Re: Challenge to Union Thinking

[Norman Kurland <thirdway@cesj.org>]

What Vic Thorpe considers a diatribe, I consider clear-headed and gutsy thinking
by Steve Nieman on the inherent weaknesses of bargaining over the crumbs of the
wage system.

The last great labor leader, in my opinion, was Walter Reuther of the UAW.
Reuther was a visionary, a clear thinker and a passionate advocate for the
revitalization of the labor movement.  When I worked for him in the mid-sixties,
I brought him together with Louis Kelso.  In 1967, just before his death in a
plane crash, Reuther made this statement before the Joint Economic Committee of
Congress:

"Profit sharing in the form of stock distributions to workers would help to
democratize the ownership of America's vast corporate wealth which is today
undemocratic and unhealthy.

"If workers had definite assurance of equitable shares in the profits of the
corporations that employ them, they would see less need to seek an equitable
balance between their gains and soaring profits through augmented increases in
basic wage rates.  This would be a desirable result from a standpoint of
stabilization policy because profit sharing does not increase costs.  Since
profits are a residual, after all costs have been met, and since their size is
not determinable until after customers have paid the prices charged for the
firm's products, profit sharing [through wider share ownership] cannot be said
to have any inflationary impact upon costs and prices." (Hearings on the 1967
Economic Report of the President, Joint Economic Committee of Congress, p. 774.)

Reuther was a thinker.  He would have understood and been sympathetic to Steve
Nieman's strategy for saving jobs for himself and his fellow pilots at Horizon
Airlines.  Yes, shifting from fixed entitlements of the wage system to the more
risky but potentially more lucrative sharing of bonuses and dividends from the
ownership system is "out-of-the-box" for wage system thinkers.  But imagine if
American labor had followed Reuther's insights, mobilized for maximum ownership
rights for private sector workers, and used its political muscle to gain passage
of the Capital Homestead Act.  American labor would not have outpriced itself in
the global marketplace, millions of unorganized private sector workers would
have joined unions, jobs lost under global capitalism would have been anchored
to America, and worker dividend incomes would have become an increasing portion
of family incomes.  The rate of capital investments would have increased through
Federal Reserve credit democratization policies and all workers in America would
have shared equitably in asset accumulations, global profits and governance
rights in the multi-trillion dollar capital pie that has been added to the
American economy since Reuther testified.

Steve Nieman is challenging American labor to wake up to economic realities.
The fact that organized labor's membership in the productive sector has shrunk
from 35% to less than 10% of the work force should be a wakeup call.  I for one
hope he succeeds.

For those interested in how organized labor might transform itself, begin
bargaining over ownership benefits for its members and greatly expand its own
revenue base in the process, please click on
http://www.cesj.org/vbm/casestudies-vbm/southbendlathe.html.

Norm Kurland
Center for Economic and Social Justice
Web Site: http://www.cesj.org





Vic Thorpe wrote:

> Steve Nieman's second item decrying union attitudes regarding the practice
> of worker ownership deserves a response from some of you union dues-payers
> out there!  It raises many inter-related issues: not all of them so clear as
> Steve would have us believe.
>
> For example, is it true that paying a decent wage drives the company to
> bankruptcy?
>
> If it is the case that the company cannot survive without paying its
> employees sub-standard wages, should it not be up to the employees to decide
> what they prefer - their existing job with a low wage, or take a risk of
> finding a better paying job when the company goes down?  What else has their
> company got to offer that makes it worthwhile to maintain their existing
> work community?  If it had a good relationship to its union and so to its
> total work community, that might be a good place to start.
>
> Should promoters of worker ownership have to accept that regular wages must
> be traded against a share of the stock anyway?
> In that view, is worker stock ownership just a way to minimize company fixed
> costs and hedge personnel costs against a down-turn?
>
> Those would be some of the questions arising in my mind following the logic
> described in some of Steve's diatribe.
>
> Anyone from the beleaguered airline industry any comments?  Anyone from
> United out there???
>
> Vic Thorpe