I hear quite a bit of that these days — almost like a local version of East German “ostalgie“. Old British friends say to me, well, say what you like about the 1970s — nothing worked; if you wanted to buy a new car, it was as if post-war rationing was still in effect — but all the same life in the village seemed a lot more pleasant back then. There’s something to this: the benign side of oppressive statism is often a kind of public restraint. And more than a few folks seem to feel, with the benefit of hindsight, that it’s better to have unionised thugs nutting scabs on the picket line than freelance yobs in hideous leisurewear infesting ersatz-American high streets catering to their every frightful whim from one end to the other. For the modern liberal, this is a new dilemma: an underclass that’s too rich.
Mark Steyn, “The Unfinished Revolution”, Daily Telegraph, 2004-05-04 (link goes to Steyn’s own site)
April 11, 2013
QotD: An underclass that’s too rich
Ontario’s LCBO workers vote in favour of a strike
Michael Pinkus is looking forward to a potential LCBO strike:
Call me an anarchist but I want the LCBO to go on a nice, big, long strike. And by the time you read this newsletter I am 100% sure that the sheeple of the LCBO will have given their bargaining team the go ahead for strike action. Now the LCBO’s contract was up on March 31, 2013 — which means currently the guys and gals roaming, stocking and generally keeping track of the aisles are without a legal contract with the provincial liquor board. I’m not about to get into the nitty-gritty of the contract negotiations, but when I read in the Liquor Board Employees Division (LBED) Bargaining Bulletin: “The offer we received from management can only be described in one word: Outrageous!” — well I just felt that I had to look a little deeper to see how the LCBO was screwing their own people (which is a nice change from the people of Ontario they screw daily).
What outrage would I find on the pages of the LCBO’s proposal? Are they locking the doors and throwing employees out on their ears? Are they proposing actual punishment for selling to minors (like the sting David Menzies did in July of 2012)? Will there be repercussions for doing a bad job, breaking the law, real penalties?
Now I have met, had dealings with, and actually, once upon a time, worked alongside some very good LCBO employees, most of them casual part-timers — but I can tell you that for every one good one there’s two that are lazy, surly and just generally people you don’t want to deal with in a retail situation — and sadly, those are the one’s you are likely to remember. So from the LBED Bargain Bulletin dated March 1, 2013 here are 2 of the 9 crazy demands the LCBO is making of their employees and the Union’s response to those “outrageous” proposals (I highlight my favs, but you can read the full bulletin here):
[. . .]
But who really suffers from an LCBO strike? California, Spain, Italy, France, Australia, Chile, in other words import wines and liquor producers, who can ONLY sell through the Province run monopoly, and they’ll be demanding the LCBO settle so their products get into the hands of Ontarians instead of sitting idly in warehouses collecting dust. Meanwhile local producers could see a boon as Ontarians thirst for wine is not met by the LCBO but instead by in-province wineries. Tourism to wine producing areas should also see an uptick; instead of visiting Grandma on a Saturday afternoon the family would pile into the car (with Grandma) to tour the highways and bi-ways of Ontario wine country. A long LCBO walk could mean that Ontarians finally get the taste for their homegrown wines en masse and will then demand greater access — one weekend away is quaint, but having to make the trek each and every weekend may prove too much. And with that kind of demand we could see movement in this province towards a freer market system with independent and corner wine stores. Maybe the government will get tired of having to pay all those wages, negotiating with an inflexible union and decide to sell off the LCBO — preferring instead to reap the rewards from taxes instead of paying the price of labour unrest … sigh, wouldn’t that be nice?!? As for the employees, the good ones will have no trouble finding a job in the public sector [I think Michael means private sector here], many in the same kind of newly created positions. The others? Well they’ll just go back to ditch digging where they belonged in the first place.
April 8, 2013
The “Winter of Discontent” that brought Margaret Thatcher to power
Megan McArdle explains the temper of the late 1970s in Britain:
To understand the legacy of Margaret Thatcher, you need to understand Britain’s “Winter of Discontent,” in which striking public-sector workers nearly paralyzed the nation. Actually, you have to go back a bit further, to the inflations of the 1970s. Americans remember the “stagflation” of the 1970s as bad, but in Britain it was even worse — the inflation rate peaked in 1975 at over 25 percent.
