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Monday, May 22, 2006

Heretical Realities of the New World?

George McGovern says business is not the enemy of labor. Workers and unions must recognize that the world has changed to avoid making self-destructive demands in wage negotiations. That does not mean the fight for social justice should be abandoned, but globalization forces the battle for health and economic security to be relocated to other arenas such as government supported universal healthcare:

The end of 'more', by George S. McGovern, Commentary, LA Times: I have never wavered in my support for policies that relieve poverty and improve the standard of living of American workers. As a lifelong liberal, I supported Medicare and Medicaid, civil rights, Social Security and workplace safety requirements. Today, I strongly support universal healthcare.

And I have always been a supporter of the labor movement. ... But lately I have seen developments that have me worried. And I have been reminded of legendary union leader John L. Lewis, who was once asked what his miners were after. His answer? "More." It was a funny answer, and perhaps it was honest too. But these days, it's not a very effective strategy, and we are seeing some unfortunate and unintended consequences of Lewis' "more" philosophy.

Delphi Corp., the biggest auto parts supplier in the country ... is bankrupt. One big reason is that the company's unionized workers earn ... more than twice what some of its competitors pay. General Motors and Ford ... have stated that they will lay off 30,000 workers each. ... Airlines have come under similar pressure. The bankruptcy stories ... are driven in large part by the compensation packages and work rules that unions have won... "More" has, unfortunately, become "too much" in a global and far more competitive economy.

Many of my friends will consider this view heretical. But it is based on stark reality. Some progressive union leaders, facing this economic reality, have come to the same conclusion. Others are holding fast. ...

It's very difficult to ... say that "more" is not always possible. It can be galling to hear companies argue that they have to cut wages and benefits for hourly workers — even as they reward top executives with millions of dollars in stock options. The chief executive of Wal-Mart earns $27 million a year... But let's assume that the chief executive got 27 cents instead ... Wal-Mart ... hourly workers ... would each receive a bonus of less than $20. It's not executive pay that has created this new world.

I understand the attraction of asking business — the perceived "deep pockets" — to shoulder more of the responsibility for social welfare. But there are plenty of businesses that don't have deep pockets. And many large corporations operate with razor-thin profit margins...

The current frenzy over Wal-Mart is instructive. Its size is unprecedented. Yet ... profit ... amounts to less than four cents on the dollar. Raise the cost of employing people, and the company will eliminate jobs. Its business model only works on low prices, which require low labor costs. Whether that is fair or not is a debate for another time. It is instructive, however, that consumers continue to enjoy these low prices and that thousands of applicants continue to apply for those jobs.

Maryland recently passed a law aimed at requiring Wal-Mart to spend more on health insurance. This is ... extremely flawed... We need universal coverage, not piecemeal legislation... The fact is, demanding more from business based on sales or the number of employees is not always the best way to achieve a just result.

Although I believe we should allow businesses to pay employees based on their skill level, I also believe we should supplement the wages of those who earn the least. Universal healthcare provided by the federal government is one way to supplement income. It is also a way of relieving hard-pressed businesses of one of their highest cost burdens. ... Another way to benefit workers financially is the earned income tax credit. ... It also has the virtue of being supported by a progressive tax system, in which the rich are asked to pay more.

Liberals must never abandon their core principles of justice and equality. But union leaders who still see American businesses as the enemy must update that vision.

While negotiators should be reasonable, I'm not yet willing to concede that, in general, workers and firms negotiate on equal footing.

    Posted by on Monday, May 22, 2006 at 12:57 AM in Economics, Health Care, Income Distribution, Market Failure, Social Security, Unemployment | Permalink  TrackBack (0)  Comments (26)


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