Detroit, Unions, and Capital

I hate to be the one to break it to you, but the offshoring / "free trade" moves of the last several decades were a direct, if delayed, reaction to unionized industry in America.

One way for a business to get out from under the union thumb is to move capital somewhere that doesn't grant unions special legal privileges (to strike with impunity, for example). Another way is to reduce the number of employees, replacing them with non-union robots.

Note that I'm not saying this was a bad thing–except for the affected unions and their members, that is–but hey, they brought this on themselves.

In a related move, some heavily unionized locales (think NYC) are switching to high-cost LED lights in public and private buildings, because of the ridiculous labor cost to replace a single bulb–the LED bulbs are gawd-awful expensive, but they are expected to last for decades, so... drastically fewer bulb changes. Care to guess how many union maintenance workers will be 'displaced' by that reaction to high labor costs?

The same kind of thing happens with businesses in high-tax, high-regulation states such as the PRC (Peoples' Republic of California)–a business climate where government officials consider it a 'privilege' to do business within the state. So we're bleeding businesses, jobs, wealthy retirees, and taxable victims, who are leaving for what are perceived as greener pastures.

The biggest problem for unions is that capital such as plants and other infrastructure can be moved to other locations where unions don't have special legal privileges, such as the ability to strike with impunity. I'm sure union leadership, and many rank-and-file members, would just love it if friendly governments would 'pin down' the victim by forcing businesses to remain within their jurisdictions, preventing moves to friendlier locales.

Union power over business is based on the real or perceived inability of the target industry to react quickly and freely, whether it be to hire replacement workers during a strike, or, to pack up and move elsewhere to avoid the hassle. Unions don't really have the latter power, though they probably imagined they did.

When the target industry was a coal mine or a factory, it was difficult if not impossible to move elsewhere, making for a seemingly captive target. So businesses are slow to react, but react they must, as they are in business to make a profit, and they have a responsibility to seek and increase profit (though not at the expense of peoples' natural and inalienable rights–there is also a responsibility of good citizenship, whether you are a human being or a business, though that responsibility is not a moral blank check).

Sorry, folks, but the unions themselves deserve credit for at least some of the destruction of the middle class in this country, though they often like to engage in blatant class warfare, blaming greedy businesses, bankers, conservatives, Republicans, and anyone else they don't like.

I doubt we'd have moved so much of our industry offshore if it wasn't for relatively high labor costs including taxes, and all those employer-paid benefits. To be sure, Federal, state, and local governments all took business for granted, and to varying degrees acted as if they didn't have to nurture the goose that laid the golden egg. Tax and regulatory policy played a part in chasing capital out of this country. Had that not been the case, perhaps many Americans would have had lower wages and less generous benefits, but there might be a much larger manufacturing base in America today. Some say that a strong manufacturing base is a liability, but Detroit clearly disagrees.

And if the unions like to take credit for raising everyone's wages and standard of living (an oft-repeated claim), then they have to take the heat for contributing to an environment where the 'evil corporations' and 'robber barons'–actually, any rational businessperson–would want to find a way out.

Buildings and factories are hard to abandon or move, but eventually, they are abandoned and relocated to 'friendlier' locales, or, new ones will be built elsewhere.

People who think victims will just lay there and take it forever are sometimes wrong. Which is exactly what Detroit's demonstrating to anyone who's paying attention.

Update 3/26/11
Linked by Doug Ross. Thanks!