Governments on both sides of the pond decided that the solution to inflation was to simply declare, by fiat, that prices would not rise so much. In America we got Nixon’s wage and price controls. In Britain, they got the government’s 1978 vow to hold public-sector wage increases to 5 percent — at a time when inflation was running to double digits.
The public-sector workers, as you might imagine, did not like that. And in Britain, the public-sector workers had immense power. Trash piled up in the streets. The truck drivers who ferried goods all over Britain went on strike — and the ones who didn’t, like oil tanker drivers, began feeding their destinations to “flying pickets” — mobile groups of strikers who would go from location to location, blockading them so that workers couldn’t get in and goods couldn’t get out. The BBC called them the “shock troops of industrial action” and that’s an accurate picture; effectively mobilized, flying pickets can grind the wheels of industry to a halt. Which is what they did in the winter of 1978-79.
In Liverpool, the gravediggers went out, leaving bodies unburied for weeks. By the end of January, half the hospitals in Britain were taking only emergency cases. Full of righteous fury, the unions flexed every muscle, demonstrating all the tremendous power that they had amassed by law and custom in the years since the Second World War. Unfortunately, they were pummeling the Labour Party, which had given them most of those powers. And the public, which was also suffering through high inflation and anemic GDP growth, had had enough. They elected Margaret Thatcher, a Conservative grocer’s daughter without roots in the working-class power structure of the labor movement, or the elite power structure of Britain’s famously rigid class system. She systematically went about dismantling the two main sources that gave labor the power to essentially shut down the United Kingdom: lenient strike laws and state ownership of key industrial sectors.
[. . .]
Her detractors should remember that as terrible as it was for the miners when the pits were closed, these mining operations were not sustainable — nor was it even desireable that they be sustained so that further generations could invest their lives in failing coal seams. The work was dreadful. The coal was too dirty for the environment, or the delicate pink tissue of the miners’ lungs. And even if Britain had wanted to keep mining the filthy stuff, it was getting too expensive to dig it out. The mines were playing out, not because Margaret Thatcher was mean, but because the cradle of the Industrial Revolution had burned through much of her coal.
In short, Margaret Thatcher destroyed an industrial system which had yes, provided workers with a secure livelihood, but yes, also done so at an unnacceptable cost. These two things are the same legacy. They cannot be parted.
Her achievement was not inevitable. But looking back at the Winter of Discontent, I’d argue that it was necessary. The alternate future for a United Kingdom where the labor unions hung on was another decade or two of failing state firms and economic decline. By the early 1980s, the UK’s per-capita GDP was lower than that of Italy. You can maybe argue that there was some alternative Social Democratic future, Sweden-style, or perhaps the discovery of an alternative path to capitalism. But it’s hard to look at the convulsions of 1970s Britain and argue that this was a happier past that the nation should pine after. And I find it hard to argue that Britain’s economy could have been modernized without taking on the unions; their veto power made even such obvious steps as shutting down failing mines effectively impossible.
As I wrote a few years back:
My family left Britain in 1967, which was a good time to go: the economy was still in post-war recovery, but opportunities abroad were still open to British workers. My first visit back was in [mid-winter] 1979, which was a terrible shock to my system. I’d left, as a child, before the strikes-every-day era began, and my memories of the place were still golden-hued and happy. Going back to grey, dismal, cold, smelly, strike-bound Britain left me with a case of depression that lasted a long time. It didn’t help that the occasion of the visit was to attend my grandfather’s funeral: it was rather like the land itself had died and the only remaining activity was a form of national decomposition.
February 6, 2013
Why does every infrastructure project cost more?
In his nominally NFL-related column, Gregg Easterbrook usually manages to insert interesting topics that are not in the least related to football:
Where Is the Bridge to Nowhere When You Really Need It? Another reason unprecedented increase in the national debt is not resulting in newly built infrastructure to help the economy grow is that government projects keep taking longer and costing more. Two years ago on Reuters, your columnist opined, “A combination of top-heavy bureaucracy, union rules, cost-plus profits and graft have made recent federally funded construction projects insanely expensive and slow. When the funding comes from borrowing by Washington, then businesses, unions and local petty officials have a self-interest in running up the cost while dragging their feet.”
