Roger and George [Will]*
Despite the UAW’s attempt to do for the South what it has done to Detroit, the South can continue to practice entrepreneurial federalism. Capital is mobile. It goes where it is welcomed and stays where it is well treated, so states compete to create tax and regulatory environments conducive to job creation. Liberals call this a “race to the bottom.” Conservatives call it a race to rationality.
— Breaking the grip of the unions, George F. Will, the Washington Post, Feb. 18
Yup. The decline of the U.S. auto industry was the fault of the UAW, not, say, decisions by top management to deliberately destroy vehicle quality and ignore the clearly growing need for fuel efficiency.
Bring back the Ford Pinto! And the Chevy Vega! We want to compete with those anti-union German companies,* and those employee-hostile Japanese ones!
Elsewhere in that column, Will complains that VW management was quietly assisting the UAW in its organizing efforts. Obviously a plot to undermine VW’s competitiveness.
Note to Mr. Will: There is a difference between ideology and fact; ideology does not constitute fact.
What a ridiculous column.
*Updated to add that link to a Dec. 2011 Forbes article. The article’s title: “How Germany Builds Twice As Many Cars As The U.S. While Paying Its Workers Twice As Much.“
All right, I’ll say it. Georrge Will’s is an A hole. Arrogant bastard!
You know what ruined the acceptance of the aluminum block early on in this nation? GM ruining one in the Vega without iron liners. Dah!
In 1982 GM shut down their manufacturing plant at Fremont California. They blamed the workers. In 1984 GM and Toyota formed a joint venture to manufacture both GM and Toyota model cars. The work would be done in the old Fremont plant and use a lot of former GM employees. The NPR program “This American Life” did a program on this.
Any honest assessment would have concluded that the Toyota/GM joint venture at Fremont was doomed to failure since it used workers who GM regarded as their worst!
The second part goes on to try to explain why GM could not translate the Fremont success into their own production plants.
I heard about this years ago and it was an eye opener. The best explanation is that American managers were somewhat incompetent in all fields and at all levels. When screw up’s happened they lashed out at line workers. Workers became defensive and the result was war.
How much of GM’s problems are due to the financial types getting control of corporate in 1958?
Oops, I forgot the punch line!
The joint venture was a success and lasted until 2009.
Sorry, I have really botched this comment!
The joint venture used a lot of the same workers and they would continue to be members of the UAW.
The major difference was that Toyota would run the plant using the methods that they used in Japan!
Since Becker already beat me to the punch on cast iron cylinder liners — let me throw in that the Russian WWII, T-34 tank used an aluminum engine block — so does a variant of today’s T-72, the T-80. FWIW 🙂
I also forgot: a friend had a 65,000 mile Chevy Vega — red in color, if you could see through the smoke.
If I wanted an overpaid job where I could slack-off and not get fired, where performance isn’t rewarded and actually discouraged, I’d want to be in a union.
Was it just a coincidence when union power peaked in the 1970s, quality reached its trough.
That’s true, PeakTrader. If you wanted an overpaid job where you could slack-off and not get fired, where performance isn’t rewarded and actually discouraged, you’d want to be in Germany, and therefore in a union. Those damn defective Mercedeses and Audis!
Union power peaked in the 1970s? Hmmm. I thought it was in the ‘50s and 60s. Silly me.
Quoting JimH here: How much of GM’s problems are due to the financial types getting control of corporate in 1958?
Sheeesh, PeakTrader. Don’t you read Forbes? http://www.forbes.com/sites/frederickallen/2011/12/21/germany-builds-twice-as-many-cars-as-the-u-s-while-paying-its-auto-workers-twice-as-much/
It depends how you measure the peak:
And, by the 1970s, after Japan and Germany rebuilt from the devastation of WWII, U.S. automakers with the UAW couldn’t compete.
Not all unions are the same:
“In Germany, management and unions worked closely together in the interests of the common good. Indeed, by law all major German firms are required to set up Works Councils, where the bosses and the unions must work together ‘in a spirit of mutual trust’.
In Britain, by contrast, car factories in the 1960s and 1970s became daily battlegrounds, where militant shop stewards and complacent managers fought out an overt class war.
German manufacturing is one of the great success stories of the post-war age.”
I worked ALL my life as mechanic, mainly motorcycles but many a day on automobiles. GM makes the CHEAPEST product able to run don a street. They wear out fast and ANY part that doesn’t wear out fast, then next years model WILL be changing that part. Parts are cheap, they have nice body styling and GM has a fantastic sales force(bullshitters) so people buy them, many are even loyal.
UNIONS have nothing to do with that crap one way or another, its called ENGINEERING & GMAC( Ally Bank since TARP)
PT: Again, there’s NO such thing as an overpaid worker.
