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0 pointsrjbond3rd15y ago0 comments

Thank you for your reply. I appreciate it.

We're talking about different decades. You're talking about present day, I'm talking about how we got here, i.e., the decline which began in the 1980's.

In terms of what a CEO is "worth," CEO's can certainly have negative value, regardless of the compensation.

Regarding who should take a pay cut, I would say everyone involved. But what I'm objecting to is this notion that "unions are to blame" for the auto industry's problems.

Let's assume the unions are acting like leeches, sucking out more value than they are putting in. Isn't it arguably the case that management is acting -exactly- the same way?

I would further argue that there is a -lot- more than $1600/car that separates GM from Toyota. If the unions are to blame for everything wrong, do they get the credit at companies which are doing well (e.g., Ford)?

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yummyfajitas15y ago· 2 in thread

In terms of what a CEO is "worth," CEO's can certainly have negative value, regardless of the compensation.

Do you seriously believe GM would have a higher value if the CEO position went unfilled?

Let's assume the unions are acting like leeches, sucking out more value than they are putting in. Isn't it arguably the case that management is acting -exactly- the same way?

Perhaps, but management doesn't have much power. If management demands more money than the company is willing to pay, they can be fired and replaced. That's a lot harder with unionized workers.

The gap between GM and Toyota may be more than $1600/car, but all that means is that unions are not the only cause of GM's decline. I wouldn't disagree with that.

As for Ford, what exactly did the unions do to help? The mechanism by which they harm is quite clear - they raise cost of labor. What value do they add that makes it worthwhile?

rjbond3rdOP15y ago

Thank you again for your thoughtful reply.

No, of course they have to have a CEO. And maybe he adds value, maybe not. He gets what he negotiated, same as the workers.

Management doesn't have much power? You're saying that an individual manager doesn't have much power and can be replaced. Sure, that's true.

As for Ford, let me clarify. No, I'm not saying the unions deserve any credit -- after all, it's the same unions as at GM!

But if you're going to give them the blame when things are bad, don't you have to also then give them the credit when things are good? The truth is they are just assembly line workers for the most part, and the quality was engineered out of the cars starting in the 1980's.

And regarding the "harm" that workers do by raising the cost of labor, why aren't management's salaries also "harming" the business by raising the cost? Why the double standard?

yummyfajitas15y ago

And regarding the "harm" that workers do by raising the cost of labor, why aren't management's salaries also "harming" the business by raising the cost? Why the double standard?

The corporation negotiates with management from a position of equality. Both parties are permitted to make or reject offers as they see fit. If GM offers too little, Wagoner is free to take a higher paying job elsewhere. If GM can find someone cheaper, they are free to reject Wagoner. GM is also not permitted to collude with other employers to reduce prices.

The corporation does not negotiate with a union from a position of equality. They are not permitted to reject union offers and procure labor at lower rates from the competition. They are also not permitted to fire and replace union workers who fail to do their jobs. Labor sellers are legally permitted to collude with each other to raise their prices, and they are given a government granted monopoly on the practice. Competition is illegal.

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