The big shakedown

By Richard Baehr

Putting politics in command of business ends up rewarding those who have, to use a Chicago word, "clout." The SEIU shakes down the state of California. AFSCME shakes down Resurrection Health care. The UAW and its patron saint, Barack Obama, shake down Chrysler bondholders. Hartmarx union members shake down Wells Fargo Bank.

This last one is interesting. The "logic" is that since Wells Fargo received federal money, presumably to help recover from making bad loans, it needs now to" serve" the public by making another one! One of the lessons of capitalism, is that some companies succeed, and others fail. In the age of Obama, if union workers are hurt by the failure of a company, then the rules no longer apply, and can be set aside.

Unions give enormous sums to the Democratic Party and its candidates. They are the community organizers, Barack Obama so loves and admires in political campaigns. Private sector workers increasingly have no interest in unions. The gains unions negotiate for workers prove to be short term, since uneconomic contracts are a reason companies collapse in bad times (not the only one of course).

Private sector unions now account for fewer than 10% of the private sector workforce. In the public sector, the story is different. Politics matters, more than economics. The SEIU and the AFSCME are in essence, major shareholders in the Democratic Party. So Democratic Party officials who control municipal, county, and state governments, and now the federal government, pretty much surrender to union demands. After all, they can always raise taxes to pay for the excess workers, and they have an interest in rewarding their campaign donors and workers the with rich salary, benefit and retirement packages the unions demand.

As to those who argue that the contacts are a result of negotiations, hence, they are fair, that suggests the two sides have separate interests. In this case, they don't.