Vincent Fernando

Defending the UAW, Felix Salmon Abandons Logic

This will be my last reply. I appreciate your comments, but there is a point where I'll just let it be until the next article. 303820, you need to really understand how wages are created for people to earn. I'm talking basic economics, basic laws of economics. Not the more complex stuff that is debatable theory.

I'm not sure how I can explain it further but I'll try.

Let's think about standard of living. Our standard of living costs something, its value has to be created from somewhere. Mother nature is a tough place. All the comforts we enjoy are due to somebody making it happen, creating value. Thus at its core, the standard of living for a country is simple. Its the total productivity, ie. value created, divided by the number of people. Because once all is said and done, collectively we all can't take more value than we collectively create. So to be simple, imagine if 10 people were dropped in a jungle and collectively harvested 10 pineapples, some collected 2 while some collected zero, but altogether they got 10. It would be impossible to have 2 pineapples each. The only way to get 2 pineapples each would be for the society to find a way to create 20 pineapples with the same 10 people.

It sounds simple, but really thats economics at its core. Its just that in this modern age we're many layers removed from the original economic problems of our ancestors so perhaps the laws of econ are harder to see as evident. Now what we consider bare necessities include mobile phones that can communicate across a continent, 200 channels of entertainment 24/7, advanced chemical compounds that extend our lives by reducing heart attack, and notebook PC's running on chips 10,000x faster than our brains. Standards of living haven't gone up? My arse. All of the above, unattainable just 20 years ago, you can have for under $1,000. But I digress.

So anyways, how do standards of living go up for a country? Create more value per person. This is inescapable fact. Just as laws of physics are inescapable.

And so how did the US create an economic miracle and a very high standard of living? On average, each worker created more and more value over time. Massively more value if we compare today with the birth of the nation. And as there is a limit to how long one can work in a day, most of this added value was due to discovering better ways to use people's labor to make things happen, with technological innovation. Labor alone doesn't create higher standard of living, labor has existed since the stone age. More advanced technology applied to labor is what makes the difference.

Now on an individual basis, we in the end either have to follow these same rules, or we need to mooch off of someone else who follows them. There is no way for 10 people to have 20 pineapples if 5 of them create 2 each and the other 5 create zero. Now of course there is a way to make everyone have 1 pineapple. Force the guys who have 2 to give 1 away. But soon many people realize that the smartest thing to do is to create zero and just take 1 from someone else. Thats called communism and history has shown us how that worked out, with China's initial economic problems, and then reform, as a prime example. Or just count the major human innovations which have come out of communist countries...

Thus on an individual basis, each of our standards of living must come from the value we create, unless we then go and infringe on other people's rights and force them to give us more value than we add. This is inescapable.

This is how it is at the core. This is basic economics. Blame mother nature, but don't blame other people in your society. Its life.

Now, the UAW is guilty of forcing wages and benefits beyond the value they provide, and doing it for a very long time. Eventually it killed the US auto industry, and it makes sense since they essentially were taking more than they provided their employers for years. Here's another analogy. Just imagine a box filled with money, invested by shareholders and creditors. And now imagine that each year a large group of people take more money out of the box, than they create in the box. Eventually, the box is empty, its not sustainable. I'm amazed at how many people fail to grasp this.

And thats the US auto industry. With the shareholders basically annihilated by this, the UAW is now killing the creditors who supplied the rest of the money in the box. If it just stopped there, then now it would be over. The money box would be empty, and the UAW's game would be over. It should have ended before the creditors got killed since by law, by contract, creditors have senior claims.

But what have they done? Well they've twisted the government to essentially ignore the law and to make things worse they've now started to tap into another box, a much larger box, called the US taxpayer, as a further step to avoid economic reality. And thats when I think a lot of American's have a very good reason to be angry.

Thats my problem with the UAW. If people want to enjoy a certain standard of living, why can't they just learn to earn it like the rest of us? Add at least as much value as you take from your company. If you need to earn more, then find ways to add more value. Its simple. Thats the real world most people face, and its the reality eventually someone has to face, even if they have to support moochers who leech off of them.

So why does the UAW get to strong arm the US taxpayer once they have killed the companies that provided their livelihood? You realize that most of the US economy, and most US people, has to live in the real world, facing the reality of economics, right? And actually most US companies are very successful, and most Americans are very successful, competing in open competition with the entire world. Most US companies do fine without the US having national health care.

See, none of the arguments for the UAW hold if one simply compares the auto industry with the majority of the US economy, thinks about basic econ, and reads history. Or simply considers individual property rights. Unfortunately, to the benefit of the UAW, most people do none of above. This is my last post on this thread. In either case, I wish you the best.

Defending the UAW, Felix Salmon Abandons Logic

303820

The key point you miss is that what I'm saying is that everyone needs to EARN their income, their lifestyle, etc. You never talk of how the auto industry might EARN its way to success. Instead you want the government to bail out the mafia like UAW, to block imports, to break business contracts with Chrysler creditors, etc.