That column ended by noting the slow pace and cost overruns in plans to replace the Tappan Zee Bridge on the Hudson River north of New York City.
Now two years have passed, and guess what’s happened to the Tappan Zee Bridge replacement project? It’s no closer to beginning. New York Magazine reports that $88 million has been spent just to study a bridge replacement — not for architecture drawings, just study. The original Tappan Zee Bridge, completed in 1955, cost $675 million in today’s dollars and required three years to complete. New York State officials are saying the replacement will cost at least $3 billion and take five years to build. New York Magazine warns the price is lowballing for an expected cost much higher.
New York is demanding that the federal government fund most of the new bridge. Borrowed funny-money would be used; contractors and unions would have every incentive to drag their feet, running up the bill, while corrupt politicians would want the project to last as long as possible, so there was more funny-money to steal.
Meanwhile the existing Tappan Zee Bridge continues to crumble and nothing’s being done. At the current snail’s pace, a new bridge is many years away. What if the existing bridge collapses? Politicians will claim they were never warned, just as they claimed they were never warned before storm surge from Hurricane Sandy smashed up lower Manhattan, Long Island and Hoboken, N.J. Running up the national debt is bad enough; not building what the country needs is even worse. But politicians observe that behaving recklessly, then blaming others, is what advances their careers. Barack Obama acted recklessly with the nation’s finances, and was re-elected. Chris Christie did nothing to prepare New Jersey’s low-lying city from storm surge, then blamed others, and made the cover of Time magazine. Where is the political leader who will place acting responsibly ahead of self-promotion?
November 27, 2012
Comparing Walmart to Costco
Megan McArdle explains why the facile comparison of the two big US retail firms does not make as much sense as people think:
One simply cannot have a discussion about Walmart’s wages without someone bringing up Costco. It seems to be de rigeur, like tipping your waiter, calling your mother on her birthday, and never starting your thank you notes with the words “Thank you”. So lets get it out of the way before the supper gong goes.
[. . .]
Costco has a more highly paid labor force — but that labor force also brings in a lot more money. Costco’s labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There’s a bit of messiness to all these calculations, because of course both firms have employees who don’t work in stores — but that’s the majority of their workforce, so I’m going to assume that the differences come out in the wash.)
This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it’s because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.
One way to think about this is Thanksgiving dinner: how come you, who are capable of getting a meal on the table 364 nights of the year, suddenly find yourself burning things, forgetting the creamed onions in the microwave, and bringing the mashed potatoes to the table a half an hour late? Because when you’re cooking sixteen things instead of four, it is not the same as cooking four four-item meals. There are all sorts of complex interactions involving things like heating times and oven space, and adding more people to the problem, while probably necessary, itself multiplies the complexities.
November 24, 2012
The disappointment of the WalMart protest
Megan McArdle says that the turnout for yesterday’s nation-wide protest outside WalMart stores fell well short of expectations, but that this shouldn’t be surprising:
There’s an irony to labor organizing: the best time to get workers fired up is during economic downturns, but this is probably the worst time to actually organize them. People are most interested in union actions when jobs are scarce and they feel economically insecure, but of course, that’s when they can ill-afford to take economic changes. Unions made big gains during the Great Depression, to be sure, but they had a host of new laws and a labor-activist FDR administration throwing heavy weight behind those efforts. Without that political help, it’s hard to see how unions could have made such big gains — and of course, arguably, the higher wages that FDR’s policies pushed for helped prolong the Great Depression.
Recessions are also a time when employers don’t necessarily have a lot of profits to give up. Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat — between 3% to 3.5%. If they cut that down by a percentage point — about what retailers like Costco and Macy’s have been bringing in — that would give each Walmart employee about $2850 a year, which is substantial but far from life-changing. Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers. Which might be difficult, given how many product categories Amazon is pushing into.