Mike, sure, there’s no such thing as an underpaid worker either.
I worked for the CWA and also worked for the federal goverment. I’d say, half the workers couldn’t last one day working for minimum wage at McDonalds (those two jobs paid great and had great benefits, including paying only $5 for any dental work, e.g. a root canal or gold crown, and could get my teeth cleaned every three months. However, those jobs weren’t for me – there was no challenge).
Also, I may add, I could pick my dentist, paid for no dental insurance and had a $5 co-payment for each visit, no matter what needed to be done.
Obviously, the U.S. needs a lot more great dentists, particularly great dentists who will work hard for almost nothing 🙂
I worked for a Porsche sales agency for about seventeen years. The cars
are all German made with minute exception. Some minor bits and pieces are sourced from other mostly eastern European countries. I think they may even have used a Toyota transmission on some models not long ago. But basically totally built in Germany by unionized workers. And Porsche has, for about a decade, been the most profitable car maker in the world. They adopted the Toyota concept of lean production technique in the early ’90s. But still using a union shop, the best engineering of any car company in the world, and Porsche is a profit center to envy.
Success is quality driven in the car business. Gimmicks don’t hold up for long. Crap is found out and rejected. The workers build what the engineering departments design. The quality of the whole is determined by the quality of the parts. GM cut its own throat by ignoring the needs, interests and tastes of the “baby boomers.” The unions had nothing to do with the failure of any car maker.
PT: Many workers are underpaid, one needs a living wage to be able to work. Slaves are underpaid workers—13 Amendment U.S. Constitution.
Come work for me, PT. The challenge is there to see if one can do a hard day’s work, room&board, brand new shovel , and I GUARANDAMNTEE YOU won’t be overpaid! (after all Ideology counts for something)
Jack, at both the union and government job I had, if you were a lousy worker, who put in minimal time and effort, you wouldn’t want to quit. It may be almost as bad as the post office 🙂
P.T.; Germany and other continental manufacturers adopted something called legally mandated, centralized bargaining after WWII — wherein everybody doing the same kind of work in the same geo-locale worked under one common contract. The industrialist’s idea, not labor’s — the idea to conserve money for rebuilding by avoiding a race to the pay and benefit top.
Ended the race to the bottom as well. Germans being their usual thorough selves instituted the most democratic labor system.
England did not adopt the strongest labor system (centralized bargaining) which is why England fell behind the continent in per person output. Assuming there is anything to your conflict on the assembly line claim (you are an easily identifiable troll by now — but trolls make good sounding boards, so have fun) it is not because of the strength of its unions — more likely England’s something in their culture due to their still nasty class system.
Peak Trader I’ve worked for NY city, NY state and private industry. In the public service jobs I was a union member. Early in my working life I was a union member in a job I held in a family owned small business. Even the owner was a member of the union and hired only union workers. In every job I’ve held the quality of the work performance was a function of the quality of the managerial supervision of the workers. Quality management gets the best out of the work force. Managers who are ass holes get what you would expect from their work force.
I’ve been an administrator in a unionized, public employment setting. There were many levels of professional and para professional workers, all were protected by a union contract. That same contract laid out in plain language what steps could be taken to “correct” an employee’s performance. Lazy, inefficient and otherwise inadequate employees were few and far between, but when they did show up in the work setting there was a clear path to take to document their inadequacies and get them out. Good management makes the work place efficient and effective. Unions simply support the workers’ rights to fair play and fair pay.
Peak Trader has, as usual, completely bought the right wing spin about unions. Unions work just fine in other countries; in ours, they must be destroyed. It’s very sad.
Peak Trader, “……if you were a lousy worker, who put in minimal time and effort, you wouldn’t want to quit.”
Possibly my response to that asinine comment wasn’t clear so I’ll add this. No, of course, if you’re a screw up you’ll stay a screw up and you will hope to be over looked as you screw up. Peak doesn’t tell us if he was one of those that he is describing. That’s not actually relevant. What is relevant is that if a work place has screw up workers, which I continue to maintain is less likely than so many are willing to admit, it is the job of the management to identify who is the screw up and who is productive. Union contracts don’t protect screw ups. Those contracts are intended to protect workers from abusive treatment, false allegations of incompetence and lay out the means by which the good and the bad within a work setting can be differentiated.
And this, “It may be almost as bad as the post office.” is such a blatantly ignorant statement that it says more about the person making it than it does about postal workers.
Obviously, some people here believe workers don’t respond to incentives, and disincentives have no effect either.
In Germany, per capita real GDP is over $10,000 a year less than the U.S., and Germany’s net exports adds to its GDP.
The reality is since unions in the U.S. began to decline in the late 1970s, the U.S. economy became much more dynamic.
