Ken Braun’s article contains a history tutorial that questions whether unions built America’s middle class. Here’s the heart of Mr. Braun’s argument:

Criticizing highly paid union officials for taking lavish trips on the backs of their dues-paying members is often met with a predictable counter-criticism about supposedly “overpaid” CEOs. But there’s an important difference: Unlike labor leaders, the jobs of workers don’t exist without the CEOs.

Executives are necessary at any large corporation. They are either the actual owner (and sometimes founder) of the company, or they are the representative of the ownership (shareholders.) Whether an outsider agrees or not with CEO pay is immaterial. The pay is set by the ownership and based on the creation of profits which make jobs possible. No profits, no company, no jobs.

The UAW doesn’t build cars, and it isn’t necessary to build cars. As recently as 2007, the Michigan Senate Fiscal Agency reported that non-union Americans working at U.S. assembly plants owned by foreign automakers built more than one-third of the planet’s American-made cars.

UAW president Bob King recently proposed a hefty 25 percent dues hike on his members. Unlike the financial decisions made by the CEOs of the Detroit Three automakers, King’s plan isn’t going to improve profitability, build a single car, or create auto jobs.

This post isn’t an attempt to vilify unions. It’s putting things in the proper historical perspective. Certainly, there isn’t a credible argument that people, acting in their own self-interest, can’t determine their financial course through life. They’re the people that think they’re commodities, important assets that can market themselves as people who can change the financial trajectory of a business.

People who think like that attract higher wages. The key is whether they create products that add value to society. If they don’t, the market will tell them. If they’re creating things of value, the markets will reward them for their ingenuity.

Here’s another important part of Braun’s argument:

The War itself substantially blasted away the manufacturing spine of the rest of the globe, leaving American manufacturers and their workers in an historically absurd position of super-dominance. With or without a UAW, disproportionate prosperity was going to flow to American workers for decades afterward as the rest of the world recovered from the rubble.

As a result of WWII, the US, specifically Detroit, had the industrial infrastructure to build products that the world needed. Russia, Germany, Japan and other nations simply didn’t have that infrastructure. Industrial infrastructure, skilled labor and a strong work ethic build things. Good intentions don’t. Eventually, Japan rebuilt. After they rebuilt, they became competitive on the world stage again.

Unions didn’t have anything to do with Japan rebuilding. Now that they’ve moved parts of their operations stateside, they’re locating in right-to-work states. Predictably, right-to-work states’ populations are growing. That’s because people love a) the stability of never going on strike, b) lower state income tax rates and c) warmer climates.

This paragraph is a fitting finish to Mr. Braun’s article:

From here forward, middle class jobs will come from smart decisions made by the leaders of American free enterprise – entrepreneurs and executives at companies large and small. Exploitation of workers is most likely to happen when Big Labor bosses cash in the dues money and go to Disney World.

In other words, free markets will reward great ideas.

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2 Responses to “Who built the middle class?”

  • walter hanson says:

    Gary:

    I think your last line can be highlighted by pointing out that if the CEO of GM doesn’t do their job people will go and buy a Ford or a BMW or a Toyata, but if the head of the UAW doesn’t do their job right the members are stuck in the Union having to pay the higher dues rate with a contract that can cause GM workers not be able to make cars.

    Walter Hanson
    Minneapolis, MN

  • nerdbert says:

    To slightly disagree, I will point out that the new CEO of GM is going to be sitting with Michelle Obama tonight at the SotU address. My point being that exploitation of workers is more likely to happen with Big Government works with Big Company to fatten up their supporters.

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