This would probably be funny if it wasn't my tax money that paid for their incompetence. Quick poll: How many founders on HN have had their failed startups bailed out by the Feds? (I suspect I know the answer)
"The nearly 5-year-old war, once billed as virtually paying for itself through increased Iraqi oil exports, has cost the U.S. Treasury $845 billion directly." [Much more now, I suppose.]
well, one can't conflate a failed business with network effects. arguably gm stopped being just a business a long time ago, and is more an army of subcontractors. perhaps managing these kinds of arrangements, and dealing with complexity and large blocks capital in the global market, is what we should be talking about, imho.
It's more aptly described as an army of union workers who contribute boatloads to political parties.
It may be more efficient for the feds to cut out the charade. They should close down all the union shops and give all the union workers full welfare for life. The resulting bill might be cheaper than the economic distortions caused by political policies that favor unions in the marketplace.
Except that the non-failed auto companies have no problems operating in union states or nations. Many of GM's own in-the-black business units are in Europe.
"The unions" didn't cause the failure, nor the bailout.
2/3 unionized auto makers in the US failed and had to be nationalized in order to survive. (Ford survived largely on the principle that you don't have to outrun the bear, just your hunting companions.) The foreign, non-unionized auto makers have no problem keeping plants open in the US and turning profits.
It may be more affordable to support a unionized workforce in Europe just because European countries have more generous welfare systems, or because European unions own stock in the company and have a financial incentive not to completely destroy the host. Of course, UAW resisted that level of responsibility in the GM and Chrysler bailouts.
Full welfare for life? You mean Social Security and Healthcare? Perhaps we just need to make those programs work properly. If we also had some basic legal limits on the way salaried and non-salaried employees work and how much of a corporations tax-deductible costs can go to C-level salaries instead of everyone else's salaries, much of the need for unions would go away.
Unions have outlived their usefulness in the American economy. Today, their primary effect is to destroy and bankrupt everything they touch. GM paid many workers full salary to do nothing for years because their union contract wouldn't allow them to fire people. I'm sure those "workers" were happy with what the union did for them. But those of us who don't get a sweet union deal have to live with a bankrupt state of California that can't negotiate their union labor contracts, a broken school system run by the country's most powerful union that resists all reform (except "more money for schools"!), bankrupt unionized automakers, a stale unionized postal system that is going broke, and even union grocery stores with long lines because the union resists putting in automatic checkout machines that they fear would take their jobs.
And when the unions inevitably kill their host, they still aren't made to suffer. The federal government steps in and guarantees their pensions and salaries. Imagine what kind of incentives that gives the union leaders in future negotiations. Oh, and union workers will have lower taxes on their health insurance than non-union workers under the Obama health care plan even though union workers make more money on average, just to rub a little salt in the wound.
In 1900, unions were a great idea. Now they are poison.
I agree, in general, as a former Teamster working for UPS. I moved out of the union and became a supervisor for UPS. It was hell, where I couldn't penalize any worker for showing up late, for not working, for leaving early. Some workers could not be motivated, period, as 'senior' union employees told them the tricks that made it so they didn't have to work hard. Meanwhile, my trucks were late to pull, meaning I got my ass chewed out, because I regularly had 3/10 employees skip work. The only way I could get things going was to literally bribe them with popsicles (hot warehouse in summer) and energy drinks from my own pocket $$$. The worst was having to give skilled positions to the most senior, rather than the most capable. Made for a nightmare operating environment.
However, my dad is a union employee - he works on elevators. It's a small union, and it doesn't have a bunch of 'no penalization' bullshit, and no seniority promotion clauses. The benefit it offers are a standardized health care package, so he can keep the same healthcare and retirement regardless of employer (there are only a few elevator companies anyway). The union also guarantees overtime. He can still get canned if he starts skipping work, doesn't perform etc, it just takes legitimate documentation to have happen.
There are upsides and downsides, but I believe a well run union is a good thing, but in general unions are not well run and are in actuality, terrible for the private sector.
> "Unions have outlived their usefulness in the American economy."
I used to think this way; even having grown up in and around Detroit. But it only takes a few years of actually paying attention to continued corporate abuse of employees -- numerous cases of flagrant violations of labor law and regulations -- to realize that's completely wrong.
All unions are not the UAW or Teamsters any more than all companies are Enron and Merrill Lynch.
But those of us who don't get a sweet union deal have to live with a bankrupt state of California that can't negotiate their union labor contracts, a broken school system run by the country's most powerful union that resists all reform (except "more money for schools"!), bankrupt unionized automakers, a stale unionized postal system that is going broke, and even union grocery stores with long lines because the union resists putting in automatic checkout machines that they fear would take their jobs.
All but your very last example[1] are unionized public employees. They work for you and me, the taxpayer. I can't even begin to comprehend how unions in this sector have ever been a benefit to the economy or the public.
I find it outrageous that it was ever allowed to happen, since, evidenced by your own viewpoint and conclusion, it has utterly eroded what unionization stands for.
I agree that unionized industrial labor was a good idea in 1900. I don't think unionized public employees were ever a good idea. Isn't this kind of corruption the stuff of revolutions? "Taxation without representation" is what it appears to amount to.
In the private sector, unions might still make sense as a hedge against corporate exploitation of workers, as other commentors have pointed out. They also might not. Your grocery store example I've seen here in the Bay Area, and the market is quite unforgiving to a business with such slim margins.
[1] The automakers are a pretty muddled situation, though the US government now owns enough of GM that I'd consider it little different from the postal service.
Maybe they put their entire fate in the faith of the union, whereas under normal circumstances, they would have used their heads? It's an important question.