Today, the U.S. not only leads the world in the Information and Biotech Revolutions, it leads the rest of the world combined (in both revenue and profit).
Complacency and expending enormous resources fine-tuning old industries really hasn’t worked out well for German living standards.
It’s more accurate to say, which I stated originally above, union power began a massive decline in the late 1970s. Chart:
The auto industry became much more competitive after Germany and Japan rebuilt from the devastation of WWII.
U.S. consumers benefited enormously from the massive resources Germany and Japan directed into auto production.
Don’t feed the trolls
W Edwards Deming, the American statistician helped Japan’s businesses to improve the quality of their products. The Japanese established the Deming Prize as recognition of his efforts.
Deming’s Red Bead experiment tells you a lot about his thinking.
Ford Motor Company had gotten themselves in deep trouble by 1982. Ford decided to invite Deming in to help them with their problems. Deming refused to help unless Ford’s upper management participated in the study and Ford’s upper management agreed.
“He told Ford that management actions were responsible for 85% of all problems in developing better cars. In 1986, Ford came out with a profitable line of cars, the Taurus-Sable line. In a letter to Autoweek Magazine, Donald Petersen, then Ford chairman, said, “We are moving toward building a quality culture at Ford and the many changes that have been taking place here have their roots directly in Deming’s teachings”
The reality is that since unions started to decline in the late 70’s the vast majority of American families have seen their income decline while working more hours.
Everybody always brings up the Vega as an example of the decline of the US auto industry(and for good cause).
My favorites though was what GM did to Cadillac with their 4-6-8 engine and their production of a diesel engine which was bastardized from combustion engine parts.
Course, the unions forced GM management into doing this and losing a generation or two of luxury car buyers.
My anecdotal two cents:
When I started work in GE Steam Turbine Engineering in 1968, all the unit managers had fought in WWII (they were all men, of course). They didn’t take any crap from anyone, above them or below them, they knew how to do the work of anyone in their office, and they had loyalty down as well as loyalty up. When Welch forced the last of them out in the 1980’s, things went downhill in a hurry. I worked for my first two mangers for a total of 20 years, and they both were great. In my next 15 years at GE I had twelve different managers, who ranged from poor through mediocre to okay. A couple of them tried to run an engineering office without being able to integrate a polynomial.
WWII was a tragedy, but we came out of it as much better people, it seems to me. As Dr. Krugman remarked once (and Theodore Sturgeon wrote a short story about, much earlier), what we need is a war with Martians, to unite us.
EMIchael: My Dad had a Pickup with one of those diesel engines. It a converted 350 block, I think. The high pressure fuel pump was in a high heat area and need rebuilding about once a year. Hard to keep running on a regular basis.
JimV : AGREED!!! My dad was a WWII veteran and had his head together on anything he did. He died riding a motorcycle at 85 years of age.
U.S. real median household income increased about $10,000 from 1980 to 2000 (also, average household size decreased from 2.76 in 1980 to 2.62 in 2000). Chart:
Of course, from 1980 to 2000, there has been massive low-skilled immigration, although they tend to be productive and underpaid in low-wage jobs.
Raising the minimum wage, perhaps, up to $15 an hour, is enough to correct underpaid jobs.
The top 20% are the fastest growing income group:
Rising riches: 1 in 5 in U.S. reaches affluence
December 6, 2013
“New research suggests that affluent Americans are more numerous than government data depict, encompassing 21% of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.
Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40% of total U.S. consumer spending.
In 2012, the top 20% of U.S. households took home a record 51% of the nation’s income. The median income of this group is more than $150,000.”
In fairness to Peak Trader I followed the link in his last comment, which is presented as though a data source to support his correlation between union strength and the collapse of an industry. The link only goes to a graph with no link to a source. By tracing the copyright notice, Political Calculations, I found their web site. Interestingly they use another web site, Before It’s News, to post duplicate articles. One standout issue, however, is that there is no disclosure as to where and by whom the data is coming. it seems that the primary blogger uses the name Ironman, but otherwise provides no means by which the veracity of the site’s content can be checked. So basically they publish any information they care to and claim that it is economic data. From where and gathered by whom is a mystery. If I’ve overlooked the source(s) please correct me.
That seems to happen to all of PTs links, when he actually even bothers to give a link. Here is a fairly accurate link
Depends on which inflation measurements you accept. But even taking the best case scenario, the growth all but disappears when you figure in the increased working hours for those households over the last several decades. If you income went up 32% but you worked 32% more hours you’re not really seeing much growth.
EMichael, when Americans become unemployed and collect government benefits, employment falls 100% for those people.
Working Americans have to work harder to support unemployed Americans with goods & services and taxes.
Also, perhaps, one of my prior comments better belongs here:
Growth in the
of Families by Income,
“The proportion of families living in affluent neighborhoods doubled from 7 percent in 1970 to 14 percent in 2007.
