Obama's German Union Quandry

Obama starts out the month of November wondering why the Germans can have both an export economy and be heavily unionized.

Does anyone need to wonder both the direction and the non-fate of America? As written about before, Obama has a view of an American nirvanaland that has U-6 unemployment at 17% and no reason to see it shrink. Sadly, just the opposite.

Unions, like Obama, think there is an endless money train they can tap for benefits. But, what is the reality?

Let's see: GM and Chrysler are easy - the companies had to be refunded by taxpayers; investors got wiped out; large parts of the company (and jobs) were lost; young workers are getting screwed to protect and provide additional benefits to older workers.

In terms of public employees - the State of CA is broke; and, in Philadelphia, last week it was reported on Bloomberg that the police/fire unions wanted 12% wage increases for each of the next two years. Meanwhile their neighbors don't have jobs.

The unions don't get it. There is a world outside the borders of the US. Other people are actually struggling for jobs and they are educated and seeking more education; taxes are lower and benefits are lower.

If the GM - UAW experience is the model that Obama and the unions seek, then it's no wonder that companies are holding onto as much cash as they can. They clearly don't want to create jobs in America where the price of labor (particularly its benefits) and taxes will make it uncompetitive to produce (exactly as with GM, where 5 car brands are now down to 2 - if that).

As the unions get the last blood out of the economy, they think they are winning. However, with the 17% U-6 unemployment rate and no one even suggesting that there will be a strong rebound in jobs, it would seem reasonable to consider maybe something is wrong? And, I'd suggest the unions are high on the list.

It may appear as though business got greedy by wanting to have products that could compete on price and quality - and maybe that's unfair.

After all, GM couldn't compete that way and so it closed Oldsmobile, Pontiac, most of Buick, etc. They were forced to try to compete and continue with 1930's unions and union labor practices. What did it get them? A wipeout of their investors and a loss of jobs and capital plant and equipment. I'd blame that failure directly on the UAW.

And, the added benefits the government is going to be mandating all sound nice, but with higher taxes it means that for every 300 dollars business could have paid a worker, they'll only have maybe 75 dollars left after allowing for all the extra costs (recall that up and down the business pipeline, money that could go to labor and labor productivity and jobs is being siphoned off for government benefits to those not working).