> ... and how much of a corporations tax-deductible costs can go to C-level salaries instead of everyone else's salaries, much of the need for unions would go away.
Something like that was already instituted under Bill Clinton - corporations can't deduct more than $1 million of an executive's salary. That was actually a big part of why compensation shifted to stock options - I don't think that was a good shift, myself. CEO's and high level executives now make a lot more short term decisions than they used to when they got, say, $6 million in salary and a dramatically smaller option pool. Back then their main concern was keeping the business running smoothly to ensure their jobs. Now it's all about getting the stock price up as much as possible in the short term, often with disastrous results. Also, executive compensation actually went up as a result of the shift to stock options... it's ironic that the government trying to limit executive compensation helped stimulate an increase in executive compensation. Unforseen secondary effects can be funny like that.
> ...much of the need for unions would go away.
Much of the need for unions has gone away, but unions do not voluntarily close shop. Do you think they would do so? It hasn't happened yet...
American industry is failing primarily because safety standards are higher than abroad.
GM failed because they designed shoddy cars. The Unions had nothing to do with that (especially given that most of the union workers were rank-and-file factory workers who built exactly the shitty cars they were told to.)
Disagree. I've worked in that industry and the amount of union pressure to resist automation (read: loss of jobs) is intense. While Toyota, non-unionized as it is, automated the shit out of their production processes (thereby increasing reliability, IMHO the primary cause of their victory over American cars), GM was stuck with a far more manual labor force.
I've seen first-hand the failure rates between parts built by hand vs. built by machines. It's night and day (think 5-10x higher).
Bull. Toyota's mistake could have happened to anyone - all of the work relating to individual parts are done by subcontractors, and you would be surprised at how many subcontractors all of the large manufacturers share.
While the problem is certainly inexcusable, the gigantic hate-on that Toyota went through from Congress and the general public is mostly political. The anti-Toyota and andti-import sentiment is largely driven by politicians trying desperately to raise the desirability of American cars by spreading FUD about Japanese ones.
Exactly.....I've owned Toyota's exclusively for about 20 years now, with no problems. And I've never bought new, always used. Anyone that says American quality is comparable to Japanese is simply making it up. It's not that Americans can't do it, it's just that they don't.
Toyota had a massive recall, congressional hearings are standard for an issue of that magnitude and even you readily admit "the problem is certainly inexcusable."
I'm amazed you were uprated for real FUD with "politicians trying desperately to raise the desirability of American cars by spreading FUD about Japanese ones" with very little evidence, other than ill-will toward all U.S. politicians.
Pols grandstand during hearings, that's what they do -- the same American pols had zero problems grinding U.S. car makers into the dirt before the Toyota issues, in hearings. (Even Ford, which did not get a bailout was ground down in the Big 3 hearings).
I'd say any of the nationalism was driven far more by the media, who enjoy schadenfreude for ratings.
Toyota was targeted with cause as you agree, _and_ no other Japanese (or other foreign) car cos were affected although you push your FUD to the affect that Japanese carmakers were all targeted and not Toyota specifically.
Plenty of Toyotas are manufactured in the U.S. with U.S. work force http://www.autonews.com/article/20090112/ZZZ_SPECIAL/3011199..., and thus have the protection of the congress critters you deride and governors where those plants are located even wrote letters to congress in support of Toyota -- again going against your assertions of U.S. pols attacking Japanese auto-makers.
Further, the "cash for clunkers" in the U.S. did not discriminate against vehicles by company origin or manufacting location, although politicians could have tried to push real policies to affect sales by designing requirements to make U.S auto-makers more favorable....something that would hold tighter to your thesis.
Interestingly Japan did have a similar "cash for clunkers" program, but no U.S. makers qualified, b/c of the rules for fuel-efficiency http://www.bloomberg.com/apps/news?pid=20601209&sid=ar3R... . The U.S. automakers didn't qualify fair and square, However, of course they issued complaints and wanted examinations to ensure they had a shot at Japanese subsidies.
It's not the union's fault the American auto industry failed to adopt using more universal/standard parts across their range of vehicles, as opposed to favoring proprietary parts for each specific model (with the exception of engines). Only now, post-gov take-over, are they implementing these practices that should have been in place 20 years ago.
Their board also structured union benefits that favored short-term cuts over long-term costs.
And when times were good, GM placed its engineering efforts on Trucks and SUVs, and when gas was cheap. Unfortunately, they let everything from compacts to their luxury sedan lines decay.
GM's failure, to me, is more of a case of rotten corporate culture than a lesson against unions.
> GM failed because they designed shoddy cars. The Unions had nothing to do with that
If the overhead of dealing with unions adds some amount to your marginal costs, and you have to sell your vehicle for a competitive price, then you have to find a way to make a cheaper car than your competitors.
A cheaper car can happen through lower material costs, less R&D, etc, all of which lead to "shoddy cars."
I read somewhere that GM's union commitments added about $2,000 to the price of a car. Meaning that if you buy a GM automobile, $2,000 is going to union-related stuff, rather than buying extra features, better quality, a longer warranty, etc.
This is arguably true. It seems that a big reason for the GM bailout was keeping the union workers employed, and keeping business going to the parts suppliers.
Even so, how does this affect the bigger question?
> This is arguably true. It seems that a big reason for the GM bailout was keeping the union workers employed, and keeping business going to the parts suppliers.
And to keep the flow political contributions from unions into the politician's coffers.
hm. thanks. (doesn't really help me; the downturn has caused me the 'too many customers' hardship, if anything. I think that's kindof stretching this 'hardship' definition.)