Likewise, the proportion of families in poor neighborhoods doubled from 8 percent to 17 percent over the same period.”
In 1970, the proportion of Americans in the “affluent” and “upper income” classes, and also in the “low income” and “poor” classes were relatively small, while the proportion of Americans in the “high middle income” and “low middle income” classes were very large.
If you break down those six classes into three classes, the high and low classes grew and the middle class shrunk. Those three categories are almost equal in size today.
In 1970, both the high and low classes were about 18% each, while the middle class was over 60%. In 2007, both the high and low classes were about 30% each, while the middle class was over 40%.
I suspect, many middle class Americans moved into the higher classes, while many immigrants from poor countries moved to the U.S. and into the lower classes.
However, U.S. living standards improved substantially, including through real median income. Chart:
Also, data on classes on page 12 of this PDF:
Course that would mean something if people were taxed more now than in the last thirty years by the federal government.
But of course we all know that is not true.
Moreover, I may add, income = GDP = output is an incomplete measure of living standards. For example, Americans live in bigger houses and drive bigger autos than Western Europeans and even Canadians. Americans pay a much smaller proportion of their incomes in taxes than Europeans and Canadians. U.S. consumption represents 70% of GDP compared to 60% in Europe, even after subtracting net imports from consumption..
Furthermore, I stated before (and measuring only domestic growth is incomplete):
In the Keynesian consumption function (or identity), Y = C + I + G + NX; trade deficits, or negative net exports (NX), subtract from GDP growth, because consumption (C) is overstated.
For example, in a $10 trillion economy, a 5% one year increase in GDP expands the economy by $500 billion. Also, if imports are greater than exports, e.g. $1 trillion of imports and $600 billion of exports, then net imports are $400 billion in one year, which adds to our trading partners GDPs and subtracts from U.S. GDP. However, the total added to the U.S. economy is $900 billion ($500 billion from GDP growth in one year and $400 billion from net imports in one year), because the U.S. is consuming more than producing in the global economy.
U.S. trade deficits became increasingly larger reaching $800 billion a year by the mid-2000s (or 6% of GDP). China, for example, to a large extent, is a giant U.S. assembly plant, not counted in U.S. GDP (actually subtracting from U.S. GDP).
Here’s what James Fallows said about China:
James Fallows studied American history and literature at Harvard, where he was the editor of the daily newspaper, the Harvard Crimson. From 1970 to 1972 Fallows studied economics at Oxford University as a Rhodes scholar.
Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China.
Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.
Neither government likes to draw attention to this arrangement, because it has been so convenient on both sides. For China, it has helped the regime guide development in the way it would like—and keep the domestic economy’s growth rate from crossing the thin line that separates “unbelievably fast” from “uncontrollably inflationary.” For America, it has meant cheaper iPods, lower interest rates, reduced mortgage payments, a lighter tax burden. The average cash income for (Chinese) workers in a big factory is about $160 per month. On the farm, it’s a small fraction of that. Most people in China feel they are moving up, but from a very low starting point.
This is the bargain China has made—rather, the one its leaders have imposed on its people. They’ll keep creating new factory jobs, and thus reduce China’s own social tensions and create opportunities for its rural poor. The Chinese will live better year by year, though not as well as they could. And they’ll be protected from the risk of potentially catastrophic hyperinflation, which might undo what the nation’s decades of growth have built. In exchange, the government will hold much of the nation’s wealth in paper assets in the United States, thereby preventing a run on the dollar, shoring up relations between China and America, and sluicing enough cash back into Americans’ hands to let the spending go on.
I’ll take your larger house and car and lower taxes and raise you healthcare.
That’s where much of the increase in real compensation went: Over 100,000 pages of health care regulations, which drove-up the costs of health care.
Government has been busy keeping the health care industry busy boged down in paperwork, inefficiencies, and waste.
So, now government will try to take over health care and create scarcity to lower the cost of health care.
Also, I may add, the ACA, or Obamacare, is designed to make consumers pay more and government pay less for health care. So, consumers will have less money to spend for everything else.
“In Germany, management and unions worked closely together in the interests of the common good. Indeed, by law all major German firms are required to set up Works Councils, where the bosses and the unions must work together ‘in a spirit of mutual trust” – in other words, the government stepped in and forced the manufacturers to work fairly with the unions, got them involved in all the decisitions, and it worked out. Whereas, in the US, the government stays out of union/management relations, except to force some “chamber of commerce” type limitations on the unions, while the companies do their damndest to destroy the unions completely. I think we see which version works better, for both the people and the companies. I wonder how well “planned obsolescence” would have worked out with motivated, car-loving workers involved in the process of producing them … sigh.
When the bean-counters get control, adios muchachos.