The other potential strategy is to mobilize those customers — to cost Walmart business unless they up their wage-and-benefit game. But the Black Friday bargain hunters apparently simply pushed past the scattered protests in search of cheap flat-screen televisions — and the progressives who seem most on fire about this campaign are not really very likely to be Walmart shoppers. Which could be a metaphor for the whole US labor movement.
October 1, 2012
Michigan’s unions battle for a veto right over state law
In the Wall Street Journal, Shikha Dalmia looks at a proposed constitutional amendment in Michigan which would give unions a huge veto power over state law:
The Michigan Supreme Court recently approved the placement of a proposed constitutional amendment on the November ballot. If passed by voters, the so-called Protect Our Jobs amendment would give public-employee unions a potent new tool to challenge any laws — past, present or future — that limit their benefits or collective-bargaining powers. It would also bar Michigan from becoming a right-to-work state in which mandatory union dues are not a condition of employment. The budget implications are dire.
[. . .]
The amendment says that no “existing or future laws shall abridge, impair or limit” the collective-bargaining rights of Michigan workers. That may sound innocuous, but according to Patrick Wright of the Mackinac Center for Public Policy, the amendment would hand a broad mandate to unions to challenge virtually any law they don’t like.
[. . .]
The ballot initiative states that it would “override state laws that regulate hours and conditions of employment to the extent that those laws conflict with collective bargaining agreements.” In other words, collective-bargaining agreements negotiated behind closed doors would trump the legislature — a breathtaking power grab that would turn unions into a super legislature.
Perhaps the biggest upside for unions is that the proposal would prohibit Michigan from becoming a right-to-work state. Regaining its competitive position with respect to the 23 right-to-work states that have become attractive to manufacturers, even auto makers, would be unlikely. Rather, labor would get a field-tested strategy for scrapping those states’ right-to-work laws with ballot referendums.
September 25, 2012
QotD: Replacement NFL referees
The replacement officials are a mockery wrapped in a travesty, dunked in a vat of incompetence, glazed with WTF and set to the Benny Hill theme song.
Scott Feschuk, “In defence of the replacement officials (Kidding: they’re terrible)”, Maclean’s, 2012-09-25
July 14, 2012
Ontario’s latest headache in the education ministry
Mark Schatzker explains the new disaster unfolding in the Ontario government’s education file:
According to reports, a number of large unions, including CUPE, IATSE and the United Steelworkers, are already courting prominent Toronto-area student leaders. It is expected that any negotiation will include a list of long-standing student grievances. Top among them is the issue of merit based marking.
“Someone has to do something about all these losers who hog all the best marks,” said Stu, a grade 11 student at Central Etobicoke High School who did “brutal” in Functions and Applications this year.
His friend and co-organizer Luke says a union will be able to push for a “marks tax” on the top one per cent of students. “You have these total nerds who get, like 98 in Bio,” Luke explained. “We think they should give five or ten per cent of those marks to the students who get 45.”
“We have to stop rewarding greed,” Stu said.
Over at Parkside Elementary School in Scarborough, Isabelle, who is in grade seven, is also taking up the fight to make Toronto schools a closed shop. At the top of her grievance list: “geographism.”
“The way it works right now,” Isabelle explained, “is that you have to go to whatever school is closest to your house. But what if your best friend from music camp goes to a different school? How is that, like, fair?”
Sources in the Ministry of Education say the province is already close to signing a deal with elementary students with a benefits package that includes: cupcake Fridays, a ban on quinoa, and a 5.7 per cent increase in recess every year for the next four years, raising it to 20.9 minutes by 2017. (It is presently 15 minutes.)
June 19, 2012
QotD: The mottos of “High Liberalism”
The story is, in a few brief mottos to stand for a rich intellectual tradition since the 1880s: Modern life is complicated, and so we need government to regulate. Government can do so well, and will not be regularly corrupted. Since markets fail very frequently the government should step in to fix them. Without a big government we cannot do certain noble things (Hoover Dam, the Interstates, NASA). Antitrust works. Businesses will exploit workers if government regulation and union contracts do not intervene. Unions got us the 40-hour week. Poor people are better off chiefly because of big government and unions. The USA was never laissez faire. Internal improvements were a good idea, and governmental from the start. Profit is not a good guide. Consumers are usually misled. Advertising is bad.
