A friend called this morning and shared a conversation he had with some relatives, who are extremely politically conservative, having adopted the Fox News view of the world. The jist of the discussion was how the Unions have destroyed America and made, you guessed it, made us a Socialist country. And somehow, it's that Muslim Socialist Obama's fault!
Now, one of these relatives can give thanks to 20 of their 30 working years being spent within a public employee union (the other 10 outside the union, in a six figure, management position in the public sector, and still within the Oregon PERS 1 Retirement plan). Their quality of life has been pretty good for the 30 working years and possibly better in retirement, living a life of leisure that wouldn't be possible if not for the union benefits or public retirement benefits they earned.
The other relative was a non-union tradesman, who's income is similar to his union counterparts. I'm uncertain if his employer had a pension plan (defined benefit) like the unions, or if he was in a 401K (defined contribution). However, the income was nearly the same as a journeyman from the union which was plenty sufficient to raise a family for 30+ years.
I was laughing a little bit when talking to my friend about the conversation, because, in my opinion, it sounded like a bit of misinformation, that a certain television news station unfairly and unbalancedly spews out around the clock.
First, a quick history of US Organized Labor, off of the top of my head, from 15 years of studying economics and US History:
America's history with Organized Labor dates back over 100 years, as industrial workers fought to reverse the oppressive working conditions during American industrial expansion. Things like working in a coal mine 6-7 days a week for 12-14 hours a day were commonplace, while living in company owned cities, where the company charged you rent in their home and sold you groceries in their grocery store were a few of the complaints. Back then, time off for illness wasn't possible. If you were sick, you were fired. A new warm body would replace you. Basically, America 100 years ago was what Asia, with it's sweatshops, is today.
The workers revolted and fought for better wages, benefits, and working conditions against such Amerian icons as Carnegie, Frick, Rockefeller, and Gould. Labor eventually prevailed after a few decades of riots and numerous deaths. Henry Ford changed things permanently by raising the wages of his assembly line workers to a level where they not only could produce the Model-T, they could also own one.
Fast forward to 1946, with US victory in World War 2, which became the golden age of American manufacturing and organized labor. The US was the only major industrial nation untouched by war, with factories still humming from the war effort. America produced the products and materials to rebuild Japan and Europe.
People like Jimmy Hoffa and the Teamsters emerged, "to provide a living wage for the workin' man." And the unions helped ensure that the workin' man made a good wage to support a growing family. My grandfather went from being a teacher in Minnesota to building ships during the war in Portland to working 30+ years for Stimson Timber while raising 3 children, sending all 3 to college, on just one income. Not only that, but they saved money out of every single paycheck.
Today's argument that union's are destroying America is a complete fabrication. The real culprit of America's problems are the direct result of over-indebtedness, from the citizens to the governments.
Debt hyper-expansion started with the conservative hero, Ronald Reagan, and his 8 years in the White House. Public debt exploded, as Reagan talked about reduction in government headcount while doing the exact opposite, increasing the size and expense of government, while simultaneously cutting taxes. What's a business or government with a cashflow shortfall to do? Borrow money to make up the difference. Thus, we get the rapid expansion of US national debt during the 80's, made possible by a little something called "VooDoo Economics."
Bill Clinton came along with the NAFTA days and we started seeing Volkswagon's built in Mexico. More high paying manufacturing jobs were sent overseas, thus, putting the skilled "workin' man with the living wage" out of a job. All was well during his 8 years in office with the bull market in stocks and "balanced budget." Yet, under the surface, wages in real terms, continued to fall, ever so slightly, as the expansion of the money supply (inflation) continued to erode savings.
George W came in and spent money like crazy. The Fed fought the dotcom induced recession with more money flooding into the financial markets (liquidity), by lowering the Federal Funds rate. Thus, the housing bubble (inflationary) emerged from all the extra money thrown into the credit markets. W's term ended with the freezing of the credit markets in September 2008 as banks refused to lend money overnight to each other, let alone businesses. Enter the recession and rapid deflation in the value of assets worldwide.
What's a good Federal Reserve to do during a crisis? Flood the markets with more liquidity through TARP and other alphabet soup programs to save banks (not unionized workers!) with the belief that, "A healthy Wall Street will lead to a healthy Main Street." Uh, we know how that one has worked so far.
What happens when you flood a market with too much credit? ANS. Asset Bubbles! (Grab that net and catch that beautiful butterfly, pal!).
So here comes Obama at the beginning of the great unwind. He's not the man we elected, but he's trying in a no-win situation. In my opinion, he should be focusing on jobs, since the 17% unemployed just want to work, contribute, and be self-sufficient. (Note: he's been a goldmine for road crews and AM/PM's, ensuring robust sales of corn dogs (for breakfast), cigarettes, and Rock Star energy drinks.)
What's killing America isn't Organized Labor, who's numbers have been in a steady decline for 30+ years. It's the unwinding of the "debt supercycle," as John Mauldin refers to it. The Ponzi Scheme finally stopped and the tricks of financial alchemy reached their breaking point.
As union membership was decreasing in size and governments were forced to make up revenue shortfalls (from lower real wages or political promises of lower taxes), they had to keep borrowing more and more money, year after year, in one big pyramid scheme.
The big winner in this thing has been the American banking system. Think about it. Who benefits from lending money, a bank or labor union? Banks. Who's size has been growing the last 30 years, banks or labor unions? Banks.
This story of the unions destroying America is absolute bullshit.
The reason we are where we are in this Great Recession (technically a Depression), is because we've become over-indebted at all levels of society - citizens and governments, and have sent thousands of high-paying, high-skilled, technical jobs overseas, decreasing living standards for the American middle class.
If one were a conspiracy theorist, he'd think the banks, as advertisers, are influencing the topics the nitwit talking heads unfairly and unbalancedly discuss on their "news" show, to keep the citizens doped up on misinformation like the evil, socialist agenda of dwindling labor unions, who are a mere shell of their former selves. Didn't a certain African American President campaign hard to win the vote of these labor unions? I'm just sayin'...