Tag Archives: unions

Mr. Daisey Goes to the Apple Factory – A Lesson in Comparative Economic Systems

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One of the core lessons that I try to get across in my introductory Comparative Economic Systems classes is that economic systems are complex. Reality is much more complex than either simple theory or ideology.  Countries simply cannot be easily categorized with simple labels such as capitalist, socialist, or communist.  Those labels usually obscure more than they illuminate.

The labels are the work of ideologues and theorists.  Pure capitalism or socialism or communism exists only in the mathematical axioms of textbooks, the novels of Ayn Rand, or the writings of some political power grabber. Real economic systems are the creatures of politics, history, the available resources, culture, religion, and some economic theory.

Another lesson I try to impart is that while we might all want to improve economic conditions, how to do that effectively is also complex.  There are no silver bullets or universal magic solutions.  There are costs and benefits to any proposed policy or practice.  The key to progress is evaluating those costs and benefits wisely and making conscious decisions.

Last weekend I heard  a story on the This American Life radio.  It was called Mr. Daisey Goes to the Apple Factory.  It’s about a man who goes to visit the workers at Foxconn, the company that manufacturers Apple products in China.  It’s a long story, but it’s gripping and powerful.  It struck me that it also powerfully illustrates the two lessons I’m trying to teach in class:  economic systems aren’t that simple and making things better isn’t always obvious.

To listen for yourself, go to: This American Life #454 – Mr. Daisey and the Apple Factory. Here’s their summary:

Host Ira Glass speaks with an Apple device about its origin. (2 minutes)
  • …

Mike Daisey performs an excerpt that was adapted for radio from his one-man show “The Agony and the Ecstasy of Steve Jobs.” A lifelong Apple superfan, Daisey sees some photos online from the inside of a factory that makes iPhones, starts to wonder about the people working there, and flies to China to meet them. His show restarts a run at New York’s Public Theater later this month. (39 minutes)

  • …

What should we make of what Mike Daisey saw in China? Our staff did weeks of fact checking to corroborate Daisey’s findings. Ira talks with Ian Spaulding, founder and managing director of INFACT Global Partners, which goes into Chinese factories and helps them meet social responsibility standards set by Western companies (Apple’s Supplier Responsibility page is here), and with Nicholas Kristof, columnist for The New York Times who has reported in Asian factories. In the podcast and streaming versions of the program he also speaks with Debby Chan Sze Wan, a project manager at the advocacy group SACOM, Students and Scholars Against Corporate Misbehavior, based in Hong Kong. They’ve put out three reports investigating conditions at Foxconn (October 2010, May 2011, Sept 2011). Each report surveyed over 100 Foxconn workers, and they even had a researcher go undercover and take a job at the Shenzhen plant. (15 minutes)

 

 

Finally Clarity on Wisconsin’s Real Objective: Bust Unions

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Menzie Chinn reports more dispatches from Wisconsin, this time on recent Congressional testimony by Wisconsin’s Governor Scott Walker.  It’s clear the union-busting efforting in Wisconsin is NOT about the state budget or saving money.  It’s ideological. It’s opposition to unions period.  The budget is and was irrelevant. It was pure propaganda by Walker and the Wisconsin Republicans to cover their real objectives.  This is shock doctrine stuff.  Neo-liberals used to force this kind of undemocratic social change onto third-world and developing nations. Now they do it here.

That is Governor Walker’s answer to the question of how much money rescinding collective bargaining for public unions saves the state government. From the Capital Times:

Kucinich said he could not understand how Walker’s bill to strip most collective bargaining rights from nearly all public workers saved the state any money and therefore was relevant to the topic before the committee, which was state and municipal debt.

When Walker failed to address how repealing collective bargaining rights for state workers is related to state debt or how requiring unions to recertify annually saves money — one of the provisions in Walker’s amended budget repair bill — Kucinich tried one more time.

“How much money does it save Gov. Walker?” Kucinich demanded. “Just answer the question.”