Thus Anderson: “Externalities, asymmetrical information, and other collective action problems are … pervasive in economic life. Countless ways of conducting business reap gains for some while imposing unjust costs on others. Create a cartel. Stuff rat feces in sausages.” Thus Freeman: “It is a truism to say that in order to achieve the benefits of an efficient market economy (increasing productivity, greater economic output, increasing productive capital, etc.), the basic rules of property, contract, and exchange must be structured [by government] to realize efficient market relations.”
No. The master narrative of High Liberalism is mistaken factually. Externalities do not imply that a government can do better. Publicity does better than inspectors in restraining the alleged desire of businesspeople to poison their customers. Efficiency is not the chief merit of a market economy: innovation is. Rules arose in merchant courts and Quaker fixed prices long before governments started enforcing them.
I know such replies will be met with indignation. But think it possible you may be mistaken, and that merely because an historical or economic premise is embedded in front page stories in the New York Times does not make them sound as social science. It seems to me that a political philosophy based on fairy tales about what happened in history or what humans are like is going to be less than useless. It is going to be mischievous.
Dierdre McCloskey, “Factual Free-Market Fairness”, Bleeding Heart Libertarians, 2012-06-16
April 9, 2012
“Teacher tenure is one of those ideas” [that] “do real damage to the public education system”
If I told you that an article in support of ending tenure for public school teachers appeared in The New Republic, would you believe it? I wouldn’t have done, until today:
Like the abortion measures, this bill was also pushed by Republicans — but here’s the strange part: It was actually a halfway decent idea. The subject of the bill was an important one: tenure for public school teachers. And, while the proposal wasn’t perfect, it was at least an attempt to rectify what is perhaps the least sane element of our country’s approach to education.
The vast majority of states have long granted public school teachers tenure. The way it works is simple: After a certain number of years, teachers qualify — “virtually automatically” in most states, according to the National Council on Teacher Quality — for a form of job protection that makes it extremely difficult to fire them for the rest of their careers.
[. . .]
So what is the case for K–12 teacher tenure? The truth is, there isn’t a good one. One argument typically offered by tenure defenders is that teaching is a notoriously difficult profession in which to measure success. But this is true for lots of jobs — yet, in all other professions, efforts are still made, however imperfect, to evaluate whether an employee is succeeding and to remove those who are not. Why should teaching be different? In fact, given that teaching is arguably the most important job in our society, it would be difficult to name a profession, save maybe the military, for which these sorts of heightened job protections would be less logical. If a job is truly important to the nation’s future, then you want to make sure that the most able, talented people are doing it — and doing their best work at all times.
That goal is simply incompatible with tenure. Indeed, tenure is so illogical that it’s impossible to see why it shouldn’t be abolished. And that is exactly what the Virginia bill sought to do. Predictably, however, Democrats — who remain far too beholden to teachers’ unions — scuttled the measure. As a result, tenure lives on in Virginia for now.
February 3, 2012
The end of London’s diesel locomotive plant
I’ve updated my earlier post on the labour dispute at London’s EMC plant now that the current owners have announced the closure of the facility.
Update, 5 February: Mike P. Moffatt at Worthwhile Canadian Initiative debunks some of the media coverage of the closure:
After the U.S.-Canada Free Trade Agreement, GM Diesel closed their La Grange, Illinois plant and consolidated their production to the London plant, though kept the head office, research, design, and manufacturing of some components in La Grange. EMD London was a direct beneficiary of the U.S.-Canada Free Trade agreement, something I have yet to hear in the media. The domestic locomotive market, by itself, would not have supported the level of production we have seen over the last two decades.
In 2005, GM Diesel sold the Electro-Motive Division (including the GM Diesel plant in London and the head office in La Grange) to a couple of U.S. private equity firms, who re-named it Electro-Motive Diesel. In 2010, those firms sold EMD to Caterpillar.
[. . .]
We need to keep in mind that:
- EMD has always been a U.S. corporation.
