Unions and Protectionism

Let me start with this disclaimer - I am very anti-union. They had their place in the early industrial revolution but not now. I’m positive they are now quasi socialist/communist organizations. So with that, my latest rant and rave regarding recent events and Obama’s tariff on tires.

Keep this in mind as you read – We didn’t bail out GM and the auto industry. WE bailed out the UNIONS.

Noun 1. protectionism - the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition
economic policy - a government policy for maintaining economic growth and tax revenues
import barrier, trade barrier - any regulation or policy that restricts international trade

Based on WordNet 3.0, Farlex clipart collection. © 2003-2008 Princeton University, Farlex Inc.

Examples:
1. Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.
2. The Obama administration will put steep import duties of 35% in the first year on Chinese passenger and light truck tires, responding to what the U.S. International Trade Commission determined to be a surge of Chinese tire exports that has rocked the domestic U.S. tire industry and displaced thousands of jobs, U.S. Trade Representative Ron Kirk announced Friday night. On Sunday the Chinese ministry said it was investigating U.S. automotive and poultry product imports following complaints from local industries that some of these products are being dumped in the Chinese market or are benefiting from subsidies, "seriously affecting" domestic industries.

Buy your tires now! Most tires, even those sold by the major tire manufacturers in the US are made in China.

Reactions to the recent trade tarrifs on China. This is direct from the WSJ and is from leading economists:
-“It certainly does not look good. [P]rotectionism is driven by the desire to protect jobs. Unemployment has not peaked in the US, and some analysts suggest that China’s job losses are far worse than the 20 million often bandied about, more on the order of 30 to 50 million. So political pressure is set to intensify.” –Yves Smith
-“A victory for the protectionists. Disappointing news”. –N. Gregory Mankiw
-“Barack Obama does something really stupid: tire tariffs. [..] The Trade Act, Section 421, gives the U.S. the right to impose tariffs in response to a surge. It doesn’t make the surge a crime, or a violation. And it doesn’t require the U.S. to impose tariffs–especially if imposing them would be a really bad idea for U.S. consumers.” –J. Bradford DeLong
-The “macroeconomic impact is not enough to warrant an escalation of such a trade dispute to such levels that would threaten the strategic relationship between the two countries,” Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong told Bloomberg News.
-“While there’s friction, I suspect that the two nations will keep any disputes under control,” David Cohen, an economist at Action Economics in Singapore, also told Bloomberg. “They understand that they’re increasingly dependent as trading partners.”
-“I think within the next 60 days you’ll see some pretty significant price increases,” Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, Tenn., a large importer and distributor of Chinese tires told the WSJ’s Timothy Aeppel. He estimates prices for “entry-level” tires could increase 20% to 30%.
-The timing of the tensions is unfortunate, James Brander of the Sauder School of Business at the University of British Columbia told the Globe & Mail. “It’s a fragile time,” he said. “It looks like most economies in the world are just turning the corner.”
“In an environment where it looks like global trade will not recover to the levels we saw before the crisis for quite some time, the last thing we need is any sort of inkling of protectionism,” Glenn Maguire, chief Asia economist with Societe General in Hong Kong, told Reuters.
-”Over 7 days right before and after the Smoot-Hawley act was passed in mid June 1930, the DJIA fell 15% but got most of the decline back by late July before falling more than 30% into year end. Let’s hope the just announced tire tariff on China and their possible response is just a one off spat but global stocks are down as a result.” –Peter Boockvar, writing for The Big Picture.
-“In 1930, the Republican controlled House of Rep, in an effort to alleviate the effects of the… Anyone? Anyone?… the Great Depression, passed the…Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act which, anyone? anyone? Raised or lowered?… Raised tariffs, in an effort to collect more revenue for the federal gov’t. Did it work? Anyone? Anyone know the effects? It did not work, and the US sank deeper into the Great Depression.” – Ben Stein, in Ferris Bueller’s Day Off (via The Big Picture)

And from the Unions:
United Steelworkers backed the Obama administration's decision to impose tariffs on Chinese tires. "The President sent the message that we expect others to live by the rules, just as we do," USW International President Leo W. Gerard said in a statement.

Ah, ok, and who’s rules are those? The Unions, the worlds, the WTO, Americas? It’s called “global” trade. The unions have outlived their usefulness. They have bloated the cost of business with benefits, hours and wages that the average American doesn’t experience. If in doubt, just look at the autoworkers pay, benefits and retirement package.

Oh heck, don’t go look. Through the mystery of the internet, I’ll just give it to you here:


Breaking the $73.26 figure down, General Motors reports that it pays base wages of roughly $30 an hour. At the end of December 2006, the average vehicle assembler at GM earned $28.02 an hour; the average machine repair electrician earned $32.43.
Other provisions raise cash earnings above this base pay. For example, workers at Ford earn 10 percent premium payments for taking midnight shifts and double time for overtime hours worked on Sundays.
Autoworkers put in substantial overtime hours at higher rates, raising earnings above their base pay. GM reported that its average hourly employee worked 315 overtime hours in 2006. Including all monetary payments--base wages, shift premiums, overtime pay, as well as vacation and holiday pay--GM reported an average hourly pay of $39.68 an hour in 2006. About 54 percent of the average UAW employee at GM's earnings came in cash in 2006.

The remaining $33.58 an hour of hourly labor costs that GM reports--46 percent of total compensation--was paid as benefits. These benefits include:
• Hospital, surgical, and prescription drug benefits;
• Dental and vision benefits;
• Group life insurance;
• Disability benefits;
• Supplemental Unemployment Benefits (SUB);
• Pension payments to workers pensions accounts to be paid out at retirement;
• Unemployment compensation; and
• Payroll taxes (employer's share).
• General Motors UAW retirement plan paid $4.9 billion to 291,000 retirees and surviving spouses in 2006. That works out to $31.04 an hour when apportioned among active workers.


Not bad work if you can get it. The retirement plan is pretty lucrative. Their medical is covered 100% .

Now, taking this into perspective of the average American worker, and global competition, and you’ll see that the pay scale and benefits is absurd and not sustainable. And on top of that, we want to dictate to the rest of the world our pay and benefits scale. No wonder China and India are cleaning up. Don’t get me wrong. I’m not for “stooping” to their level regarding pay, benefits and working conditions. We all know that in some areas, it’s just plain bad. But, I’m all for suggesting that we are WAY off course and out of control with the unions.

So, my rant for this edition is simple. Obama and the Democrats, hell government as a whole, are in bed with the unions to protect their asses. If we continue down this path of pro-union, pro-socialism then hello Smoot-Haley and hello depression. It's obviously not to late for Obama and his croneys to turn a recovery into a depression. They will protect their asses but in the end cost us all dearly and if they do that, then the result will be equalization – we will all be making what China makes in wages. Doubt me? READ YOUR HISTORY!

One last thing… do you know who owns the second largest share of GM (Government owns the largest)?

WE didn’t bail out GM. WE bailed out the UNIONS!!!

Don’t go blindly into the night…..

You get what you allow to be done to you…..