Neither Management Nor Labor Killed The Twinkie: We All Did

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[Editor's Note: The following post is by TDV legal correspondent, Jim Karger]

I came close to avoiding the Twinkie topic entirely, if only because so many have already taken it on in animated, breathless fashion. The right-wing has firmly laid the blame on the union, those greedy bastards. After all, had they convinced their members to give up more of their pay, 18,000 would still have a job and all would be making far more than the average American worker.

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The left has indicted, convicted, and is ready to execute all Hostess executives, those high paid greedy bastards. After all, they were making millions, even giving themselves pay increases while the little guys were shaking in their boots, dreading the very day that came last week.

On its face, it seems there is a disagreement here, but fundamentally, both sides agree: greed is the problem. They just can’t agree on who is greedier. Unions often secure wages far beyond what the market would demand for unskilled and semi-skilled labor and featherbed jobs making the incumbent less than productive, while management secures the same for the psychopaths who, due to their incapacity to feel empathy, are capable of wiping out thousands of jobs and livelihoods without so much as a thought.

Both sides point their fingers at the other as evidence of why America is failing, and both seek to eliminate what they see as unjustifiable greed (translated, not their own greed), by legislating away the right of others to be, well, human. The right wants to eliminate the poor man’s attempt to collectivize, to join forces to maximize their economic power, while the left wants to put hard limits on profits, salaries, and the perquisites of capital, thereby killing the proverbial goose that laid the golden egg.

The answer, both sides believe, is to correct a manufacturer’s defect in mankind. Yet, for longer than anyone can remember, no amount of shrill, whiny moralizing has changed man’s desire for more, and both sides are willing to force their beliefs on the other at gunpoint, urging government to enforce what they consider to be the “greater good”, on one side the cheerleaders of crony capitalism and on the other, detractors of capitalism, regardless of brand. In both cases, the otherwise invisible hand of the market suddenly appears with a gun in it. Both seek a State-enforced solution.

Both sides make compelling arguments that they have the moral high ground, but neither does. And the real question is not “who is right,” but rather, “to whose benefit?” As Charles Hugh Smith observes in his new book, Why Things Are Falling Apart – And What We Can Do About It, ”[every] policy is sold as being ‘good for the country,’ but underneath the happy-story public relations, some vested interest is benefiting directly. We don’t know who cooked up the policy, but we know a vested interest bought political power to make it law.”

Indeed.

Just as the labor laws passed as a part of the New Deal have transmogrified market forces into Government Motors and the soon to be resurrected Employee Free Choice Act, the Federal Reserve’s zero interest rate policy has decimated savers while making corporate America happier than a pig in shit, allowing business to borrow cheaply while forcing individuals who have acted prudently to jump into and bid up a risky stock market in a desperate bid for yield and return.

The battle rages on, each side looking for the next legislative fix that will give it an advantage. Neither side ever considers fewer laws or less regulation (especially when those laws serve their interests). And so, as politicians are bought and paid for by corporate America and big labor, the legislative patchwork continues ostensibly to right the wrongs of the market. Nonsense. They are righting the (perceived) wrongs of the last legislative incursion that didn’t go their way.

The only alternative neither has considered is to permit the market, unfettered supply and demand, to sort it all out. Employees via unions have plenty of weapons to enforce their will if they had the guts to use them, with strikes and boycotts topping the list. Without government involved, they would have a lot more weaponry, such as a strike for recognition (picketing an employer until they recognized the union), secondary boycotts (picketing the customers, vendors and banks of the offending employer) and hot cargo agreements (allowing employees to refuse to handle goods of companies designated as unfair.) These economic weapons and others are now prohibited by law and limit the power of organized labor. Absent government incursion, unions would also be empowered because they would not have to take on a corporate America financed at lower-than-market interest by their banker buddies. Bain Capital and the private equity industry would be no industry at all, if only because the market would not permit massive amounts of capital to be transferred from banks by leveraging questionable assets. Without government and Fed involvement, there would be no fractional-reserve banking, no creation of money from thin air, no ZIRP. Banks would exist but they would loan prudently and never more than they could afford to lose since no one would ever be too big to fail in a purer version of a market economy.

