CEOs of the World, Unite!

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A piece in Slate from a couple of weeks back notes that big corporations are warming to the welfare state, which they hope will relieve them of their "legacy" obligations.

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  1. Of course businesses with large commitments to their retirees will support something they think will save them money, that’s what large corporations have become in America today, welfare queens. The fact that in the long run these govt programs will destroy America doesn’t mean anything to them, or to most people in this country. They do have the apparent defense of their welfare desires in that govt interference with businesses has probably added 100s of billions of dollars to their costs and getting the taxpayers to cough up more money for their “legacy” benefits is just getting some of those costs back. It’s the same rationalization every person uses when it’s time for them to get ‘their’ Social Security. When was the last time a major corporation stood up for capitalism in America? They’re all in the business of using the govt force to rid themselves of competition. So, of course they are in favor of govt intervention to spare them some money. It,s all part of the process of selling your indedpedence for perceived security.

  2. Fusionism reaps what it sowed — this is the thanks that Libertarians get for voting Republican. Do remember that in the future.
    –G

  3. This is an excellent article. This is part of the same phenomenon described in the past by James O’Connor and Murray Rothbard. Big business acts through the State to organize what is, in effect, a State-enforced cartel. Since business is acting through the state to provide certain parts of the benefit package, the cartel is not vulnerable to instability or defection, like a private one. And those benefits are no longer an issue of cost competition, since the costs and benefits are organized across the board.

  4. Didn’t Reason publish an article a while back about some S. American countries that were getting their economies back on track by getting out of the pension business? Why can’t the multis do the same thing if their pensions are a (perceived) problem?

  5. Ask AARP

  6. Such a business policy makes perfect sense from the vantage point of self-interest. Of course this is a somewhat unorthodox example of the free-rider problem.

  7. Tom P.,

    Well, why not simply roll-forward the date of legal retirement (meaning when you can get SS)? That would likely encourage people to work more years, and in turn lift the burden on pension plans.

    J. Canuck,

    Because, multis signed contracts with unions which stated that pensions would be paid; furthermore, people paid into these pension plans with the aforementioned guarantee of payment. I also find it humorous that at this point, no economy in South America appears to be “on track.” Especially the major South American economies – Brazil and Argentina.

  8. All big business is the same. It is completely rational and reasonable to say that “all big business is evil” because they are all same entity and there is no variation. I say this is thus because my God Rothbard gives thee the right to say thus. And unions are completely libertarian, especially since the entire movement involves threats of violence to the owners and to those that choose to noncomply.

    Amen.

  9. Because, multis signed contracts with unions which stated that pensions would be paid

    Yes, while these agreements should certainly be honored, let’s not forget that they were signed at the point of a gun — the federal law that mandates collective bargaining.

    End corporate welfare, end Social Security and end unionism, and everything would be just fine.

  10. Wasn’t the idea from Reason’s article something along the lines of taking the deduction that would have gone to a government pension (or, for this case, a corporate one), and putting it into a self-directed fund? Also, existing state plans would be guaranteed to a certain limit, after which “your” plan would kick in. I believe the nations mentioned in the article were Chile and Ecuador, but I may be wrong. Again, as long as existing contracts are met, why can’t this work? I would much prefer to be able to plan for my retirement with MY money, rather than have to rely on someone else.

  11. Jim, Kevin, et al:

    I realize my late-night language was a little sloppy when I wrote, “… end unionism, and everything would be just fine.”

    I didn’t mean “end unionism.” I mean “end federal labor laws.”

    Unionism, in and of itself, is fine. At its most fundamental level, a union is merely a group of people — in that sense, no different from a stamp-collecting club, or a Friday night cocktail party.

    The problem is the law that REQUIRES this entity called an “Employer” to associate with this entity called a “Union.” That part of the deal — the collective-bargaining requirement — is what’s anti-freedom, and should be done away with.

    Sure, people should be able to gather any way they want — in stamp clubs, at parties, in labor unions. Yes, absolutely. So why is it OK to take that freedom of association away from a business owner?

    See, if some people decide to form this thing called a “Union,” he no longer gets to associate with the people HE necessarily wants to associate with. Once this “Union” has been formed, the law mandates that he deal with it. Rights have thus been stripped from him, and privileges given to this other, arbitrary group.

    My ultimate point, then, was that the government needs to get out of business affairs, period. No corporate welfare, no Social Security, no NLRA. Let life proceed on its own, please. We don’t need the Great Overseers choreographing everything for us.

  12. Tom P wrote:
    The real problem here is old people.

    They’re always the problem.

    Baby boomers turning into old people will become one of the biggest problems this country has ever faced.

    …and thus Soylent Green suddenly becomes the most prescient film from the 20th century. đŸ˜‰

  13. Tom P,

    That was my point as well. See prior posts.

