It is indeed striking to see the UAW demand higher wages from a manufacturer that now sells more cars in China than in the U.S. and that is experiencing a current decline in auto sales. It seems even more noteworthy against the ground lost by middle class income generally. A sea of declining sales and incomes does not usually encourage a manufacturing  strike for higher wages. But there are special circumstances.

President Trump is leaning on U.S. industry to return manufacturing to America; that raises the difficulty of countering wage demands using the threat of overseas production. GM remembers the 2008 financial crash when it was effectively taken over and its CEO replaced by the U.S. government. And President Trump is already providing tariff protection for various U.S. industries. From the union side, automakers’ use of nonunion southern and overseas manufacturing hugely threatens the union’s future relevance; that says a successful strike has much to gain and not so much to lose. A worthy gamble for essentially, rebuilding the support of millions of workers and the Democrat party. Those workers have been watching their factories depart and their wages stagnate for a long time.  All these now feed the strike.

But in eternally dismal economic reality, all those are counter to that reality’s larger trends: The U.S. as high cost producer cannot expect to compete with the rest of the world’s lower costs in the long run. Union political muscle is in long term decline as one result of that. And it is not just auto workers but the entire middle class that is watching its earnings decline under the combined pressures of government-imposed inefficiencies and foreign competition. The strike is proceeding through multiple weeks, still apparently surrounded by uncertainty.

For the outside observer, it appears to be a Quixotic enterprise. Timed against an oncoming, much publicized presidential election, the union will likely reap Democratic support, at least to a point. But given the magnitude of economic reality opposed, it seems likely that any victory declared by the union will be nominal and perhaps not worth its actual cost to either the union or to the workers. But union leaders are elected and may feel that they have to do something to stay on top.

For those interested in longer term trends, it may be worth noting that governments dislike competition from any outside body, be it business, church or union. In the U.S. at present, education is controlled, business has been coopted, churches are marginalized and unions seem increasingly to accommodate the politicians. Since that reinforces the current politicization of nearly everything, it is probably a lasting trend. On a scale of economic reality, the GM strike may well be irrelevant.

About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much) Couple of degrees in government, a few medals in figure skating; just reading and suspicion for economics ...
This entry was posted in Ecomomics, Goverrnment, Politics, Uncategorized and tagged , . Bookmark the permalink.

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