Corporate America, admittedly downsized without government largesse, likewise would not have to play by rules now cut from whole cloth when it came to dealing with unions. Don’t like unions? In a free market, any employer that didn’t want a union would simply refuse to recognize a union, at least not until it was in their best interest to do so. Hostess, herein, would have simply enforced its will. “This is what we pay. Stay or leave, your choice.” Individually or collectively, but without government protection, each employee would have had the choice to come to work or not. Those who did not come to work might be terminated and new employees hired to take their place, and Hostess would soon find out whether the wages they offered could attract the quality of employee they sought. Having fought government’s largess to organized labor for 35 years, I am the first to admit that some businesses run better with unions if only because it is easier for unskilled, untrained managers to read a contract and apply the rules than it is to make good management decisions and to make their employees’ jobs more than just paychecks. My guess is Hostess was one of these businesses, but they never knew it. They never considered it.

The game would be played much differently if government stepped out of the way, a fact to which the do-gooders respond, “It would be so confrontational that way,” as if confrontation should be avoided at all cost. It shouldn’t. The workplace, the market, isn’t a laboratory. It is tough. Wear a cup. But the workplace is also a place where we come, or should come, together, not for the common good, but for our good, the good of each one of us. If we are fortunate, we learn early that the best part of work isn’t injecting animal fat and sugar into a sponge cake made of, well, animal fat and sugar for a paycheck. It is in the relationships we develop working with others, the friendships that develop naturally from that other part of human nature — care, compassion, and concern — that is likewise sublimated by government intrusion. It is easy for an employer to justify not doing the right thing vis a vis employees if government has already defined the right thing as the minimum required.

In the end, while left and right mistake the market as a cause of the problem rather than a victim of the state, Brad Spangler reminds us that “a deeper libertarian analysis . . . points to the role of the state in artificially concentrating capital in the hands of state-allied big business — giving statist plutocrats far more bargaining power in the labor market than is their natural due. Injustice happens to play out in the marketplace, but the cause is the state.” I suggest that this injustice is on both sides of the aisle—crony-capitalism and crony-labor, two sides of the same coin.

The unacknowledged irony of it all is that both sides are fighting for something not worth the conflict, not if they knew the truth. And the truth is our insatiable desire for more, achieved or not, doesn’t make us any happier. To the end of applying that truth to the workplace, Fritz Aldrine and I wrote the book, Why Work Isn’t Working Anymore, in 2002. () We dutifully recited the overwhelming evidence that once basic needs for food, shelter and clothing are met, there is no evidence, none, that the continued search or achievement of more does anything to increase one’s life satisfaction. Our admonition that “endemic change in the ethos of what work is, what work can become, and how our jobs should fit into our lives is essential if half of the American workforce, currently dissatisfied and discouraged with work, is to salvage any joy and satisfaction from their waking hours,” was roundly criticized but mostly ignored. Now, ten years later, nothing has changed. Indeed, the long-inculcated Western fascination with money makes our work not an end, but a means to an end, even as its advocates become progressively less satisfied. And, its advocates, also known as “us”, management and labor, can never assume the noble pose until each of us stops seeking government intervention to line our pockets at the expense of others.

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In America, we talk of “growing up to be what you want to be”, but what we really mean is “growing up to have what you want to have”. Having, not being, is the American Dream, and work is the distasteful cost of the ticket in the minds of most. That dynamic has been, is, and will remain, dysfunctional, but no amount of government intrusion will lead to fairness, a concept that will always remain in the eye of the beholder. Nor will it expose the myth of more that has destined more to dissatisfaction than any other fiction around. Rather, government encourages the myth to live on by putting its finger on the scale of the market and thereby choosing winners who never feel like winners for long, but just try harder to fit the square peg into the round hole.

Breaking free of the myth that binds us into the never-ending rat race can only be accomplished by looking within even while others want to fight over who should get the last Twinkie. In the meantime, the only reasonable way to continue the battle is to take the government’s finger off the scale.

Jim Karger is a lawyer who has represented American businesses against incursions by government and labor unions for 30 years. He has been the subject of many feature articles, including, “Outlandish Labor Lawyer Gets No Objections From Staid Clients,” published in The Wall Street Journal, and most recently was featured in an article entitled, “You Can Get There From Here,” published by the American Bar Association. In 2001, he left Dallas, and moved to Mexico in the high desert of central Mexico where he sought and found a freer and simpler life for he and his wife, Kelly, and their 10 dogs. Today, Jim takes a handful of assignments each year, and speaks regularly to industry associations and employers on issues involving government regulation, over-criminalization, and privacy. His website is www.crediblyconnect.com.

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avatarThe Dollar Vigilante - The Dollar Vigilante posted Thursday, November 22nd, 2012.

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