And btw Toyota lost money for the first time ever. We'll see where they go, but I'm sure they will continue to do fine especially as long as US automakers have their hands tied by government and parasitic unions. They have proven their competitiveness for the time being. Despite the recent loss, I think few would argue that the US automakers have been beating them lately.

Finally, I think you need to think about what America was built on, what brought us middle class lifestyles for the masses, etc. At its core it was not manufacturing, it was not farming, it was not computers. Really. At its core it was a system whereby people pull themselves up by their own bootstraps while the government makes sure others don't break their individual property rights. Each tries their best to succeed, motivated by the knowledge that they had a right to their spoils and others wouldn't be able to forcefully mooch off (ie steal from) them. It sounds so simple, but such a system had never existed on such a large scale. The result was an economic miracle because masses of people spent time building skills, being productive, and innovating rather than just following their leader powerlessly or trying to find ways to mooch. America needs entities like the UAW? If you go to any third world country there are tons of UAW-like entities, far more than in the US, be they big labor or state-run company employees, clamoring for support and demanding financial security as if their income was a god-given right rather than something to be earned. In most countries, large entities like the UAW spend more time finding ways to manipulate the government to their favor rather than finding ways to become more skilled, more efficient, more innovative. And in many countries the route to success more based on political manipulation skills, rather than innovation, efficiency, and competency. If you look at the richest people in the world, you'll see most of the richest abroad are based on heavily government-regulated industries like liquor, tobacco, property, agriculture. There aren't Bill Gates or Warren Buffet. No Steve Jobs or Larry Page. In a system such as the UAW plays, if you are truly smart you realize working hard isn't necessary and time is better spent playing political games to succeed. The unique success of the US wasn't built on that kind of behavior. The US is still the leader on so many fronts, in growth industries of the future, and most... dare I say all... of these leader industries have absolutely nothing like the UAW to deal with. They are probably the least unionized industries we have. And the most competitive, with the brightest futures. 303820, please slow down your thoughts and think about this!

Defending the UAW, Felix Salmon Abandons Logic

303820, Rush Limbaugh has nothing to do with this. As pointed out previously I am not anti-union. I am anti-UAW. There is a huge difference.

I think you need to think about how one earns an income. We are not born with a guaranteed income regardless of what we do. We need to earn it and in a perfect system we get paid an amount equal to the value we add. You have to think about this. Thus anyone who wants a middle class lifestyle (which is a pretty luxurious lifestyle that most of the world doesnt have btw), then you need to create value in this world equal to the cost of your lifestyle. The way to solve worker's income problems is for them to add more value. Not to just demand higher wages. Because in the end, their wage has to come from added value, ie. adding to employer's income by at least an amount commensurate with their salary hike. Company's income, which is the source of all wages, have to come from somewhere. If workers just demand more and more without adding value they simply kill their companies by slow torture. That's what we've witnessed with the US auto industry. If people find that the salaries from auto factory work aren't enough to maintain the lifestyle they want, (again, our middle class lifestyle is pretty luxurious relative to most people in the world) then they need to figure out how to add more value with new skills or new ideas. But instead of doing this, the UAW simply finds way to demand more money, less work, and twist the rules to get their way. Our tax dollars now subsidize their inflated benefits. I'd much rather this money went into educating proactive people who try to improve themselves in order to learn more, add more value, and then EARN higher wages.

Defending the UAW, Felix Salmon Abandons Logic

The UAW or any union has nothing to do with "the middle class", despite their attempts to connect with people by associating themselves as such. Toyota's workers are doing just fine. They are middle class. Also take a look at growth industries of the US. No huge unions and they are doing fine long term. The middle class isn't being "destroyed". I am always perplexed where this concept comes from. Finally, also realize that the US economy is at its core driven by internal innovation, not through a dependency on selling abroad. I wouldn't worry about selling to China.

I think you need to understand what the UAW is, how they aren't just any union, and how they have slowly strangled the US automakers to death. There's no reason why the US can't have competitive automakers, once the strangehold of unions are gone. But it seems like our government just won't let the UAW die. Too bad.

Defending the UAW, Felix Salmon Abandons Logic

There are a few typos in the above, hopefully its understandable, its 4am for me.