- The intellectual property from research and design, etc. was from the head office in La Grange, Illinois.
So that leaves “know-how” which Cohn mentions in a follow-up paragraph. On Twitter, Colby Cosh asked: “Cohn talks about “know-how” but (a) know-how isn’t IP and (b) Cat doesn’t seem to have much use for the workers who have it, do they?” Caterpillar, however, did send a number of employees from London to their new plant in Muncie, IN, to train newly hired workers. I am Facebook friends with an EMD worker and I remember him objecting loudly to this last fall. But did Caterpillar really buy EMD so that it could obtain the talents of a dozen guys to teach advanced welding techniques?
There are a lot of narratives to this story, many of them unpleasant. A narrative about a U.S. company buying Canadian IP at 15 cents on the dollar does not pass the sniff test, however.
Update the second, 7 February: Andrew Coyne gets his inconvenient, yucky facts in our lovely flag-waving, anti-capitalist nationalistic fantasy:
EMD never received any subsidies from the federal government; certainly not since Caterpillar bought it. Indeed, looking through the hundreds of pages of “grants and contribution” in the Public Accounts, it may be the only company in the country that didn’t. The Harper visit to which Olive refers was to promote a tax break for the purchasers of locomotives, not the manufacturers. The visit occurred in 2008, two years before the Caterpillar purchase.
It’s not clear how the foreign investment laws could have been invoked to cover a purchase of an American company by another American company, or if they could, why this should be the pretext for “demanding job guarantees.” Presumably if it is wrong for a firm to close a plant or lay off workers, it is just as wrong whether it has recently been the object of a foreign takeover bid or not. Perhaps you will say we should bar all companies from closing a plant. Okay: why would they ever open one? If workers, once hired, cannot ever be laid off, why would they ever be hired?
Of course, there’s always Olive’s suggestion of a punitive tariff, through which the cost of keeping jobs in London locomotive plants could be shared by consumers and businesses across the country. (You’re welcome.) This would recreate the system of foreign branch plants that existed in the days before free trade, small factories producing exclusively for the domestic market. Rather than lament at foreigners stealing our jobs and technology, the nationalists could once again lament at being tenants in our own land.
January 27, 2012
January 26, 2012
The fate of London’s diesel locomotive plant
In the Toronto Star, Martin Regg Cohn (who claims he “is not an anti-globalization crusader”) does his level best to put forward a case for massive government intervention in a labour dispute between Caterpillar and the Canadian Auto Workers:
At the old locomotive plant now owned by U.S.-based multinational Caterpillar Inc., the Canadian Auto Workers union is not even on strike. The CAW has been locked out since New Year’s Day because it refused to sign its own death warrant by agreeing to slash wages in half for most workers from $34 an hour to $16.50.
When a powerful multinational negotiates in bad faith, it becomes a story that governments in Queen’s Park and Ottawa can no longer wash their hands of. To put it in language that resonates with Premier Dalton McGuinty: When a bully tries to humiliate people, you can’t just watch in silence.
When high-paying skilled local jobs can be shredded at the whim of a combative multinational giant, it dramatically undermines all the upbeat rhetoric we hear from McGuinty and Prime Minister Stephen Harper about Canada’s global appeal. It sends a signal that Ontario is not so much open for business as it is closed for unions.
We jump directly from Caterpillar’s demand for wage reductions to an assertion that the company is negotiating in bad faith (I guess, from the union’s point of view, anything other than a wage increase is proof). No indication whether the company’s demand is economically justifed — if sales of the plant’s railway locomotives are as bad as the wage offer implies, then the next step will be closing the plant — just straight over to bad-mouthing the company.
And, of course, it’s merely objective reporting to use pejorative descriptors when discussing the eeeeevil multinational firm. Not content merely to malign the company, he then calls on the Premier to support the union to the hilt:
So what can our anti-bullying premier do?
If I were McGuinty, I would ask myself a simple question: What would Bill Davis do?
The former Tory premier of Ontario wasn’t perfect, but he was always plugged in. He took labour seriously, listened closely to business and wooed foreign investors (remember Renault?). He knew how to leverage the power of the premier’s office to stand up for Ontario’s greater interests.
