianism of Rothbard? Rothbard would have defended re-appropriation of GM by the UAW, by force if necessary.
Published: April 22, 2006 2:21 PM
Steve, you exceed yourself. If the UAW wants to buy GM, let them do so. Leave force out of it.
Published: April 22, 2006 2:55 PM
Steve,
Liberterians understand your argument, but they have a problem. There is no such thing as a free market, but they try to point out some aspects of it as best we can. They will point the many ways Wal-Mart is good, but they do know the many ways in which it is bad. Same with GM. And even the same thing with Las Vegas (totally artificial place existing only because of a certain distribution of laws).
Liberterians would be completely stymied saying anything, if they can't isolate things. If you really want to infuriate libertarians (I advise you not to) is to mention that every organization is bad because they use public roads (hence there is some subsidy). But doing so is naive and makes you lose out on anything liberterianism offers.
Published: April 23, 2006 12:30 AM
"What ever happened to the the libertarianism of Rothbard? Rothbard would have defended re-appropriation of GM by the UAW, by force if necessary."
I'd like to see a few Rothbard quotes to support this amazing statement.
Published: April 23, 2006 12:54 AM
I assume he's talking about Karl Rothbard, the well-known "Communist Libertarian" :-)
Published: April 23, 2006 2:10 AM
Paul Edwards wrote:
"I'd like to see a few Rothbard quotes to support this amazing statement [Rothbard would have defended re-appropriation of GM by the UAW, by force if necessary]."
BillG responds:
Rothbard applied the same principle to private corporations that derived most of their revenues from the State as the nominally private universities like Columbia that got most of their funds from the taxpayer.
he said they were private "only... in the most ironic sense," were as deserving of confiscation and homesteading as those owned by the State.
quote from "Confiscation" p.3:
"But if Columbia University, what of General Dynamics? What of the myriad of corporations which are integral parts of the military-industrial complex, which not only get over half or sometimes virtually all their revenue from the government but also participate in mass murder? What are their credentials to private property? Surely less than zero. As eager lobbyists for these contracts and subsidies, as co-founders of the garrison state, they deserve confiscation and reversion of their property to the genuine private sector as rapidly as possible. "
Published: April 23, 2006 6:51 AM
Well, General Motors isn't a defense contractor (at least, not their automotive division, or the finance arm; I don't know what else the company proper might be involved in)
Published: April 23, 2006 9:11 AM
sorry...I should have commented that Steve was obviously confusing general Dynamics with General Motors
Published: April 23, 2006 9:31 AM
Steve's comment is really far flung. Here are two Rothbard articles on unions: The Union Problem and The Legacy of Cesar Chavez. MNR sees unions has violent parasites that ought to be prosecuted under libertarian law for using force against private property. This really should be no controversy about this.
Published: April 23, 2006 11:26 AM
Bill G,
While you might have sympathies with the Georgist position, that's hardly a justification to misrepresent the views of Rothbard. It is perfectly reasonable for him -- and other libertarians -- to be critical of "private defense contractors", due to the fact that they build WMDs and get their money from the State war-machine. That critical appraisal, however, certainly does not necessarily carry over to GM, Walmart, Microsoft (which, before you start talking about patents and copyrights, could exist exactly the same as it is via EULAs and DRM), and others.
Published: April 23, 2006 2:04 PM
David,
I believe I said in the next post that Steve must have been confusing General Dynamics with General Electric.
bg
Published: April 23, 2006 2:28 PM
I remember a conversation with one of the UAW's top brass about 1 year ago. I left a message and he actually called me back. He lamented how horrible it was for a Pharmaceutical company to make 18% profit. He continued to inject how universal healthcare was (quote me) "a God given right". Can you see how now how big labor enjoys THEIR profit, but God forbid you try to make any money at the company they work for. The Niagara Power Project enjoys about a 80% net profit, and I wonder why this Union operation in Western NY hasn't been attacked by the UAW also? After all, they know it all. Not.
Published: April 23, 2006 2:43 PM
Bill G,
You're right, I didn't realize you were referring specifically to General Dynamics as being worthy of takeover, and not all companies in general. Thanks for the clarification. My apologies.
