Trade Unionism / Labor

A few weeks ago in a posting I speculated that a battle royal was brewing in the House and Senate over the so-called “card check” bill, otherwise knows as the Employee Free Choice Act (HR 1409 and S 560).  With the defection of Senator Arlen Spector and a number of conservative Democrats rethinking the issue, the momentum on this bill has slowed considerably.  This is a good thing from my perspective.  This legislation is a very bad idea.

That is not to say that some compromise can’t be found that reforms the present law but avoids the excesses of the card check bill.  A story in today’s Washington Post entitled Union Bill’s Declining Chances Give Rise to Alternatives explains both the card check bill’s growing lack of political support as well as moves to draft a more widely acceptable compromise.  For those interested in the issue, it is worth reading.

In the weeks ahead both the House and Senate will be taking up the controversial Employee Free Choice Act (HR 1409 and S 560).  There will be lots about the bill in the papers and I know I’ll have much to say about the topic myself as this is an issue about which I care a great deal.  To tee off the issue I recommend reading this story from the Washington Post on Sunday entitled ‘Card Check’ Bill Fosters Scrutiny of Fundamentals.  Let me say only this for now:  This bill should not become law. 

For a story about the local Washington DC tech community’s opinion of the Employee Free Choice Act, see the story in today’s Washington Post Business section entitled Local Tech Community In Uproar Over Labor Rights Bill.

It appears most clear from everything I’ve read that efforts by countries to restrict foreign imports during times of economic upheaval is an unwise thing to do.  Restricting trade and protecting domestic industries is an understandable instinct when times get bad, but it is apparently precisely the wrong course of action when combating a global recession.  It makes things worse, far worse.  Yet, we all know that labor organizations the world over, responsive to their domestic clientele, like nothing more than a good trade barrier to protect their particular industry from foreign competition.  The most popular trade restriction these days comes in the guise of conditions which must be negotiated into trade agreements to improve labor and environmental conditions in foreign countries.  While for labor it serves a very distinct purpose–a means of restraining free trade–for most everyone else, from the comfort of our American homes, it sounds like a very nice thing to insist upon (a close relative of ‘political correctness’).   While negotiation of some provisions of this sort would seem to be prudent, it is apparent that the “prudent” end of the spectrum rarely satisfy organized labor, as “prudent” would rarely really significantly alter trade.

So, today comes word that the Obama administration, showing due fealty to a key constituency of the Democratic Party, announces that it is “aggressively reworking U.S. trade policy to more strongly emphasize domestic and social issues, from the displacement of American workers to climate change.”  This is according to a story in this morning’s Washington Post (U.S. to Toughen Its Stance on Trade: New Policy Reflects Growing Dissatisfaction With Global Markets).  The story is a good one and confirms that countries the world over are “embracing new trade barriers aimed at  imported goods and other measures meant to restrict the flow of capital outisde their borders.”  Concerning the push in the U.S. for new labor and environmental standards in foreign trade deals, here is an excerpt from the story:

During the campaign, Obama said he generally supports free-trade policies but also signaled a tougher approach that is only now beginning to be outlined. Both in Kirk’s testimony yesterday and in a policy statement issued by new Obama appointees at the Office of the U.S. Trade Representative, the administration vowed to make tougher labor and environmental standards prerequisites for trade deals. Rather than stressing the signing of new agreements, the administration indicated that it will instead prioritize stricter enforcement of existing ones before the World Trade Organization — the Geneva-based body that arbitrates global trade. 

I am, of course, suspicous, given the relationship of organized labor and the Democratic Party, that anything approaching reasonable or the “right thing to do” will be the end result of this new policy.  This is more politics than sound policy.

Also in today’s Washington Post is an Op-ed arguing the importance of global trade to world economic recovery and offering a “three-pronged agenda [that] can promote growth, and support foreign policy and global stability.”  The author is Charlene Barshefsky who was the U.S. trade representative from 1997-2001 (making her a Clinton appointee).  The Op-ed is entitled Trading Up to Global Recovery.  While the author advocates free trade she also advocates for “disciplines on labor and the environment.”  

It appears clear to me that as concerns these “disciplines” to be imposed on other governments, the devil will be in the details:  Too lax and organized labor won’t be happy and too strict and the agreements will be have no chance of being agreed to by foreign nations.  Good luck on finding reasonable middle ground and a trade policy that helps more than hurts.  Good luck indeed.   

The U.S. is a better place this weekend than it was last with Rod Blagojevich no longer the Governor of Illinois.  Illinois has long had a deserved reputation for dirty politics and this is an opportunity for the state to clean things up once and for all.  A friend once worked for the state and the stories he’d tell of how jobs in state government were filled was truly frightening.  Competence or qualifications for a job were secondary to political party and how much you’d raised, even as a state employee, for the winning candidate.  It’s no one wonder almost every Governor of Illinois ends up in prison.

