Merging and Purging Their Way to Billion$

I‘m no fan of the Employee Free Choice Act (EFCA), but the principle of organizing for better wages and benefits is a sound one–until it’s abused. And union abuse is largely what doomed (along with better products from foreign competition) the so-called Big Three automakers in Detroit.

So, in unions you have a good thing in principle, and a bad thing in practice. Look at the routine corruption and power hunger at just about every union in America, and you’ll see that the free pot of cash that unions blackmail out of the employees they bargain for affirms Lord Acton’s observation that “Power tends to corrupt. Absolute power corrupts absolutely.”

Anyway, the picture on the other side isn’t any prettier. As much damage as the unions have done to industry in America, corporate chieftains have sent to their workplace graves millions of employees over the years.

Joseph Schumpeter called capitalism “creative destruction,” and in any act of destruction, something is obviously destroyed–and that something in capitalism is workers’ lives and livelihoods.

The sad fact is, for CEOs, destroying workers’ lives through downsizing pays off big time. A study by the Institute for Policy Studies and United for a Fair Economy (admittedly, two left-leaning groups) shows that CEOs for the 50 companies that did the most downsizing in 2001 averaged 44-percent pay raises the next year. In fact, compensation for downsizing CEOs grew seven times faster than for CEOs in general.

The CEO for Hewlett-Packard since 2005, Mark Hurd, over the years eliminated 40,000 jobs through 31 mergers and acquisitions and reaped a cool $60 million-plus in 2008 alone. Larry Ellison of Oracle, with a personal net worth of $22.5 billion, eliminated 5,000 good jobs with his acquisition of PeopleSoft in 2005 and looks to axe another 5,000-10,000 this year through his acquisition of Sun Microsystems.

Now, to change the subject a bit and return to the plight of the Big Three: When I read over the weekend that the government would end up owning 50 percent of General Motors and the United Auto Workers most of the rest, it brought to mind this perceptive observation of Ronald Reagan’s:

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

In the case of the Big Three, Washington and the Democrats not only ruined them with taxes but also with ridiculous regulations like CAFE (Corporate Average Fuel Economy), which forced the automakers to build cars no Americans wanted to buy. Now with the Obamacrats owning GM, we’ll end up with an American version of the Yugo–and with an automaker (or two) that will be forever subsidized by the federal government (in reality, by you, me and all the taxpayers, who will have no say whatsoever in the matter).

Reagan was and always will be right about taxes and government.

To preview GM’s future, just take a gander at these Soviet-mandated cars for the masses now lying in a Russian boneyard:


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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