The biggest mistake that all organized labor advocates make is that they believe collective bargaining is a viable device for gaining wages, which it is not. From the employer’s point of view, wages are the way employers can motivate the best and brightest of their work force to excel, which ultimately sifts the bad workers from the good, the lazy from the ambitious. In the game of football and other sports, there is a tryout process, and players that excel because of their skill and ambition are the ones who often end up making the most money. Collective bargaining destroys this entire discovery endeavor. It imposes upon the revenue generating entity an equal distribution of wages that all the employees do not deserve, because not all employees perform equally. It is this very economic misconception that has destroyed the economy of Detroit, and is why the city is considering Chapter 9 municipal bankruptcy protection after years of gradual decline. The city was built by the car industry, and the unions killed the car making business in Detroit. To understand why, just read Atlas Shrugged written in 1957 for the long answer. Here is a USA Today article on the issue.
It was good to see my old friend Doc Thompson who is now doing radio in Detroit acting as he did when he was in Cincinnati and that is pointing out where the discrepancy is in perception between public sector unions and economic reality. As Michigan has looked at Detroit and learned some hard lessons, they have come to realize that the best way to bring business back to the state is by passing right-to-work legislation as Indiana has, and Wisconsin. As predicted the unions have taken to the streets in an all out assault to defend their legal rights to loot and pillage from the American tax payer. Doc had some wonderful appearances on the Kudlow Report on CNBC talking about this very volatile issue.
When Doc was in Cincinnati as a radio personality he hosted a debate between factions involving Ohio’s Senate Bill 5 which was in essence an attempt to make public unions a right-to-work option, which of course the unions attacked heavily out of fear that if employees had the freedom to join a union without coercion, that most employees would elect to not pay the union dues—which is all the unions really care about. The money they make off union dues gives them lobby power over politics. Doc handled the radical crowd fairly. CLICK HERE FOR A REVIEW. I was a much bigger supporter of Senate Bill 5 than Doc was at the time because I saw it as a chance to take control of our local government politics away from public sector unions—which was essential to keeping taxes minimized. But now that Doc is in Detroit, he can see clearly what the unions have done to that once great city, and he has stepped up to the front line to fight the parasite that the unions have made of themselves at the expense of South Michigan’s entire economy.
The villain of Detroit is the labor unions that are rooted in communism that is forced upon employers with “collective bargaining.” Labor unions controlling management that are in the business of making goods like cars, cans of beer, and paper find that through “collective bargaining” the cost matrix of operating a business pushes up their labor costs way too much for a business to properly function, so the business locates to a state, or a country where they can control their labor costs. Labor union’s answer to this trend is to spread communism to every corner of the world so that businesses have nowhere to go and thus no option but to pay employees through “collective bargaining” extraordinarily high wages that most of them do not deserve. This is why public schools are failing, because bad teachers and good teachers all make the same amount of money no matter what they do, so failure is incentivized. Businesses, like sports and other entertainment have survived under high organized labor costs because the public has so far supported the extraordinary mark-ups in the product to subsidize the collective bargaining impact. But even those industries are about 10 years away from total collapse of their profit profiles. Movie actors are paid too much as ticket prices at the box office have capped out, which will lead to a recession in the movie business. And sports franchises are hitting the same cap, the public can’t afford in general to spend more than $200 for a football game so the profit matrixes for the NFL are about to hit a brick wall as well. But that brick wall hit Detroit many years ago as companies like Toyota, and Honda have made better cars cheaper than the union wages of Detroit, leading to a collapse of that industry.
Michigan will be a right-to-work state, and Ohio will follow shortly thereafter. They will become freedom to work states because the economy demands these actions. Anything else leads to direct socialism, which will choke off the economy and send too many American citizens to welfare programs to survive, which will collapse the GDP of our nation, so there isn’t a choice. The only fools who haven’t received the memo are the union workers who want to believe that pixy dust will save their hides from their own stupidity—and the Keynesian economics that politicians like Barack Obama subscribe to, which is destroying the economy of Europe presently, will have to be abandoned. These are facts that cannot be ignored, even though all politicians who cozy up to organized labor practices “evasion” in denying the facts of economic reality.
No economy can flourish if the potential for profit from the job creators is taken away, and labor unions take away from management the tools designed to produce wealth. Once a company loses its ability to manage their costs, and can no longer raise their price to off-set the labor costs, they have no choice but to file bankruptcy, or move their business to a more business friendly environment. However, in the case of Detroit, the entire city cannot just pick up and move, it will simply fail, and become part of a long list of once thriving areas that prospered economically for a time, then failed under their own stupidity. Detroit will join cities such as the Native American city of Cahokia, the mysterious, Teotihuacan, or Ankor Wat all which found their previous flourishing economic periods erode away due to droughts, disease, poor crop yields, or just political corruption which had the city of Chichen Itza on decline before the Spanish ever set foot on the Yucatan Peninsula. Detroit is failing because it cannot manufacture goods to export, and people are abandoning the city because there are no jobs, and those jobs where ran out-of-town because of labor unions. The economic failure is unlike those other ancient cities. Detroit is a victim of self-imposed greed, and lack of proper economic understanding. I feel honored to know Doc Thompson personally and see that he is still fighting for what’s right, even when it might otherwise be unpopular, or socially unfashionable. The fix to Detroit’s problems, or America’s are not to glaze over the obvious economic facts of organized labor failures, but to fix the problem before one of America’s once great cities becomes only a distant memory. Right-to-work cannot come soon enough for the poor state of Michigan.
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