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First, Chrysler files for bankruptcy and now, General Motors. What has happened to the vitality of the American auto industry and its champions, the Big Three? For so long, Chrysler, GM and Ford Motor Company have served as the driving force — both literally and figuratively — for the American economy. For more than a century, they have produced the means of transportation that millions of Americans have relied upon for everything from their morning commute to their vacation road-trips with the family. Beyond cars, trucks and sports utility vehicles, the Big Three have also been largely responsible for sustaining the American middle-class. The wages and benefits which they have provided to millions of their workers (and workers’ families) throughout the decades past have proven essential to many American families and communities.
Despite the merits mentioned above, the case for America and the Big Three is no longer the same as it once was.
Detroit, a city featuring the headquarters of GM and the other two auto giants in its suburbs, was once a thriving city that had the potential to rival the economies of many developed and industrialized countries; however, now Detroit seems on its way to achieving developing country status, receiving development aid from the U.S. government.
Detroit, however, is not the only city that has relied upon the auto industry. Cities and towns across America that have relied on the American auto industry for factory jobs are now finding themselves coping with high levels of unemployment, plant closures and increasing home foreclosures. The middle class in these areas is quickly being eroded and replaced by the unemployment class. Investment by private firms has contracted, leaving re-employment an option only for the lucky few and opening the doors for government funded programs to help mitigate the losses.
The recent catastrophe in the auto industry and manufacturing sectors of the American economy in general has brought harsh scrutiny upon many — especially the labor unions. The long-existing criticism of the United Auto Workers union has recently turned into a full-out indictment. When asked what went wrong with the American auto industry, many pundits and politicians will immediately point to the unions and their relentless advocacy for workers’ rights.
While I find merit in the argument that organized labor has metaphorically shot itself in the foot, I don’t think unions are the sole perpetrators of the American automakers’ insolvency
Unions are nothing new; they have existed for centuries. Unions often get a bad reputation, yet their objective is — quite simply — universal. Over the centuries, labor unions have been founded as instruments to advocate and protect workers’ rights. Those rights include unemployment benefits, safe working conditions and the right to collectively bargain for a better salary without getting fired. These are all workplace rights that I am sure every American supports.
Going back to a point I made above, unions not only protected workers’ rights but they also served as the cornerstone of the American middle class. Throughout the 20th century, the U.S. economy experienced unprecedented economic growth. This steady, long-term growth — while partly a result of measures and policies instituted after the Great Depression — was a product of the job security labor unions provided their members.
Despite their solid efforts, a time came when American labor unions could no longer provide their members with the same job security to which they had grown accustomed. The companies with which millions of auto workers had been employed had begun to look elsewhere for skilled labor. Many of the jobs that had once provided income to families in cities such as Detroit and Toledo were beginning to provide income to families in developing countries such as Mexico.
I would like to make it clear: I have no problem with free trade and jobs being shipped to other countries, for this has proven to supply people in impoverished regions of the world with an income, making their lives better than before. However, there is one caveat: the improvement of living conditions in these developing countries, due to the arrival of factory jobs, will be nominal until the workers themselves begin to organize. The simple fact is that these U.S.-based multinational corporations did not ship factory jobs overseas in order to raise the standard of living in developing countries; instead, their actions were driven almost entirely by an insatiable need to increase their profit margin.
Yes, earning $10 a day compared to $2 a day is a big improvement; yet, when you add the depreciatory inflation rates of most of these developing countries into the picture, the increase in the standard of living becomes nominal.
I envision that at some point, either in the near future or long term, workers in the Mexicos and Chinas of the world will organize in a fashion that resembles early 20th century American labor movements. At this moment, workers will begin demanding a real wage and the middle class in these countries will finally begin to flourish. My only wish is not that these return to America but, rather, once these workers organize, they learn an important lesson from the American labor unions. That lesson is that seeing the fulfillment of their self-interests is impossible if they do not refrain from trespassing upon the self-interests of their employers.
Labor unions, in an ideal sense, are not meant to be economic parasites that feed off of their companies’ profits; rather, they are meant to be instruments that ensure that employers recognize that company profits would not be attainable without the efforts of the workers. Once unions stop operating on this motive and being operating on the motive of greed, they begin to lose credibility.
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