When will people realize that unions are bad for business? Look at the “Big 3” car companies here in the U.S.; they are failing, no surprise there. They want money from the government, and more of it, and more of it. But why is it that I should willingly give them my hard earned dollars to support their idiotic decisions? 

Let’s look at some data, compliments of Forbes. In 2006, Forbes reported that the average compensation, wages and benefits, for workers at the “Big 3” car companies and Toyota, Honda, and Nissan. Chrysler workers received an annual average of $151,720 each, GM workers received an annual average of $146,520, Ford workers received an annual average of $141,020 each, and workers for Toyota, Honda, or Nissan received an annual average of $96,000 each. Breaking those numbers down into hourly wages, Chrysler paid the workers $75.86 an hour of compensation, GM paid $73.26 an hour of compensation, Ford paid $70.51 an hour for compensation, and Toyota, Honda, or Nissan paid $48.00 hour for compensation. 

How many jobs do you know of, especially jobs requiring a mere high school degree, that will pay comepensation of even $48.00 an hour, not to mention almost $76.00 an hour of total compensation? How can it be that a high school degree can earn someone over $150,000 a year? And why is it that Toyota, Honda, or Nissan workers make almost $30 less an hour or $55,000 less than Chrysler workers? The “Big 3” car companies have the United Auto Workers (UAW) union working for them, the Japanese companies do not.

The UAW is responsible for the astronomical wages that these workers earn, the enormous compensation packages they receive, and the lavish pensions rewarded to the workers. Sure the workers love it, but it is extremely difficult for a business to undertake such enormous costs and be profitable. And what are the car companies at the current time? Unprofitable.

It is true, however, that Chrysler, GM, and Ford don’t absorb these exorbitant prices. They do what any business does when the cost of doing business increases: change things like passing the increased cost along to the customer. Imagine how much cheaper a new car would be if the average UAW worker screwing in the headlights was not getting $75.00 an hour, if that worker was not earning over $150,000 a year. Moreover, in addition to passing these costs on to the consumer, spending such money unnecessarily hampers innovation, research, and expansion.

When Chrysler got bailed out the first time back in the late 1970s there workers were making two and a half times the amount the national average was for someone in their line of work. Two and a half times more! It’s no wonder they were failing when they were basically throwing money away at paying their workers. Reviewing the aforementioned numbers, it seems as if the car companies still throw away an unnecessary amount of money on their high school educated workers. Why don’t they learn from the past? Speaking of learning from the past, why is it that American car companies take so long to adjust production to align it better with demand? Anyway, workers at the American Toyota, Honda, and Nissan plants aren’t part of the UAW and they still are nicely compensated. They also aren’t apparently on the verge of collapse. Coincidence? 

Even if you may consider yourself more patriotic for buying an American car, as in from one of the “Big 3” car companies, doing so only makes the UAW union stronger because they see the money. Conversely, if you buy an American made Japanese car, such as a Toyota Camry built inside the U.S. you are paying the American workers, not the union to pay the workers.

Other than requiring companies to pay ridiculous wages, unions are bad for business for other reasons. In a union you advance in the workplace based on seniority, which is a good concept in theory. But what happens when you work at a unionized place for two years and know infinitely more than someone that has been employed there for 25 years? Even if you would deserve the promotion due to your knowledge and skill, the other person would get it because they have been there longer, regardless of knowledge and skill. It is not difficult to see that such a scenario is disastrous for businesses. Unions also take away the worker’s voice. They claim to represent the worker’s, but really they represent the union’s own self interest. If the worker wants the same thing, then fine, they represent it. However, if the worker has an opposing want, good luck getting union support. Lastly, unions, and their policies and demands, also have a negative effect on the economy, particularly the GDP. Reverting to the asinine price of wages, assuming aggregate demand does not change, a higher paid wage leads to a decreased aggregate supply, which means a lower number of total goods and services produced, increased price levels, and a decreased real GDP.  Not only is this bad for the business, but it is also bad for the economy as a whole.

How inefficient must a business become before it realizes that unionization was a bad idea?

I am so thrilled that Jimmy Carter could be elected to his second term, even though it took almost 30 years for it to happen. But perhaps more importantly such reelection is historic. I am so delighted to be alive for this second term since I was not alive for his first. When is a rogue nation, perhaps Iran once again, going to take our citizens hostage for over a year? How long until the 20% interest rates return? When are the 70% tax rates going to make their return to boost this struggling economy? How long until the inflation rate it back up to 16%?

What do Jimmy Carter circa 1976 and Barack Obama circa 2008 have in common? Carter had and Obama has a complete lack of knowledge of international relations and the economy. The ignorance on both fronts is frightening, especially with such hateful countries that would like nothing more than to see us crumble. Domestically things could be just as grim with the utter lack of knowledge that Obama has on economic issues. I have taken two economics classes and I know more than he does. 

Obama got to where he is today based on the platform of being against the Iraqi War. Congratulations! Being so anti-war, he was also against the troop reinforcement and he was dead wrong on that. He rose to fame based on this one aspect, without having much knowledge of it, and managed to get his party’s nomination. But then the war started going well, too well to be an anti-war candidate. You know when you don’t hear anything about the Iraqi War for a month or two that things must better. Luckily for Obama, however, the economy tanked because of, in part, the subprime mortgage mess that the Democrats earnestly supported because everyone needs a house. Then Obama became a pseudo resident expert on the economy. And for some reason the ignorant Americans who are completely brain dead economically found their messiah.

Can anyone point me to an example in history where redistribution created new wealth and a better society? Certainly it didn’t go so well in Communist Russia. The last time I checked Cuba didn’t have the fastest growing economy in the world, or this hemisphere for that matter. I also want to see an example of how increasing taxes on the “rich” has previously made the middle class better. From the logical standpoint, doing so will create fewer jobs, raise prices, and be more of an incentive to drive jobs overseas. Sure the “middle class” might get a “tax cut” but it will do nothing for the economy. It won’t create new jobs, expand businesses, innovate, or even be extra cash in your wallet when prices increase. Why will they increase? A business will not absorb a tax increase and lose money; they will fire people, not hire people, raise prices, or any combination or all of the three. 

That’s something else Obama fails to realize. He claims he wants to give “tax cuts” to companies that don’t ship jobs overseas. Ironically, jobs are shipped overseas because of the astronomical tax rates they would otherwise have to endure here in America. A 40% combined corporate tax rate doesn’t help business, that’s for sure. The 40% is the current rate, who knows what it will go up to once Obama takes charge. All the European countries have lower rates, even the socialist welfare states like Sweden.   Is it too much to ask for our politicians to have knowledge of the basics of economics? The matters seem so simple and straight forward, but, in general, the policies of one party do not support the principles of economics and the policies of the other party do.

Just like after Jimmy Carter left this country in shambles, I hope someone is ready and able to rise up in four years and lead us back to security and safety, prosperity and growth, respected and feared. The prospects are not looking so well right now, but four years is a lot of time for something to happen.  After four years of being operated by someone with absolutely no experience in operating or running any type of business or other entity where money had to be earned and bills had to be paid, this country will need change. Perhaps it won’t be hard to find someone that can, again, deliver us from evil, the evil of our foreign affairs policies, or lack there of, and asinine economic policies that have been tried before, and have failed each time.

Will the law be changed so Jimmy Carter can run for a third term?