--Dave
Published: April 23, 2006 4:15 PM
DH-
no problem...I've done the same too many time not to give someone else the benefit of the doubt.
just to be clear...I was directly quoting Rothbard on Columbia and General Dynamics saying essentially they should be homesteaded by those who work there...not too far away from an anarcho-syndicalist position where his colleague Karl Hess eventually migrated to.
hmmm...I wonder if when Peter jokingly referred to Murray as "Karl" he was referencing Marx or Hess???
bg
Published: April 23, 2006 5:31 PM
Doctor Reisman sheds light on some aspects of current issues, but unfortunately many of his pieces are clearly imbalanced and overly simplistic.
Yes, the UAW has played an important role in the demise of GM, but there are other important factors that a more even-handed treatment would not fail to note, including incompetent and greedy management, inadequate shareholder control, and rent-seeking behavior.
Management was co-party with the UAW in negotiating all labor contracts - which at the end of the day are CONTRACTS and could have been renegotiated - but both management and labor remained stuck in controntational styles, and so failed to take advantage of the mutual gains that could have been accomplished if greater mutual trust and cooperation were present.
These points are rather self-evident, and I and others have noted them on the initial thread and above, but as Reisman's preferred focus is on the UAW "goons", these other factors earn no discussion. As a result, Reisman's anaylsis of the problems at GM and other US automakers is too facile, partial and emotional to be particularly helpful, except perhaps to a partisan, as Reisman reveals himself to be.
Reisman's posts on environmental issues such as climate change are similarly flawed. Rhetoric such as "green thugs" may be emotionally satisfying, but is hardly helpful to a nuanced understanding.
Regards,
an environmentalist who hides under the name “Tokyo Tom�
Published: April 24, 2006 12:48 AM
TokyoTom
But the CONTRACTS were NOT freely negotiated. Relevant legislation prohibited GM management from acting as would have been in the company's interests and as they should have preferred. They have been trapped for decades. I'm not surprised that the arbitrary rules by government turned out to be so corrosive that SOME of the senior managers of the company eventually became cynical enough to do as the UAW did; take while the going was good. After all they couldn't fix the fundamental problem at source.
"One does not play to the rules of rugby league when involved in a rugby union match."- Anon.
Many in GM management did indeed see the product was starting to fail in the market and they could see their staff were bringing the company down. But they could also see the process was gradual. In such a scenario they did what most people would do. Given the rules there were operating within they merely took as much as they could get while the getting was good. Most of them are retired and paid out by now.
BTW another reason for so much product being poor was the lack of skills in the work force and an entrenched opposition to change. The old, "This is how wees always dun it and wees aint about to change." Always works out, that (assuming you want to crash the company)
I note that the new "foreign" plants in the USA do not have significant UAW involvement at all. Honda. Mercedes. BMW.
All reminds me of a situation in the freezing works of New Zealand. The workers would demand 10-15% pay rises at the start of the killing season. Management would say that was impractical and couldn't be afforded. A strike would be called. The govt would prevail on management to settle with the unions (which were compulsory by legislation). Eventually the cost of processing the sheep and cattle was higher then the animals were actually worth on the open market. The govt stepped in and "solved" the problem by paying each farmer a head subsidy (calculated on the herd size). They paid for this by raising personal income taxes across the board. I remember 66% (it's been reduced to about 35-39% over there these days). Of course the whole mess eventually collapsed. New Zealand had a titanic recession and very nearly encountered a national default.
A while back I watched a documentary about this story. One union delegate (who has not been able to find another job since) said, "Every season they say the same thing. Too expensive. Can't afford to pay us more. We go on strike. They fold. One day they say they can't afford it any more and the company is broke and they close the plant. Then I guess they were telling the truth all the time."
On a more humorous note at the end of the documentary they asked each of the interviewees what their favourite cut of meat was. The answers were illuminating.
"Fish," said one.
"Stolen," said another.
Sione
Published: April 24, 2006 3:05 AM
It is indeed a good graphic.