A phone call to Caterpillar’s corporate braintrust would show that Ontario’s premier is no pushover. If that didn’t work, a phone call to Harper — who is still trying to live down the tax breaks he gave the locomotive factory’s former owners a few years ago — might find a receptive ear.
And finally we get to a good point: the foolishness of governments in giving special tax breaks to certain industries or companies. If it’s in the company’s best interests to locate in your jurisdiction, they’ll probably do it. If you have to bribe them with tax breaks, low-interest or interest-free loans, or other special incentives, then once the incentive runs its course, the company has no further requirement to stay in your location.
Update: In the National Post, Kelly McParland has some suggestions for union leaders:
1. A lot of people (the membership figures suggest it’s the vast majority) think unions are concerned solely with their own members and couldn’t give a bird’s turd for anyone or anything else, including other working stiffs, members of other unions, the fortunes of the company they work for or the customers they deal with. When you display a total lack of interest in others, they generally adopt the same attitude towards you.
[. . .]
4. Union politics might consider moving out of the stone age. The world evolves over time, but unions persist in peddling the same trite bromides as if it’s still the dawn of the industrial revolution. The “us against them” mentality; the pretense that all employers exist to exploit workers and can never be trusted; the assumption that every contract must be succeeded by an even richer one no matter the health of the industry, the economy or the company; the fealty to leftwing political parties — all are symptoms of an exhausted, outdated perspective that has barely changed since “modern technology” meant the telephone.
If unions really want to save themselves, they might take a lesson from the market economy. If no one buys what you’re selling, it’s not because they buyers aren’t bright enough. It’s because people see no value in your product.
Update, 3 February: The plant is being closed. Here’s the official announcement:
Progress Rail Services has announced that it will close Electro-Motive Canada’s (EMC) locomotive production operations in London, Ontario.
Assembly of locomotives will be shifted from the London facility to the company’s other assembly plants in North and South America, which will ensure that delivery schedules are not impacted by the closing of the London facility.
All facilities within EMC, EMD and Progress Rail Services must achieve competitive costs, quality and operating flexibility to compete and win in the global marketplace, and expectations at the London plant were no different.
The collective agreement and cost structure of the London operation did not position EMC to be flexible and cost competitive in the global marketplace, placing the plant at a competitive disadvantage. While the company’s final offer addressed those competitive disadvantages, the gulf between the company and the union was too wide to resolve and as such, market conditions dictate that the company take this step.
January 19, 2012
In spite of the large number of petitioners, recalling Wisconsin’s governor may not be a done deal
Christian Schneider in City Journal on the efforts underway in Wisconsin to recall Governor Scott Walker:
One morning last February, Wisconsin governor Scott Walker called his staff into his office. “Guys,” he warned, “it’s going to be a tough week.” Walker had recently sent a letter to state employees proposing steps — ranging from restricting collective bargaining to requiring workers to start contributing to their own pension accounts — to eliminate the state’s $3.6 billion deficit. That day in February was when Walker would announce his plan publicly.
It turned out to be a tough year. The state immediately erupted into a national spectacle, with tens of thousands of citizens, led by Wisconsin’s public-employee unions, seizing control of the capitol for weeks to protest the reforms. By early March, the crowds grew as big as 100,000, police estimated. Protesters set up encampments in the statehouse, openly drinking and engaging in drug use beneath the marble dome. Democratic state senators fled Wisconsin to prevent a vote on Walker’s plan. Eventually, the Senate did manage to pass the reforms, which survived a legal challenge and became law in July.
The unions aren’t done yet: they’re now trying to recall Walker from office. To do so, they will try to convince Wisconsin voters that Walker’s reforms have rendered the state ungovernable. But the evidence, so far, contradicts that claim—and Wisconsinites seem to realize it.
The fight between the Governor and the public unions matters more than it may seem: Wisconsin was the first state to allow civil service workers to unionize and has traditionally been seen as a strong union (and therefore also Democratic) state ever since. If unions can have some of their power trimmed back there, it will hearten the efforts of other state governments to follow suit.