Further, the former Governor’s missteps in trying to “sell” Barack Obama’s Senate seat were but the most flagrant of his myriad of transgressions.   It has raised the issue, however, of how the U.S. goes about replacing Senators when they die or resign to do other things.  None of the experiences this year with Governors replacing Senators have been tidy, although none sink to the sordid depths of Illinois.  This week Senator Russell Feingold along with Senators John McCain and Mark Begich introduced a constitutional amendment that would require special elections for Senate vacancies.  (Information courtesy of CongressDaily 11:30 EXTRA yesterday).  It’s a great idea although it will be a tough row to hoe in getting the majorities required in both Houses, not to mention the requisite assent of states.  It needs to be pursued, however.  I’ll leave it to this Washington Post Editorial, entitled How Not to Pick a Senator which appeared on January 24, to make the case for special elections to fill Senate vacancies.  I agree with it completely.

As concerns the U.S. economy, the news continues to get worse.  We’ve driven off a cliff and it’s appearing that it will be a mighty challenge to get back to anything approaching normal soon.  It could be the rest of my working life, now unfortunately itself prolonged as a result of the depreciation in my life savings.  Having said that, there was blurb in yesterday’s New York Times business section entitled “A History Lesson” (which can be found in a larger story entitled Bank of America Needs a Nudge) that offered a little hopeful news to balance the doom and gloom.  I recommend giving it a read.  It points out that this isn’t likely to be the Great Depression.  I know I felt a little better after reading it.

Finally this week, I’d like to briefly address an issue that has the potential to get very heated in the months ahead.  It is the issue of labor unions and their role in our economy.  Our new administration will be much more friendly to labor as the Democratic Party owes labor a large political debt.  Paying off that debt may be very costly to the country and the economy.  Let’s begin with the news that unions at a number of petroleum refineries around the country are threatening to strike.  This news could mean shortages, at least regionally, of petroleum products like gasoline.  The issues include safety and wages.  While I understand safety, I cannot see the entire country being held hostage over the wages of employees of refineries.  If they don’t like their wages, I suggest they build their skill set and seek better paying jobs.  Right now there are surely many that could and would take their place for the salaries they currently receive.  That is the essence of the market.  Jobs that are in economic demand in relation to the supply of workers able to do those jobs get higher wages than those jobs where workers are a dime a dozen.  This apparently includes corporate CEOs who operate in a rarefied, and in my opinion perverse, market that I neither understand nor condone.  Unions, however, are able to interfere with that market by threatening significant economic loss (through a strike action) to the employer and potentially to the entire economy (in the case of petroleum refinery workers) if their demands for higher wages are not met, notwithstanding the fact that there are others who’d only be too willing to work for those same wages.  The market therefore gets skewed.  Wages end up being higher than the market tells us they should be and that impact ripples through the economy.  Eventually, things get so out of line that market prevails, as it has in the case of Detroit of late.  The wages and benefits extracted by labor over years of collective bargaining break the bank and it all comes tumbling down. 

So, immediately, with this potential of an economy-jolting refinery strike, the administration may be presented with a dilemma that is not unlike the one that hit President Reagan in his early days in the White House with air traffic controllers.  Then, Reagan told the air traffic controller’s union to take a hike.  This President will be unlikely to tell the refiners’ union to do the same and he will likely fail an important leadership test.  We’ll have to see.

Another leadership test will be in how the President handles union demands for enactment of the Employee Free Choice Act.  He’d like to put this bill off for as long as possible into his administration although Vice President Biden this week suggested that it would still be brought up for Congressional action within the year.  Expect a knock-down drag-out fight of huge proportions on this one.  Especially in a major recession, this is one I don’t see labor winning and if they do, it will be at great political loss for Democrats, as this will not sell well in most of America.  Already corporate America is circling the wagons and it will get nasty.  A good story explaining this looming battle can be found in a January 9 New York Times piece entitled Bill Easing Unionizing is Under Heavy Attack.  You can guess that I will be no fan of this legislation and will side strongly with corporate America.  This bill must be defeated, especially now. 

And that’s it for this week.  For the record, I’m not sure that the Weekly Roundup is a sustainable feature of this weblog.  Writing a column every day of the week takes an inordinate amount of time and energy and by the weekend I need a mental break, if nothing else.  I always say to myself that I’m going to do a short one that won’t take more than an hour and then I conclude the piece at least two hours later.  We’ll have to see, but his could be the last.  All the best.