    ….

    That isn’t to say that the unions themselves may not be their own worst enemies if we abolish labor laws, because if they make a big enough pain in the ass of themselves, they may just drive their employer out of business or force their hand at total job replacement. In this scenario at least there’s a correction mechanism.

    I think a lot of the labor movement’s philosophy is based on faulty economics – the need to ‘make work’ or to provide protection from foreigners with comparative advantage. Without the government interfering, the obviousness of the flaws would have been apparent sooner and business/labor could have developed much more productive, mutually beneficial arrangements. The legacy issue is the long term outcome of faulty economic decisions played out over generations, and which never would have come to pass, IMHO, in the absense of both labor laws and corporate welfare programs.

  14. Steve: In that vein, I prefer Logan’s Run. Sure Michael York is a goof, but Farrah is hot!

  15. Tom P. and Jim,

    I agree completely. Abolish ALL federal labor law (except Norris-Laguardia, which simply removed federal troops and injunctions from the arena), including the Railway Labor Act and the like (which was aimed at preventing another Pullman Strike). Let management and labor fight it out mano a mano, without any NLRB certification process or any enforcement of contracts outside the ordinary common law courts.

    I believe labor will do a lot better under such circumstances than under the present regime. But as Benjamin Tucker said, if it can’t be done without state coercion, let it not be done. To quote Adam Smith, when the state regulates relations between masters and workmen, it has the masters for its counsellors.

  16. Mr. Carson:
    Does this include the prosecution of union members who use violence or threats of violence as tactics against owners or scrabs? Would you support lock-outs and trespassing charges to protect owners legitimate property?

  17. Mr. Simpson:
    Does this include the prosecution of employers who use violence or threats of violence (by themselves or through the police) as tactics against workers or their families? Would you support charges to protect workers from the employer’s violence or his illegitimate resort to the apparatus of the state for coercion?

  18. “Does this include the prosecution of employers who use violence or threats of violence (by themselves or through the police) as tactics against workers or their families?”

    Depends on why they are using violence. I certainly support companies or so-called “scrabs” who use REASONABLE violance to protect themselves or their property (machines, factories) from union violence or trespass.

    If you choose not to work that is your business. But if you threaten others or trespass on my property, then it is within my rights to reasonably defend myself.

    And BTW, I consider barging into a factory and sitting on the floor to be trespass, just as it would be if I barged into your house. And I also consider beating the shit out of scrabs to be unjustified violence. Firing those in violation of contract is not violence and is completely justified.

  19. I thought they were “scabs”?!

  20. Grandpa,

    Just so long as they are no double standards. The law and practice as currently exists supports your position to a T. It often works a little differently in practice when the shoe is on the other foot, but it’s been that way for a long time, so I guess there’s no reason for anyone to get worked up about it.

  21. What bothers me is the monopoly unions have over the “bargaining unit” if I want to set up my own union with 40% of the clerical workers in a company and get us our own contract I can’t. Instead we have to go along with whatever the other 60% of the clerical workers want. I want a good 401(k) but the union at Yale is focused only on pensions.

  22. Grandpa,

    I’d certainly be satisfied with a State legal regime that limited itself to such enforcement of property rights.

    As to what action I’d support by labor in a revolutionary situation, that’s entirely a different matter. I think there’s a lot to be said for Rothbard’s idea of treating firms that get the bulk of their profits from the state as “unowned,” and letting workers “homestead” them. But that’s not a course I expect until the central apparatus of state capitalism is on the verge of total collapse; nor is it something I expect (or want) the State to initiate.

    By way of analogy, I would support the action of Sam Adams’ boys against property of the statist British East India Company; but I could hardly expect any government not to attempt to punish such activity.

    In principle, though, I believe the right to resist trespassing on justly acquired property is absolute.

  23. Jean Bart, do you know if the decision-maker or the executive-in-charge who came up with the idea of a Social Security Administration, fashioned that cash cow after the ideas of Charles K. Ponzi?

    If so, is it fair to roll-forward the date of legal retirement, when you’re just about to reach age 65?

    Then, five years from now, would it be fair to again move the date of retirement when you’re close to age 75?

    And ten years from now, wouldn’t it be just cruel to push the retirement carrot even further into the future, when you’re just about ready to celebrate your 85th birthday?

    YOU SAID, “Well, why not simply roll-forward the date of legal retirement, when you can get SS? That would likely encourage [seniors] to work more years …”

  24. I believe it was Chile. FYI Foxnews.com today has an article on how Chile is dealing with the unemployment insurance problem. Same basic system, employee and emplopyer both contribute to the fund, but it belongs to the employee to do with as he sees fit: use it for unemployment or retirement. But it’s his.

