Unions and Capitalism

Labor unions have been around for decades.  They formed as a way to prevent management from treating labor unfairly and to guarantee certain rights for their members.  Labor unions subsequently rose in power and began to handicap companies ability to cut costs and maximize shareholder value.  In this way, they are counter capitalism, since capitalism is meant to maximize profits for it's shareholders.  Now, this isn't to say that labor unions are evil or a bad idea, just that the two ideas have fundamentally opposite goals.

Unfortunately, where labor unions once were the champions of honest hard working people, they became the poster child for corruption and greed.  It's no coincidence that the labor unions rose in power at the same time the Italian mafia rose in power.  Now, the nefarious element has been largely removed from the unions, but the greed still exists.  Ultimately, union leaders and members could not see the correlation between their increasingly skyrocketing salary, retirement and health demands and managements increased use of outsourcing.  After all, nothing about capitalism requires the use of domestic labor.  This has contributed to the down fall of not only companies, but entire industries and sections of the country.  Nowhere is this more evident than Detroit and the auto industry.  It's a shame that management and labor couldn't see the end coming and agree to make individual sacrifices for the good of everyone.  This doesn't mean that the American auto industry would have been saved, but it would have made it easier to compete if people weren't making $35+ an hour for assembly line jobs.  My father ran a manufacturing company for almost 20 years and in the end he was a victim of the same fate.  People sweeping the floor at his company were earning $20/hr.  In the end he just couldn't compete with foreign labor prices.

Chicago is going through its own labor union negotiations right now.  In an effort to save 1,500 city jobs, union leaders are meeting with the mayor and his administration to come to some sort of agreement.  This includes concessions on both sides, which is welcome news.  It seems as though people are starting to understand that the economy is constantly changing and shifting.  That is until I read this quote from the union chief:

"There's got to be assurances that, 10 years from now, these jobs that
our members have are still gonna be there for them," he said.

It's amazing to think that people are still looking for 10+ year job security in such a changing environment. If you have a guaranteed job for 10 years, what incentive is there for you to change?  Instead of figuring out how we can take what we have and freeze it in time to preserve it, we should be figuring out how we can better equipment the people whose jobs are going to be obsolete to tackle new jobs.  One of the strange facts about the current economy is that there are thousands of jobs that are still vacant and with no supply of people filling the positions.  Unfortunately, these jobs  are in emerging and sometimes complex industries like IT and health care.   We should be retraining people in these industries rather than trying to maintain and blue collar / assembly line economy.