“It doesn’t save any,” Walker said.

“That’s right. It obviously had no effect on the state budget,” Kucinich replied.

…

[Emphasis added -- mdc]

How Come Conservatives Only Hate Some “Unions”?

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Michael Perelman writes an excellent post on the roots of the current conservative efforts to roll-back collective bargaining rights for public workers. (See the Michael’s full post after the ‘more” button). Namely, the target right now is public sector workers but the effort is the same effort that traces back to the 1960′s as concerted effort of the right-wing.  The idea pushed was that by eliminating workers’ rights and increasing business (particularly financial industry) profits, everybody would benefit. It didn’t work out that way, though.

One very interesting observation that he makes is that not all “unions” are targets of the right-wing.  Technically in economic terms, a “union” is any combination, cartel, or trust that aims to reduce horizontal competition and negotiate or set prices/wages/output as one group.  Any such “union” is in essence anti-competitive. But in some cases it may be justified as increasing overall social welfare. For example, labor unions are justified when there is only one or a very few, very large employers negotiating with a very large number of employees. The employers have monopsony power (a monopoly on the buy side). The union balances the scales. (See my post here for more.) The right-wing though is apparently only opposed to labor unions, not all unions:

One union stood out by its successes.  It is not generally called a union, but so long as we can abuse reality by calling corporations people, we can call the Chamber of Commerce a union.  This union is so powerful that the present United States must come before as a humble supplicant.  This union was at the forefront of the deconstruction of the New Deal.

The time has come to stop blaming the victim.  Somehow, we have to learn to fight back in this one-sided class warfare.  We have to learn to explain that more of the same medicine that made us sick is not going to cure us.  We have to learn to identify the architects of this disaster — the political manipulators, the right wing foundations and their benefactors, and if we want to begin a legitimate fight against unions, let’s start with the Chamber of Commerce.

He highlights the Chamber of Commerce (particularly at the national level), but I can name others.  For example, the American Medical Assoc is effectively a union of high-paid physicians yet the right-wing actually promotes them. The American Bar Assoc. and other professional associations are likewise unions. Yet they don’t get criticized despite doctors fees and lawsuits being a very significant part of our long-term budget difficulties (healthcare costs).

Continue reading →

Union-busting In The Past

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Since unions and collective bargaining rights are in the news lately, here’s an event of interest for students of economic history.  Ninety-seven years ago, union-busting meant murdering. Twenty-five people were shot and killed in Colorado on orders of the Governor of Colorado and John D. Rockefeller.

The Ludlow (Colorado) coal strike massacre (from About.com):

In the decades before World War I, industrialists such as John D. Rockefeller had become millionaires; by the early years of the 20th century labor unrest blossomed in the United States, particularly in the coal mine industry. Strikes grew into riots occurring throughout the US, and then into full scale battles, the most famous of which was in 1914, the Ludlow Coal Massacre, when Colorado National Guard opened fire on a tent city of striking miners and their families in Ludlow Colorado.

Basic Facts

On April 20, 1914, Colorado National Guardsmen attacked a tent colony of 1,200 striking miners at Ludlow, Colorado, looting and burning the colony. Twenty-five people were killed. This was the worst of many such skirmishes between the government and the miners in Coal Field War of 1914, which lasted for seven months.

Battle Statistics

The battle lasted 14 hours and included a machine gun and 200 armed militia; the tent city was destroyed. Of the 25 people killed, three were militia men, twelve were children, and one was an uninvolved passerby. The strikers were mostly Greek, Italian, Slav, and Mexican workers; the militia were sent by the Governor of Colorado and ultimately by John D. Rockefeller, owner of the Colorado Fuel and Iron Company.