Published: April 24, 2006 3:33 AM
If all other things were equal, the UAW would merely be an annoyance, not a threat.
There are plenty of non-union shops run by very clever entrepenuers who cannot compete with Chinese factories (on stolen land, free to pollute, and with free credit from the Government). Nor can the best customer service groups underprice Bangalore, India.
For GM to survive, it would need to become a Wal-Mart for cars, i.e. having everything built in China and merely selling them here (though service would still be a problem).
GM may also have been shortsighted, but they weren't stupid. When they promised retiree health benefits, they could have instead paid much higher wages (much, much, higher since they would be subject to tax). The package was negotiable. They also could have reinsured and some financial company that guaranteed the benefits would be close to bankruptcy and not GM. But GM could play games with contributions and do other games with benefits - not unlike why most companies prefer earnings which can be managed to move the stock price to dividends which require cold cash to write a cheque.
So while complaining about the leeches, one should take note that people don't survive long several meters below the waterline especially when they have a gash with arterial bleeding.
But leeches are ugly and easy to point to.
Published: April 24, 2006 12:21 PM
"There are plenty of non-union shops run by very clever entrepenuers who cannot compete with Chinese factories (on stolen land, free to pollute, and with free credit from the Government). Nor can the best customer service groups underprice Bangalore, India."
I'll agree that the Price is a seductive Siren, but, given the least threshold of rationality, how can the American customer continually pull on the chain of Supply that leads to foreign shores?
I was asking, in a different thread,: "Doesn't trade go beyond Price, into the explicit support of the Society producing the goods?"
Also, don't we import, over the long-run, the conditions found in the Societies we trade with?
It is my suspicion that the answer to both of the previous Q's is : Yes.
When we rely solely on the Price signals of the Marketplace aren't we, again, allowing Finance to sever the thinking head of Economics?
Thoughts on this, appreciated.
Published: April 24, 2006 3:27 PM
Let's see here. Price? Can't beat the Chinese? That all depends whether you're a loser or not.
Carlos is manufacturing steering knuckles and other components for various industries in Australia (high tax, compulsory superannuation, regulations upon regulation, severe compliance costs, lots of enviro nonsense). He even makes parts for the new Boeing. He beats the Chinese out and wins the deal.
Then there is a guy in New Zealand, Martin, who casts and machines precision aluminium components and exports them back into Asia.
And there is an outfit up in Penrith (Dorf-Clarke) who manufacture faucets, showers, baths and the like. They export into China and Asia.
AMT in Wiri exports its aluminium wheels and suspension components all over the planet. They seem to be able to compete with the Chinese AOK.
Fischer and Paykel make white goods in NZ and Australia. Exported everywhere. They are also a leading manufacturer of healthcare products. They seem to be able to successfully deal with low cost labour competitors.
Of course I am also well aware of a number of outfits that are unable to compete and some that are going to crash and burn. I won't name and shame them here for obvious reasons. Their troubles are not caused by the Chinese or the Indians or the Asian Tigers. They are not even down to a matter of labour costs. The troubles are internal, cultural, structural. They certainly are not imported!
The best thing for the American consumer to do is to determine his purchases according to the attributes he feels are important to him. That may be a matter of price. It may be brand name. It may be quality or fitness for purpose. It may be finance deal on offer for the purchaser of the product. It may be location of the distributor. Whatever.
But to appeal to patriotism, the last refuge of the scoundrel...? Stupid.
Businesses come and businesses go.
Sione
Published: April 24, 2006 3:59 PM
Sione, please re-read my post more carefully. The last thing I was doing was "appealing to Patriotism". I was, most definitely asking why we trade with regimes we wouldn't like to see constructed here(the U.S.) and chalk it up to the simplistic answer: Price.
Published: April 24, 2006 4:49 PM
M.E.,
People trade with people, rather than regimes. Now, it is true that people live under and suffer under these various regimes, but usually these people have no say in the behavior of, much less a say in the existence of these regimes. It is likely that although they must acquiesce to it, most regret living under the particular regime they live under, at least insofar as their state acts against their own interests, which it almost necessarily must do.
