Free-Floating Hostility

Tuesday, December 16, 2008

Hey Mickey: Look at the Economy, and tell me that weak unions are good for anyone

Mickey Kaus's reflexive anti-UAWism has me pretty riled up these days. And I'll address that in a moment. But first, baseball:

Things are going pretty well for baseball right now. The Tampa Bay Devil Rays (of all teams) played in the World Series this year and the sport is as competitive as it has ever been. I do question whether competitive balance is good for the long-term health of MLB -- baseball doesn't have a national following the way the NFL does, so one wanted to watch Rays-Phillies -- but in the short-term that fact seems to make people happy. This age began following the 2002 labor agreement. And that's telling.

From the advent of free agency in the 1970s, the owners had spent decades trying to re-impose the reserve clause on the players. They colluded to keep salaries low for a while. And then they spent a decade ragging on their own game and complaining that it was lousy because competitive imbalance (even though there were no repeat champs between 1979 and 1992 and the only team to win twice in that span was the small-market Minnesota Twins). Then they even threatened to contract two teams. Shockingly, people believed them about the game being in trouble. After the strike of 1994 wiped out the World Series, it took Cal Ripken (whose streak the owners tried to end with scabs) and steroid-fueled Home Run chase of 1998 to start to bring people back. it was touch and go for a while. MLB nearly sent its business the way of the NHL in order to save it from the evil union.

But a funny thing happened in the 2002 labor deal. They owners stopped doing that. They accepted that the MLBPA probably wasn't going anywhere, and instead of trying to destroy the union, they engaged it. Bud Selig and Don Fehr probably don't have dinner together if they can avoid it, but there is a real working relationship. And while the steroid issue exposed some fissures, and there always will be conflicts (hell, even the weak-ass NFLPA complains about stuff sometimes) between labor and management, things have been peaceful for the better part of a decade. For years the union said it would accept a drag on salary if the owners accepted revenue sharing. The owners nearly destroyed their business to avoid agreeing to that. But in the end, shared sacrifice led to a good outcome for everyone. The MLBPA is arguably the strongest union in the history of organized labor, and baseball is doing fine.

The UAW is a pretty strong union too, and far from perfect. But people like Mickey Kaus, who fanatically blame the UAW for the problems facing the American automakers are simply wrong. Kaus says the adversarial nature of Wagner Act unionism is what has destroyed Detroit. Kaus is wrong. Bad management has pushed GM and Chrysler to brink. See, as fun as it is to blame the big bad union, that's completely disengenuous. In labor relations, management always dictates the terms of the transaction. This is always true, no matter how strong a union is. Management can choose to fight or it can choose to partner. What I believe happened to the Big 3 is what happened to MLB between 1977 and 2002. They were so committed to fighting the union that instead of trying to repair their business when problems arose, they let the issues sit there so they could win arguments at the bargaining table. And that appears to have subsumed everything. I suppose you could argue that's a natural outgrowth of industrial unionism, and Kaus does that. But then you have to explain Ford's ability to cut plant-specific deals and Saturn, in which the UAW agreed to a new model that appeared to be on its way to profitability before GM management ruined it.

The difference between baseball and making cars is that the Japanese competition was never good enough to steal eyeballs. And if you don't think that's a real issue, talk to me about all the Americans who watch the Europeans leagues while ignoring their own (In other words, let's talk about me, Yay!).

Kaus closes by asking "how long will it be before General Motors realizes its interests are sharply different--and parts company with its union co-pleader?" Maybe he's right. After all, GM can go into bankruptcy and do the following
  • Bail out of its UAW contracts and reorganize in a way that cuts thousands of jobs and slashes the wages and of those workers that stick around.
  • Scale down, which destroys at least some jobs at the suppliers -- and maybe all of them because the suppliers were selling to GM on credit.
  • Reorganize its distribution system, shutting down relationships with car dealerships, some of which also close, eliminating jobs (and all the other things that car dealerships support in their communities).
My reading of GM's actions is this: The company doesn't believe it will survive bankruptcy. It will struggle to get credit in this environment, and going into Chapter 11 may put the suppliers out of business. As some have suggested, Congress could pre-package the bankruptcy or guarantee the loans. But given how appealing the scenario above sounds, especially in the middle of a recession, it's hard to see why exactly anyone would endorse that.

If GM can't argue social utility -- autoworker wages essentially invented the American middle class and moved the wage structure upward for the entire nation -- then there's no compelling reason for the company to survive.

0 Comment(s):

Post a Comment