Archive for the ‘GM’ Category

In Defense of Bankers’ Bonuses and Union Contracts

June 30, 2009

Over the past year, two groups have been unfairly scapegoated for our country’s economic problems:  (1) bankers and (2) unions.  In particular, many people have blamed the incentives embedded in bankers’ compensation scheme for the near bankruptcy of the entire industry.  Many people also blame unions for the down fall of the auto companies.  But I believe both positions are misguided at best and flat out wrong at worst.

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Question for the Readers of This Blog: Obligation to Deal with Unions

May 1, 2009

I am no expert on labor law.  As we watch Chrysler go into bankruptcy, many on the Right blame the unions for the American car companies’ problems.  They say that the American car companies are at competitive disadvantage to their foreign competitor (even those with plants in the U.S., mainly in the South) because the U.S. companies have unionized workers (and very high health care costs as a result) and the foreign ones don’t (needless to say this leaves out the fact that the Southern states have given generous tax breaks to the foreign car companies).

But is there any legal requirement that the U.S. companies negotiate with the unions?  Why isn’t all of the blame on the management of these firms?  The unions and their leaders have a responsibility to their members, not to the car companies.  There obligation is to get the best deal for their members.   Management and the Big 3’s Directors have the responsibility to get the best deal for their company, not the unions.  Unless there is a legal requirement to bargain AND come to an agreement with the unions, no one forced the Big 3 to sign the deals that gave the unions their CBAs and the health care coverage and other benefits.  I understand that they may have signed these deals for business or political reasons, but that is thierere decision and problem.

Any insight in the comments would be greatly appreciated.