But why would we trade with people living under these various unsavory regimes? For the very same reason we would trade with our domestic neighbors: we as individuals, think it is in our best interests to do so. Therefore, no one could be justified in, and hence it would be unethical to forcefully restrict this voluntary trade. Nor is there any point in hypothesizing about if or how life might be better for others if this trade were stopped. We know the people trading believe they benefit, and the economist cannot know how non-market participants feel about it.
Finally, if it is coercive and repressive regimes we happen to be averse to, the proper response is to argue to lessen the power our own repressive regime has over us that it exercises in such ways as inflicting trade restrictions, embargoes, tariffs and quotas.
Published: April 24, 2006 5:45 PM
Paul, thanks for your post.
Believe me when I say that: "Trade Rules! We just don't need trade rules."
But my Q remains: "Also, don't we import, over the long-run, the conditions found in the Societies we trade with?"
I'm not a believer that our current market is an honest broker that deals in all Costs that its Price may pretend to signal. To the remaining Q, above, If the U.S. economy is locked into a "Free Trade" contretemps w/ current-day PROC and all of its lovely appreciation of its people that that entails; are we not ensuring the eventual mirroring of the worst(presumably, the least Financially costly) of their system in ours?
Published: April 24, 2006 6:20 PM
M E Hoffer
"are we not ensuring the eventual mirroring of the worst(presumably, the least Financially costly) of their system in ours?"
Depends on who the "we" is.
Sione
PS. In practice totalitarianism is most expensive.
Published: April 24, 2006 9:15 PM
Sione, my point remains that even with both labor and managment resorting to state proxies in their negotiations, they remained responsible for them and could have negotiated better terms if they had been able to establish greater mutual trust. Management consistently failed to do so and instead showed that it cared more about its self than it did the welfare of the company or the workers. Better deals could have been won if there was greater management sacrifice and greater disclosure.
ME, you ask "Doesn't trade go beyond Price, into the explicit support of the Society producing the goods?" The answer to this question is obviously yes, except that the support to the exporting country is implicit and not express. The exporter benefits and, assuming any negative externalities are not larger than the benefits, hen the exporting nation benefits as well.
You also ask "don't we import, over the long-run, the conditions found in the Societies we trade with?" I think that the answer to the second question is clearly no as a general matter. The consumer in the importing country is generally unconcerned with the state of affairs in the exporting country, and is simply interested in desired products and their prices. There may be a cultural interchange that accompanies the flow of goods, but that is tangential.
That said, there are exceptions. Our knowledge of horrific labor and environmental practices may make us more willing to accept such practices domestically, and does to some degree underwrite the continuation of such practices abroad. There is the problem of growing trafficking in human slave or slave-like labor, including sexual slavery. And where environmental regulation/enforcement are extremly lax, imports can in effect subsidize environmental destruction.
What we should do about these matters is a difficult matter, complicated by the fact that even if the US were to take action against particular products, there is now a global market, so products not consumed here will be consumed elsewhere. For this reason, any action taken here should be coordinated with other nations, such as the coordination involved in trade in endangered species under the CITES convention.
I think this is actually a very important issue, since many countries do not have effective property rights regimes, so demand pull from the developed nations often results in over-exploitation of previously "common" resources by politically well-connected elites who essentially are stealing common resources for private gain. Those who are poorer have few effective defenses to this.
Regards,
Tom
Published: April 24, 2006 10:33 PM
TokyoTom
Could'a. Gonna. Might've.
Had you experienced some of the nonsense regulations and politics of the car industry I doubt you'd see things in the way you appear to.
The GM management did not have the opportunity available to dismiss the union and walk away. Without the option to say "no deal" there was no way they could negotiate properly. For one thing they did not have the option to look elsewhere for labour. They were forced to use UAW. And there was always a threat of sabotage and violence.
My understanding is that "negotiations" occurred under a culture of threat and rort. Hard to see why any manager would go out on a limb and put themselves at risk. Why bother? You can't get a reasonable result and no-one cares anyhow.
