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The United Auto Workers have gone on strike: https://www.reuters.com/business/autos-transportation/us-auto-union-strike-three-detroit-three-factories-2023-09-15/
What happens if Ford and GM simply say: "okay, you're fired"? This seems to have quite a few benefits, mostly that they can get rid of union workers and remove the threat of another strike.
I'll admit that unions sortof confuse me. I didn't grow up around them and have always wondered the mechanism by which everybody gets to quit their job but then demand extra money to come back. Are the people running factory machines inside of Ford and GM (or starbucks, or a hollywood writers room) really that highly skilled?
It should be noted that Tesla is not unionized, and will not be a part of this strike. Do you guys think there is a chance that the government tries to force Tesla to stop making cars during the strike to make things more fair?
I'll be honest about my feelings towards unions: I don't get it at all, and I think I'm missing something. I do think that workers should have an adversarial relationship with their employer, but it seems to me like unions have all but destroyed the american auto industry. I think you'd be insane to not just fire anybody who joins a union on the spot. I don't get how places can "vote to unionize". Why does the employer not simply fire the people doing the organizing? Sure you can all vote to make a starbucks union, but...I just won't hire anybody in your union.
The best argument I've heard in favor of unions is that the equivalent bargaining power of "a company" isn't "an employee" it's "all the employees".
Suppose we remove the distinction of capital versus labor, and suppose that we have two groups of people with disproportionate level of bottleneck in a production process. That is, if we have X people from the first group, and Y people from the second group, then the level of production is something like
f(X,Y) = A sqrt(X)P(Y)
where A is some constant, and P is 0 if Y is 0 and 1 if Y >= 1
That is, you only need one Y (the employer), but can have as many X as you want, but the more X you have in the same job the more diminishing returns you get. For each production process people can gather together and organize and form mutually consensual agreements to find some equilibrium level of X that makes this efficient. BUT, Y has disproportionate bargaining power here. If any individual X threatens to quit, their quitting drops the profits of the process by some small amount. But less than their average. The other X essentially pick up the slack, and the production keeps on going. But X is now unemployed and has 0 income, which is catastrophically awful and wasteful, as all of their potential labor is essentially being wasted unused. X quitting hurts themselves more than it hurts Y. But if Y threatens to quit then everything stops and everyone is at 0, so it's a credible threat.
But if all of the X form a union and threaten to quit/strike together, then again production stops entirely, just as if Y threatened to quit. So now they have equal bargaining power.
I'm pretty sure whoever I read this sort of argument from explained it way better than I just did, but I don't remember who or where (it might have been on the motte, so if whoever it was recognizes this argument as their own and can find the post, feel free to repost it and claim credit).
The issue is the market has a rate of return. Let’s say it’s 10%. If you invest 1000 you get 100 a year.
Now auto manufacturing seems like a scale business but realistically there is no moat. Spending $20 billion to enter the auto industry seems like a lot of money but globally it’s not and your end up having a very competitive business environment where every nation has its auto manufacturer. And there is not some big differentiating factor. Hyundai can make sedans or suvs for middle class Americans.
When America was more of a closed market union wages could be high and since they just compete with other unionized shops the big 3 could pay high wages and then hike the price of their car. And every consumer pays a higher price. In the global trade world whoever has the cheapest wage costs can sell the cheapest car and consumers will buy it. And then labor is priced in the market for moderately skilled labor.
I saw the other day chicago public schools costs $40k per child. That’s unions being able to close the market and fucking over all citizens and tax payers. I see elsewhere it’s 30k but that’s still stupid.
In 2019-2020, the Chicago school budget was just shy of $ 6 billion. Enrollment was 355,000. That is per pupil spending of $16,900. LAUSD, which is also unionized, spent about the same that year. So, if per pupil spending now substantially higher, as it is in LAUSD, it obviously is not because the districts suddenly became unionized and the unions were able to "close the market."
The most obvious reason for the recent increase, in order of magnitude, is 1) the large COVID enrollment decrease, which obviously is going to push per-pupil spending up; 2) an increase in state and especially federal revenue (in LAUSD, it rose from 631M to 1.85B) ; 3) the expiration of the old collective bargaining agreement in LAUSD and the signing of a new one; and 3) inflation.
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