 

 

Michigan IS Wisconsin – Just Different Tactics

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Rick Snyder, Michigan governor, claims “Michigan is not Wisconsin”.  People take this to mean Snyder doesn’t want to bust unions. That’s wrong. What Snyder means is he’s going to use a different strategy than Walker in Wisconsin.  Walker is a bare-knuckle street fighter. Snyder hires a hit-man. Snyder smiles, tells you what you want to hear, lies about his priorities, and then has his hit-men crush you. Snyder claims he wants to negotiate with unions and isn’t out to “bust the unions”.  So far, Rick Snyder has largely gotten a free pass compared to Scott Walker in Wisconsin. The national news media concentrates on Wisconsin and the protests are largest there. But part of the attention in Wisconsin is because in Wisconsin the power grab to end collective bargaining rights has been so blatant, so clear.  It’s made great theater. And the media love theater.

In Michigan, the effort to end bargaining rights and to bust unions is apparently just as strong, but it’s more subtle, more sophisticated. In Wisconsin, you only have to read a single proposed bill to see that they want to end collective bargaining rights. In Michigan, you have to connect the dots to see the pattern.

First off, there are over 40 anti-union bills that have been introduced in the Michigan legislature since January 1 that have consequences for unions.  In some cases, it’s not just public employee unions under assault, it’s private unions too. In Michigan there isn’t one bill that does the big repeal of rights. It’s lots of bills each chipping away at one right or another. In one case, the bill doesn’t repeal collective bargaining rights for the private sector in all Michigan, just in to-be-named-later “zones”. In another bill, a specific work rule bargaining right is over-ruled for teachers. It’s the death of collective bargaining by a million cuts.

If all these bills pass, and there’s no indication from Snyder that he would veto any of them, they mark a significant roll-back of collective bargaining rights in Michigan.  But there’s a hidden strategy that’s even bigger.  Many of the bills are about increasing the autocratic powers of “emergency financial managers”.  In Michigan “emergency financial managers” are appointed by the Governor and state Treasurer. These emergency financial managers are appointed to take-over the management of local school boards, cities, counties, or townships that encounter financial difficulties. Emergency financial managers are not accountable to local residents or voters at all. They report only to the governor. Further, emergency financial managers have the powers to unilaterally revoke all union contracts and negotiations. Snyder and the Republicans are moving swiftly to increase the already hefty power of these emergency financial managers. A spokesman for the Republican majority leader in the legislature claims these bills are not about busting unions but about “protecting municipalities from bankruptcy.  From The Detroit News:

“We’re not out to destroy anything, we’re out to help everybody,” Marsden said.

“That plan is aimed at keeping municipalities from falling into bankruptcies that will cost people jobs.

But if the objective is to protect municipalities from bankruptcy, why are the biggest budget cuts aimed at revenue sharing and schools?  Right now “emergency financial managers” seem only like a hypothetical to most residents and voters. After all there are only 4-5 such financial managers in the state.  Detroit Public Schools and the cities of Pontiac, Ecorse, and Highland Park have them (there maybe another one or two, I’m not sure). But after the budget is implemented there will be a LOT of cities and school districts in serious financial trouble. Then the governor appoints his emergency financial managers. Then the union contracts can be nullified.  All without legislation.

Wisconsin gets the attention and Walker takes the heat.  Meanwhile, Snyder moves quietly, counting on people not connecting the dots until it’s too late and it’s done.  It’s important to maintain collective bargaining.

Wisconsin Rolls On (Over Workers)

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In the dead of the night Republicans in Wisconsin vote to end collective bargaining rights of unions who were not supportive of Governor Walker’s election.  The state assembly (the lower house of the legislature) has acted while the Senate is adjourned. The Senate has been unable to convene for lack of a quorum. However, this is not exactly democracy in action. From AP News:

With the Senate immobilized, Assembly Republicans decided to act and convened the chamber Tuesday morning.

Democrats launched a filibuster, throwing out dozens of amendments and delivering rambling speeches. Each time Republicans tried to speed up the proceedings, Democrats rose from their seats and wailed that the GOP was stifling them.

Debate had gone on for 60 hours and 15 Democrats were still waiting to speak when the vote started around 1 a.m. Friday. Speaker Pro Tem Bill Kramer, R-Waukesha, opened the roll and closed it within seconds.