My approach would have been to close the plants, dismantle them and import everything from off-shore. That would have saved a great deal of time and resource. The trouble is that any manager who took that approach would have been jailed or murdered or both. Anyway, it's too late now.
GM, Ford and Chrysler will cease to exist as we know them soon enough. The best thing to do would be to admit defeat and start closing plants straight away. If its a UAW plant shut it. Save the money and tool up off-shore. There's a whole generation of US workers that have been tainted and you'd need to wait for them to dissipate (or die off) before you can get things re-established, if ever.
You guys will be able to import Cherry sedans from China for under $20k shortly (4.7l V-8 RWD). That has to be the death knell for the US domestic manufacturers.
I wonder whether GM et al will be around long enough to sell any fuel cell cars to the public? I'm betting not. So then you have to consder the billions being wasted on US govt. grants for fuel cell research. Imagine. All that spending and no result!
Sione
Published: April 24, 2006 11:30 PM
I'd like to reopen the issue of Rothbard's position regarding expropriation of corporations whose main customer is the state.
First, when he spoke of workers as the homesteaders, he was certainly not talking of any union. He plainly views unions as criminal organization in collusion with the state. They as criminals have no claim on any property.
Secondly, it strikes me that his solution as pointed out by BillG above which is presented here:
http://www.mises.org/journals/lf/1969/1969_06_15.pdf
strikes me as unnecessary, potentially impracticable and at least partially non-libertarian in its implementation. At least it seems to be worth a debate.
Is it not adequate that the stock holders of such companies would suffer a large capital loss due to the lost future "earnings" of the firm? Does transferring ownership to the employees really correct any wrong, and how?
Are the employees of these firms less culpable than share-holders in such firms? Are they really in a morally superior position to claim ownership in an enterprise that they have also benefited from and arguably more so?
There is no way to assess to what extent employee and share-holder considered themselves to be simply doing their best to protect themselves from circumstances inflicted externally by the state, versus them being enthusiastic participants in the state created game.
I would suggest letting the employee and investor sink or swim together on unchanged terms as the impact of lost revenues from state money takes its affect.
Furthermore, i would like to contrast Rothbard's treatment of the major corporate players in the military-industrial complex with his treatment of the banking industry. It is possible i am misreading his entire thrust, but on the surface it strikes me as RADICALLY inconsistent. The banking industry is most certainly a gang of defrauding thieves and lenders of blood money. Much of their profit is derived from theft, coercion, and the threat of violence and murder. If any group deserves harsh treatment, certainly that group of vipers does.
However, when Rothbard described dissocializing the dollar, he never mentioned transferring ownership of the banks to banking employees. Furthermore, he even considered it feasible to not first do a massive deflation which, in not doing so, would add dramatically to the capital stock of the banks. At the least it seems they should not profit so handsomely due to this one last act of moving the dollar entirely to the private sector.
Perhaps i am missing something. Does anyone have any comments on any of my points?
Published: April 26, 2006 1:33 PM
Paul Edwards wrote:
"when Rothbard described dissocializing the dollar, he never mentioned transferring ownership of the banks to banking employees"
BillG responds:
you mean so they can continue collecting interest on money that was created out of thin air?
truly de-socializing of banking would be the mutualist approach...
Published: April 26, 2006 2:08 PM
Sort of yes. Without a deflation back to pure reserves prior to the official equating of gold to the dollar, all bank loans outstanding based on fractional reserves, prior to that moment would be simply then considered actual reserves afterwards, a real money asset held by the banks, rather than a multiple of the reserve that they originally held. This would represent a substantial increase in capital to the banks accrued due to their previously fraudulent banking practices.
Published: April 26, 2006 2:45 PM
"There is no way to assess to what extent employee and share-holder considered themselves to be simply doing their best to protect themselves from circumstances inflicted externally by the state, versus them being enthusiastic participants in the state created game."
Paul, this may be somewhat specious. Are not the employees and the shareholders, both, "enthusiastic participants in the state created game"? Surely they both know, before investing or accepting employment, the nature of the beast they are courting.
