When I read this post of Tim Worstall’s at Forbes about how its new owners turned Hostess around, it occurred to me that it contained an interesting insight. The most important technological advancement in modern business may be organizational. Business processes rather than robots.
It also raises a question I’ve long wondered about. Why don’t unions purchase bankrupt companies to keep the jobs rather than letting themselves be reorganized out of existence as happened in the case of Hostess? Are there legal barriers? Psychological barriers? Political opposition?
Unions don’t have the money or the credit to purchase companies. I know where you’re going. If the union payscale and benefits were efficient then the union should be able to make a profit at the negotiated remuneration the company has to live with. Dammit. We are people, we have needs, we have children. I refuse to sacrifice my family at the alter of capital growth. Executives have agents, athletes have agents, but when workers do we are GREEDY! Yes, pure crony capitalism produces wealth superior to socialism, I get that. But I am still pissed off that I cannot negotiate my pay without being called a communist. Work or be fired, our new incentive plan, heard that too many times. Give a man a reason to work, and he will surprise you.
I think American unions are still mostly stuck in the industrial mindset of unions as a competition between workers and management.
You won’t find that here. I don’t do feces flinging or name-calling. What you will find is that I think that the “-isms” are overused or misused.
What can we do? In Europe companies and unions co-operate. Yes you can find cheaper, desperate laborers, even skilled ones. I want to put this forward. It is not management vs labor. It is Management AND labor vs CAPITAL, which has no human face or emotion. Capital seeks GAIN, or it leaves, instantly. Again, what can we do?
It is my general impression that by the time those bankrupt companies are to the point where most unions can afford to buy them, they are in pretty bad shape. They probably don’t want to buy those companies for the same reason no one else does.
Steve
“The most important technological advancement in modern business may be organizational.”
You bet. So few really know what I (we) do. The strategy, the financing, all the business tool kit is there. (That’s easy). But that’s not what I do. That stuff is a given and simply a mechanical means to an end. I’m a shrink. An evaluator of people. We have to get the right people doing the right things the right way. (That’s really, really hard). It’s all the difference in the world. The secret sauce. You, sir, have hit the nail on the head.
Why don’t unions purchase bankrupt companies…….”
Psychological barriers. Us vs them. (Ever read the Steelworkers or UAW daily rag? Wow. Just wow.). They actually do and have purchased companies, bankrupt or heading there, mostly as ESOPs, but they have a high failure rate. First because they are impaired businesses. Second because of the psychology. Unions tend to look at business as a jobs vehicle. We all want more jobs. But that is an insufficient goal. It’s more of a residual effect of a business prospering. It doesn’t make for good governance, attract capital or correct business practice failures. (Just as an anecdote, lest people think it’s all mgmt vs Union. We are in the volume bakery business. Our understanding is that in the Hostess situation the bakery workers vs the truckers was key. Couldn’t pair the business down to its logical and profitable sectors for loss of jobs. They let it burn for lack of cooperation. Now it’s back n some form. Power of the brand).
The closest analogy to a union meeting is a Bernie Sanders speech. Free college!! Yay!! Free health care!! Yay!! Free beer!!!! Yay!!! Make the rich pay!! Yay!! Kill the rich!! Yay!!……………wait, who is going to pay now?
I just skimmed that article. 95% is hard to imagine. I suspect some is outsourcing.
But big plants, automated lines, hub and spoke logistics. Sounds like entry into the modern world. Nobody can make money doing milk runs.
Guarneri, If I read you right, CAPITAL is GOD , and the rest of us can suck hind tit. Don’t bother explaining, just confirm. So We Know. .
On the trek to the end of the rainbow, Lord Keynes forgot to mention that unions and free trade are relics of the hard money era. In a credit backed monetary system, simple arithmetic is no longer applicable. In this era’s financial system , $1 + $0 > $1. When currency is meaningless, it is possible for all countries to be net exporters, but it is more profitable to be a net importer.
As you increase the amount of money needed to pull-up the bottom, you must accelerate the growth at the top. Accelerated growth means that the rate is increasing. In order to provide an increased standard of living to an increased number of people, you must have the top people increasing the rate their wealth is growing.
Trying to bypass the private sector does not work. If you simply begin sending out checks, you will eventually cause a currency crisis. If you try to bypass private investors, you either get the same government failures of the past, or you get the GSE’s which are no different from the private investors. Actually, they are worse, and Congressional oversight is a joke.
Adam Smith and the other classical economists cannot help. Capital is stored value, but with a meaningless monetary system, there is little value to store. Capitalism cannot function in an indeterminate environment. In Capitalism, production is a value added operation. The single purpose of Capitalism is to increase output. This is how Capital is “put to work”.
In a hard money environment, manufacturing facilities will increase, and the overall demand for labor will increase over time. Unions have something of value to offer, and the unions with skilled labor have even more value to offer.
In a credit backed monetary environment, every dollar not used to create credit is a lost opportunity. The economy becomes financialized, and manufacturing credit is the prime function of the economy. This credit is not consumer debt, but it is just one use for the credit produced.
The credit backed monetary system is and always was a parlor trick. There are some really big winners, and there are some big winners. More importantly, they can never become losers. No matter how bad it gets for them, it will be that much worse for everybody else.
It is usually best to not make deals with the devil, but if you do, you only have yourself to blame.
Gray
I understand your emotional response. But to deny the mobility of capital is like demanding the law of gravity be repealed. And not productive. Further, I doubt there are many, bordering on none, who instruct their mutual fund managers, financial advisors, stock brokers etc to deliberately underperform because capital returns don’t matter. Do you?