On May 07 04:55 PM Vincent Fernando wrote:

> I'll respond to the following comment from "bibble":
>
> "So finance lobbyists can 'organize' and 'collectively bargain' with
> Washington politicians for NAFTA, all manner of deregulation, legalized
> usury, bailouts for the banking and bossing class etc. But when workers
> do it, it's labeled corrupt by this same hypocritical crowd? Please.
> "
>
> I am not arguing against workers organizing. I am arguing against
> the government allowing them to break the rules. In a normal situation
> the companies would go into bankruptcy and the creditors would have
> senior claims to the UAW, as guaranteed them in contract. They are
> senior in claims. But the UAW has managed to use the government to
> their advantage and get ahead of the creditors in claims. Basically
> its having an contractual agreement ahead of time and then breaking
> the contract. If the entire US worked like this, the country would
> be a disaster. You need to realize how much of the economy works
> off of sanctity of contract. Many countries have struggled for decades
> to get the relatively trustworthy business law of the US and failed.
> Let's not throw away something one of the US's greatest achievement
> - a relatively trustworthy legal system for business.
>
>
> "Even Sect. 201 of your labor-market-regulating Taft Hartley Act
> clearly states the position of the U.S. with regards to collective
> bargaining:
>
> "It is the policy of the United States that sound and stable industrial
> peace and the advancement of the general welfare, health, and safety
> of the Nation and of the best interest of employers and employees
> can most satisfactorily be secured by the settlement of issues between
> employers and employees through the processes of conference and collective
> bargaining between employers and the representatives of their employees"
>
>
> Why don't you captains of industry try to grow your precious profits
> in ways other than simply extracting wealth from those who actually
> create it?"
>
> I think you need to really re-think the above. If nobody provided
> funding and them organization for companies, there would be no wealth
> generation. The factory worker who pulls levels the way he was told
> to, would be nothing without the funding and organization that put
> him in his position. And if there are no profits, then there a business
> is not sustainable. And then there are no jobs. So profits are very
> important and they make the jobs possible. Funding of a company also
> make the jobs possible. The UAW doesn't make the jobs possible. Why?
> Because Chrysler would be MORE than happy to find people elsewhere.
> But the UAW, in mafia like fashion, forces Chrysler to use its labor.
> The UAW is a parisitic monopoly and if you want to know why the US
> auto industry has failed, look no further. Toyota is doing just fine
> in the US, using US workers.

Defending the UAW, Felix Salmon Abandons Logic

I'll respond to the following comment from "bibble":

"So finance lobbyists can 'organize' and 'collectively bargain' with Washington politicians for NAFTA, all manner of deregulation, legalized usury, bailouts for the banking and bossing class etc. But when workers do it, it's labeled corrupt by this same hypocritical crowd? Please. "

I am not arguing against workers organizing. I am arguing against the government allowing them to break the rules. In a normal situation the companies would go into bankruptcy and the creditors would have senior claims to the UAW, as guaranteed them in contract. They are senior in claims. But the UAW has managed to use the government to their advantage and get ahead of the creditors in claims. Basically its having an contractual agreement ahead of time and then breaking the contract. If the entire US worked like this, the country would be a disaster. You need to realize how much of the economy works off of sanctity of contract. Many countries have struggled for decades to get the relatively trustworthy business law of the US and failed. Let's not throw away something one of the US's greatest achievement - a relatively trustworthy legal system for business.


"Even Sect. 201 of your labor-market-regulating Taft Hartley Act clearly states the position of the U.S. with regards to collective bargaining:

"It is the policy of the United States that sound and stable industrial peace and the advancement of the general welfare, health, and safety of the Nation and of the best interest of employers and employees can most satisfactorily be secured by the settlement of issues between employers and employees through the processes of conference and collective bargaining between employers and the representatives of their employees"

Why don't you captains of industry try to grow your precious profits in ways other than simply extracting wealth from those who actually create it?"

I think you need to really re-think the above. If nobody provided funding and them organization for companies, there would be no wealth generation. The factory worker who pulls levels the way he was told to, would be nothing without the funding and organization that put him in his position. And if there are no profits, then there a business is not sustainable. And then there are no jobs. So profits are very important and they make the jobs possible. Funding of a company also make the jobs possible. The UAW doesn't make the jobs possible. Why? Because Chrysler would be MORE than happy to find people elsewhere. But the UAW, in mafia like fashion, forces Chrysler to use its labor. The UAW is a parisitic monopoly and if you want to know why the US auto industry has failed, look no further. Toyota is doing just fine in the US, using US workers.


On May 07 10:45 AM Bibble wrote:

> So finance lobbyists can 'organize' and 'collectively bargain' with
> Washington politicians for NAFTA, all manner of deregulation, legalized
> usury, bailouts for the banking and bossing class etc. But when workers
> do it, it's labeled corrupt by this same hypocritical crowd? Please.
>
>
> Even Sect. 201 of your labor-market-regulating Taft Hartley Act clearly
> states the position of the U.S. with regards to collective bargaining:
>
>
> "It is the policy of the United States that sound and stable industrial
> peace and the advancement of the general welfare, health, and safety
> of the Nation and of the best interest of employers and employees
> can most satisfactorily be secured by the settlement of issues between
> employers and employees through the processes of conference and collective
> bargaining between employers and the representatives of their employees"
>
>
> Why don't you captains of industry try to grow your precious profits
> in ways other than simply extracting wealth from those who actually
> create it?
>
> img.skitch.com/2008081...