Granted, though, there is no way to assess "self-protection v. enthusiastic support".
And, the eternal conundrum remains: how to find toxin-free fish in a polluted stream.
Published: April 26, 2006 2:58 PM
"Much of their profit is derived from theft, coercion, and the threat of violence and murder. If any group deserves harsh treatment, certainly that group of vipers does."
Paul,
Why would we give any countenance to the gains made by fraud? let alone, leave the perpetrating institutions whole in any semblance?
Doesn't the market's dispensation of Enron provide an accurate corollary?
Sincerely,
Published: April 26, 2006 3:08 PM
Gypsies, tramps, and theives - Share and cher alike.
But why would we trade with people living under these various unsavory regimes? For the very same reason we would trade with our domestic neighbors: we as individuals, think it is in our best interests to do so. Therefore, no one could be justified in, and hence it would be unethical to forcefully restrict this voluntary trade. Nor is there any point in hypothesizing about if or how life might be better for others if this trade were stopped.
Let us say that next door to you lived a literal den of theives. They could get nearly anything for you BELOW wholesale. You do a business auctioning things on eBay or something else such that it is not in their interest to steal from you. Is there anything wrong with that?
It is in my best (economic) interest to do so.
Would it be unethical to restrict this involuntary trade?
Is there any point in hypothesizing about if or how life might be better for the theft and robbery victims if this trade were stopped?
Well, the house next door might be raided, and China and Taiwan might get into a scuffle which will monkeywrench the whole system, or the USD may collapse, but while WalMart can get stuff from the Chinese, we can buy merchandise at discount prices - better get it while it's "hot"!
The problem is the trade is voluntary at the final and superficial level. The farmer did not volunteer having his land taken for a factory, those near it didn't volunteer to deal with the pollution, nor are they volunteering to lose their wealth to inflation, no more than the person volunteered to not get shot or not have his watch stolen so you can get a $20 Rolex.
Maybe we can call this volition laundering.
Can a non-fractional reserve bank compete with fractional reserve banks that can fraudulently promise to meet all deposits? I've noted before they are free to call themselves mutual funds and suspend redemptions on a whim, but they call themselves "banks".
Sione - many of the negotiations and contracts occured in the '50s (and the employer health insurance and benefits was a consequence of wage and price controls during WW2). You would not have been able to outsource anything. It may be imprudent to sign long-term contracts, but when there is economic power (and labor can have it during times of labor shortages), why shouldn't they take advantage of it to lock-in the advantage for the long term?
You are also projecting China's advantage linearly into the future. That isn't going to happen unless cash-out refis and home flipping continue similarly. Is the DJIA at 36,000 yet?
Published: April 26, 2006 3:52 PM
Hi M E,
“Paul, this may be somewhat specious. Are not the employees and the shareholders, both, "enthusiastic participants in the state created game"? Surely they both know, before investing or accepting employment, the nature of the beast they are courting.�
Well, they certainly could be enthusiastic participants, and this was essentially my point, which was this: if GD is broken up and confiscated from the share-holders and given to the GD workers, how is this better than just leaving it with the share-holders? How are the workers more deserving of this asset than the share-holders?
But although I hold the investor and the worker to be on an even moral ground, I am not quick to judge either. I think that when someone needs a job, and an arms company offers them one, it might be a bit much for me to shake my finger at them. The reason is this. If the state did not exist, that person would find profitable work in a legitimate enterprise. It may even be in the defense industry. After all, we’ll still need guns and bullets etc. even under anarchy.
With the existence of the state, opportunity is more limited than it otherwise would be, the economy is distorted and hampered and money has been diverted to these grey firms. Often people are just doing what they can to get by comfortably given the deal they’re dealt.
Published: April 26, 2006 4:05 PM
Let us say that next door to you lived a literal den of theives. They could get nearly anything for you BELOW wholesale. You do a business auctioning things on eBay or something else such that it is not in their interest to steal from you. Is there anything wrong with that?
It is in my best (economic) interest to do so.
To me, what is being described is in the [Financial] best interest, lowest price, of the buyer, and in no way should one conflate that w/ [Economic], supporting Hooligans, best interst.