Democrats looked around, bewildered. Only 13 of the 38 Democratic members managed to vote in time

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Where’s Obama?

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The President is missing. Could we get the candidate back?

The concerted effort to eliminate collective bargaining rights has spread well beyond Wisconsin.  So have the protests. Reports have protests in 38 state capitols this week, including even Montana. Heck, even the protesters in Cairo are expressing support and solidarity with the workers in Wisconsin. But there’s a giant gap in the protester lines.  President Obama is staying out of it. Apparently President Obama doesn’t have a strong opinion on workers’ bargaining rights.  Interesting because candidate Obama had a strong opinion and made a strong promise:

 

Prank Phone Call Reveals the Real Wisconsin Governor

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Governor Scott Walker in Wisconsin gets totally pranked and reveals a lot.  No, it’s not about the money. It’s about busting the unions and he’ll lie if he has to.  From Yves Smith, the author of Econned and a blogger extrordinaire  at naked capitalism :

The Beast’s “David Koch” Speaks to Wisconsin Governor Walker

I was alerted about and listened to this recorded phone conversation between a caller claiming to be David Koch and Walker a couple hours ago and did not post it then over concern that might not be real. However, the governor’s office has issued a press release attempting to defend the governor’s half of the conversation. Per reader Doug Smith, who pinged me about the official statement:

Here’s the press release from Walker’s office:

The Governor takes many calls everyday. Throughout this call the Governor maintained his appreciation for and commitment to civil discourse. He continued to say that the budget repair bill is about the budget. The phone call shows that the Governor says the same thing in private as he does in public and the lengths that others will go to disrupt the civil debate Wisconsin is having.

I listened to the full tape. Walker said nothing at all that would indicate his appreciation for civil discourse. For example, at one point he describes a gambit under consideration where he’d invite the 14 Senators to join him in a conversation. Walker says ‘not a negotiation, a conversation’. Then he goes on to describe the purpose of this conversation: if they can get the 14 into a room, the law may support the notion that the session has officially begun — at which point, even if the 14 leave again, the quorum for the session would be there and the Republicans can move forward with votes even in the absence of the 14 Dems. Walker says, he’d be happy to have the 14 ’scream at him for an hour’ if he could accomplish this legal tactic.

Civil discourse? Not a whiff of that in anything Walker said when he thought he was speaking to Koch.

Oh, at one point after “Koch” suggested Walker bring a baseball bat to the possible meeting, Walker did say “I’ve got on in my office. A Slugger”.

You can listen below:

 

 

Public Sector Unions: U.S, Canada Compared

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From Stephen Williamson (emphasis mine):

One simple way to look at unions comes from Econ 101, where we just apply standard monopoly power arguments. Labor law gives workers the right to effectively act as a monopoly seller of labor. Result? The union drives up wages and extracts rent from the firm. But that argument goes only so far. As long as the firm faces competition, this has to discipline the union. Extract too much rent and you drive the firm out of business.

So what is going on in Wisconsin, Indiana, and Ohio? In general, union organization is not an easy thing in the United States, relative to what happens in other rich countries. Twenty two states, mainly in the south and in the middle of the country have right-to-work laws. In some states, state employees have much less power to form unions relative to what exists in the private sector. However, in Western Europe, unions tend to be relatively powerful. In Canada, labor law is much more conducive to union formation and power. For example, most (if not all) Canadian provinces do not allow the hiring of permanent replacement workers during a strike, and some will not permit the hiring of temporary replacement workers. Strikes of public service workers in Canada are infamous, from old-time disruption in the post office to more recent strikes involving garbage collectors and transit workers in Toronto. The difference in labor laws in Canada and the US is reflected in unionization rates. The US has a unionization rate of only 7% in the private sector, and 29% in the public sector. In Canada, the comparable statistics are 16% in the private sector and 71% in the public sector.