  25. Tom P.,

    How, exactly would you end unionism? Bring back the Combination Laws, which prohibited free association among laborers? Or otherwise interfere with the right of free contract between employers and whatever representative workers choose to appoint?

    The other two legs of your triad only require government to STOP doing something.

  26. The greatest power the union has against the corporation is the strike. The greatest power the corporation has against the union is firing everyone and starting over. Put legal impediments in front of either of these free market/free association choices and you get problems.

    I believe the grossest excesses of unionism are largely due to laws restricting corporations from who they can hire and fire.

  27. The Business Roundtable differs from many business groups in that it has a long history of supporting many statist interventions on behalf of certain of it’s large corporate members. In 1980 David Rockefeller convened them to form a “Stop Reagan” movement as they were quite worried about his free-enterprize message.
    As Milton Friedman observed, numbered among capitalism’s most devoted opponents are academics and businessmen.

  28. Jim,

    What about the grossest legal excesses against iunions/i? For example, U.S. law makes it exceedingly difficult for workers to strike, and failure to comply with the technical regulatory framework for striking (in terms of timing and notices, not to mention limiting any action to the legal windows of strike opportunity) subjects workers and their associations to stiff fines.

  29. In all fairness, those laws should be abolished too. The government’s own employees have the worst deal of all. Many ‘essential service’ employees like fire fighters and policemen are not allowed to strike at all, because of the potential for catastrophe. While this makes a certain amount of sense, esp. since these folks already have a monopoly on supply, expect to see it pushed further as a cost control measure. The government surely isn’t going to tolerate dissent among its own….

  30. Jim and S. Gompers,

    Right on! Most of what really worked during the strikes of the ’30s was made illegal by Taft-Hartley. Sympathy strikes, boycott strikes, etc., are subject to federal injunctions. For example, the auto strikes in Michigan and the longshoremen’s strikes on the west coast turned into regional general strikes because of sympathy strikes up and down the production chain. There is also a large body of transportation labor legislation that prevents sympathy strikes by transport workers.

    And such a level of support would make strikes much more likely to succeed today. Having such third and fourth lines of defense would make it a lot harder to turn an isolated strike into a lockout. Under such circumstances, a company would be a lot less likely to welcome a strike as an opportunity to bust the union.

  31. The reason this crisis is occuring is simply because the corporate benefits of the largest corporations are based on the same faulty economic model behind Social Security and Medicare. When Social Security was originally started, the average life span was 67. So if you retired at 65 you’d expect, on average, to collect pension benefits and social security for 2 years. Now you routinely have people alive today who have been retired longer than they’ve worked.

    The proper government response to this should be “tough luck”. If you put all your eggs in one basket by assuming that your company will be around as long as you live to pay your pension and health care bills, you took your chances. Sure, the early in folks may have ended up with a better deal, but that’s only if you consider dying young in exchange for guaranteed support a good deal. Still, one cannot help but think that smart businesses would not have blindly continued to agree to lifelong benefits without limit in the face of increasing lifespans over the last 50 years. One has to wonder if there’s government interference behind that also.

    Obviously the unions have strongarmed a lot of bigger companies into continuing the same benefit their parents and grandparents recieved. But the unions are a political entity themselves. Most younger salaried workers for these companies have 401k plans and much more modest pension plans than previous generations.

    I read somewhere that providing retirement pension was something many larger companies were encouraged to do during WWII by tax breaks and other regulatory enducements by the government. In a sense, then, the New Dealers tried somewhat successfully to ‘privatize’ the social security system. Unfortunately the legacy of this appears to be to have afflicted the same problems of SS on the private sector as well. Can anyone else shine some light on that?

  32. The real problem here is old people.

    They’re always the problem.

    Baby boomers turning into old people will become one of the biggest problems this country has ever faced.

  33. BTW, the United Auto Workers tends to focus its strikes on engine plants, because they can strike at one plant and shut down several others since most automakers put the same (or similar) engines in multiple vehicle lines.

    As far as intercompany or interindustry strikes, I suppose that the situation would have to be pretty bad for people in other lines of work to risk their jobs and lose pay to support those workers, so I’d think in general you wouldn’t see a lot of that happening. Still, it can be an effective tool in those more extreme situations.

  34. Nice review, Jean. You obviously know your economic history. But you didn’t answer McGee’s question about dragging the retirement carrot-on-a-stick ever further into the future.

  35. Don’t forget old Otto von Bismarck, German Chancellor, who got old age pensions adopted in 1889. Even the Fed’s own SS credits/blames him as an inspiration:

    http://www.ssa.gov/history/ottob.html

    Yup, the pinnacle of the democratic process, stuck on the theories of a Prussian autocrat. Genius.

    Kevin.

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