Published: April 26, 2006 4:19 PM
Hi again M E,
Me: "Much of their profit is derived from theft, coercion, and the threat of violence and murder. If any group deserves harsh treatment, certainly that group of vipers does."
You: Why would we give any countenance to the gains made by fraud? let alone, leave the perpetrating institutions whole in any semblance?
Doesn't the market's dispensation of Enron provide an accurate corollary?
Response:
I admit I may not follow you completely, but I’ll take a swack. My point was to suggest that the bankers are in no sense above the military-industrial complex on moral grounds and they don’t deserve better treatment.
But if you ask why Rothbard might have, not that I have established at all that he did, and I’m thinking he almost certainly didn’t, I would have to say it was more on practical grounds. If the banks are taken down and demolished, rather than just put under ethical laws of 100% reserves, perhaps the economic ramifications on the nation would be too overwhelming.
I don’t know if that is it at all or if Rothbard would have dismantled the banks as ruthlessly as the major players in the military-industrial complex after he had finished defining the dollar in terms of gold. My impression is that was not the direction he was going with banks though.
Published: April 26, 2006 4:20 PM
Well, they certainly could be enthusiastic participants, and this was essentially my point, which was this: if GD is broken up and confiscated from the share-holders and given to the GD workers, how is this better than just leaving it with the share-holders? How are the workers more deserving of this asset than the share-holders?
Paul, I doubt that the workers should be the favored class, though, I've long wondered why the U.S. Treasury is not a shareholder of firms that it chooses to deal with. The M/I Complex, especially. Or, if not the UST, then a distro of saidsame shares to the American people, writ large.
Published: April 26, 2006 4:28 PM
Paul, I am not fully versed on Rothbard, though, you caught my general drift.
"rather than just put under ethical laws of 100% reserves"--What makes us think the today's Banks have sufficient Capital to be able to weather a shift like this? I'd think they do not and, thereby, would be Insolvent. No?
Published: April 26, 2006 4:39 PM
Tz:
Me: But why would we trade with people living under these various unsavory regimes? For the very same reason we would trade with our domestic neighbors: we as individuals, think it is in our best interests to do so. Therefore, no one could be justified in, and hence it would be unethical to forcefully restrict this voluntary trade. Nor is there any point in hypothesizing about if or how life might be better for others if this trade were stopped…. [I think you dropped a few words providing some important context here, but that’s cool]
You: Let us say that next door to you lived a literal den of theives. They could get nearly anything for you BELOW wholesale. You do a business auctioning things on eBay or something else such that it is not in their interest to steal from you. Is there anything wrong with that?
It is in my best (economic) interest to do so.
Would it be unethical to restrict this involuntary trade?
Is there any point in hypothesizing about if or how life might be better for the theft and robbery victims if this trade were stopped?
Response:
You conflate the dealing with thieves with the dealing with the poor shmucks trying to make a living under the tyranny of murderers and thieves. You would have our own tyrants, murderers and thieves, prevent us from dealing with people suffering under their own tyrants, murderers and thieves. It’s counterproductive and unethical.
Secondly, think about your contrived scenario and the unreal assumption your point implies: You are living next door to thieves who can avoid prosecution by the law, and yet this same law is able to correctly discern and prevent you from doing business with such thieves? What an interesting mixture of extreme competence and incompetence this system of protection and justice is that you imagine.
How about imagining that if the law can’t even catch the thieves, it is in no position to know when we are dealing with thieves. And since the state is the number one thief in the first place, expecting it to be motivated by anything approximating justice is extremely naïve.
Published: April 26, 2006 4:46 PM
Mostly Reisman is fudging the truth, for cheap political gain. For whom? Certainly not libertarianism?
It does no-one any good to lie.
Here's a critique of Wagoner (and Reisman implicitly)
http://chrissilvey.com/weblog/?p=112
"Even a person with the most basic math skills can calculate that this is not one of the fundamental reasons for GM’s poor performance. GM loses $2,311 per vehicle. If we were able to waive a magic wand and eliminate all health-care costs from GM’s liability sheet, they would still be losing $786 per vehicle."