Now, if we believe Scott Walker, the Governor of Wisconsin, public spending in Canada should be wildly out of control. We know, of course, that government is doing much more redistribution in Canada than is the case generally in the United States. But in Canada actual expenditures of all levels of government on goods and services amounted to 21.2% of GDP in Canada in 2009, and 20.6% of GDP in the US. Not much difference there. Further, in spite of union power in the public sector, the Canadian federal government was able to turn around a deficit which had exceeded 5% of GDP in the mid-1990s. Before the recent recession, the Canadian federal government had been running surpluses for several years. We all know how that compares to recent US fiscal performance.

Is Scott Walker likely to save much money by picking on his public sector unions? That’s very doubtful. He’s certainly creating plenty of unproductive conflict. Is what he is doing politically smart? That’s hard to tell. Picking a fight with unions in Madison, Wisconsin may not be the brightest idea. Anyone who has spent time in Madison (4 years for me) knows that there is a large reserve army of people who would enjoy nothing better than spending a couple of weeks camping out in the State Capitol building to bother a Republican Governor. This might play well in the rest of the state, however, where Madison is sometimes viewed as sin city.

Observations on Wisconsin

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I’m noticing that the media is being somewhat slow to pickup on the real story happening in Wisconsin and not spreading to Indiana and Ohio. It’s not about fixing state deficits or finances. It’s about busting unions, pure and simple.  As such, it’s part of an long-term effort that the right wing of American politics has been pursuing since the late 1960′s to increase the share of GDP that goes to profits and elite investors and to reduce the share of GDP/national income that goes to the middle class/working class.

Steven Pearlstein of the Washington Post is starting to get it, though:

The last time any elected leader made such a direct and brazen attack on the legitimacy of the union movement was when Ronald Reagan risked havoc in the skies by firing hundreds of striking air-traffic controllers and preventing them from ever getting their jobs back. This dramatic bit of union-busting became a turning point from which organized labor never really recovered – and, like the Wisconsin imbroglio, skillfully played off resentment of public employees whose pay and benefits exceed that of the average taxpayer.

But rather than playing Reagan to Wisconsin’s truant teachers, Walker overreached, refusing to give up his union-busting even after the unions agreed to his benefit-cutting demands. Now that he has allowed the unions to reframe the issue from one of greedy public servants to one of political revenge, Walker has single-handedly succeeded in bringing more attention, unity and sympathy to the union movement than it has had since . . . well, since Ronald Reagan took on the control tower. A mischievous columnist might even take this opportunity to speculate whether this is the beginning of the revival of labor’s fortunes

Pearlstein also observes how all the conservative talk about “running government like a business” is pure nonsense.  No sane business leader interested in building a long-term successful business would approach workers this way, something I can attest to from my own corporate and consulting experiences:

Back when I was working at Inc. magazine in the mid-1980s, we loved nothing better when approaching a public-sector issue than to ask how the private sector would handle it. Faced with the situation in Wisconsin, we would have called up Tom Peters or Peter Drucker and posed the example of a new chief executive brought in by the shareholders (i.e., the voters) to rescue a company suffering from operating losses (budget deficit) and declining sales (jobs). Invariably, they would have recommended sitting down with employees, explaining the short-and long-term economic challenges and working with them to improve productivity and product quality in a way that benefits both shareholders and employees.

Now compare that with how Wisconsin’s new chief executive handled the situation: Impose an across-the-board pay cut and tell employees neither they nor their representative will ever again have a say in how things will be run or get a pay raise in excess of inflation. A great way to start things off with the staff, don’t you think? Remember that the next time you hear some Republican bellyaching at the Rotary lunch about why government should be run more like a business.

This situation, both the efforts to bust the unions and the protests, which started in Wisconsin but has spread will, I think be a major turning point in U.S. political economy.  It’s too early to tell if which way things turn.  It could spell a determined u-turn back to the early 20th century and worse working conditions and wages share of GDP/GNI, or it could be the beginning of the reversal of the 1970′s-1980 conservative revolution (is that an oxymoron?)  and a return to progressive values.  Too early to tell.