"To illuminate this falsehood in another way; If GM sold its average car for the same price as Toyota (an addition of $5,855 per car) they would eliminate their marginal operating loss and make a profit of $3,544. This would more then cover the large executive bonuses and employee health-care liabilities"
Published: April 26, 2006 5:11 PM
M.E.,
Me: "rather than just put under ethical laws of 100% reserves"
You: --What makes us think the today's Banks have sufficient Capital to be able to weather a shift like this? I'd think they do not and, thereby, would be Insolvent. No?
Response:
I think some banks would perhaps endure the contraction. What it would entail for starters is the FED’s permanent demise. No more injections of new reserves. Secondly, it could be a gradual, fully pre-announced schedule of incremental increases in reserve requirements for the banks up to 100%. The practical consequences could be a massive reduction or halt to bank lending. No money would be lent by the banks as they did nothing at all but receive principle back which would be applied to their new increased reserve requirement.
During this MASSIVE credit contraction, many businesses might fail and there would be a spike in unemployment. It could be the biggest correction the world has seen I would imagine. But within a year or two, the economy would be as good as gold and the country would see prosperity like never before. I don’t clearly see that all banks would necessarily fail during this process, but I would think some bank runs would occur and some banks would likely fail, but if they fail, they fail. In the end, the money in the economy would be 100% reserve money and then the conversion of dollars to gold could commence without banks benefiting unfairly.
I don't know; maybe it would be too brutal. The alternative is to have banks benefit unfairly. Life.
Published: April 26, 2006 6:23 PM
tz
And many of the negotiations did not. They occurred every "bargaining season." I recall some of the not infrequent strikes. GM could not say "no deal" to UAW. BTW you certainly can't say that GM pays 1950s rates. The bar has been raised on many occasions since. Anyway, you've identified the problem yourself. GM was placed in a position where UAW union power could force them to accept "agreements" that were not in the best interests of the company (or its employees). How can there be any "trust" in such circumstances?
Outsourcing: GM owned Opel, Vauxhall, Holden (eventually) and other off-shore plants (as did Ford). Transplanting capacity off-shore and reducing local production was (and remains) the only real option they have left. It's probably been left too late now.
Buying a Chinese lux. car: the V-8 Cherry to which I referred is presently under devlopment. Given the usual rate of progress in finalising specification and tooling up etc. you could expect it to arrive on the market quite soon. I remember what the Lexus LS400 did in the US market on introduction. The Cherry is likely to be more significant.
Soon there will not be any "American cars" which is a pity. Cars will be built to European mechanical specifications with Asian production and quality standards. Perhaps they'll put a little US bling bling (made in Taiwan) on some of them.
Sione
Published: April 26, 2006 6:48 PM
Paul,
I hear ya, if it were too occur, maybe some some of the current Banks could meet capital req.'s, but how would they square their previous behavior?
I would imagine that such a change would only come about by the realization of the vast many that 1/x Reserve Banking is, indeed, the fraud it is. Given that, wouldn't there be a corresponding call for : Justice meted upon the Perpetrators?
As an aside, I've long wondered whether The FedRes' ownership of the U$D money supply, or 1/x Reserve Banking is the greater nuisance.
Something tells me that the existence of the FedRes gets the nod.
Published: April 26, 2006 7:14 PM
M.E.
Without the fed, that would be the end of the steadily increasing supply of money. Then we would just have business cycles with fr banking. On the other hand, it is the banks themselves that do the lion's share of the inflating via credit expansion given the increasing reserves from the fed. So I guess it’s kind of hard to make a choice. They’re like a tag team in wrestling. Just when you think the one is going to twist your arm off the other one comes in to the ring and stomps your foot. LOL.
Published: April 27, 2006 1:15 AM
"In every way, down to its misspelling of the graffiti, this graphic is an incredible visual depiction of the mentality that has decimated"
The misspelling was intentional. The misuse of "decimated" probably was not.
Published: April 27, 2006 12:24 PM