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Greg Worden

Entrepreneur and Adjunct Professor of Sustainable Business, Worden Associates

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Are unions in the US still relevant?

Hostess is closing eliminating 18.500 jobs due, in part, to 5,000 bakery union members striking while the Teamsters had already accepted a deal. True, the company had been mismanaged but this appears to be an example of a union cutting off its nose despite its face. The US has some of the best worker-protection laws in the world. Is this an example of good union leadership or is it an example of unions acting as though it was still 1905? Are unions still relevant in the US today?

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    Nov 20 2012: As it currently is then the answer is no unions are not still relevant. When the unions went after the robber barrons and stopped child labor, required safety, etc ... I was all for them.

    The current union philosophy is straight from Marx ... the value oif the product is in the worker. Thus the alignment of the democratic party and the unions. The chairman of the Communist Party of America stated "I not longer have to run for office of the president as the democrats have picked up our battle."

    On the funny side ... unions who hate management is the most micromanaged organization and also one of the most top heavy organizations I know of. Wonder if the union laborer know what his executive union boss makes and all of the perks the union administration gets the very things they want you (the laborer) to fight against. Talk about selling a bill of goods to someone. Ain't America great when even a lowly worker can aspire to be a multimillionaire union leader.
    • Nov 22 2012: Are you saying Lloyd Blankfein isn't a robber baron (income inequality has certainly returned to robber baron age proportions)? Or what about all those corporations that exploit workers in China and other low wage countries (often even breaking the local laws)? If Apple (and all the others) thinks $200 per month for a 60 hour workweek is OK in China what makes you think they wouldn't try to make it the same in the US? The only thing stopping them is the law and the only thing stopping the law from being changed are organized groups of workers, including unions.

      P.S. the average CEO makes dozens of times more money than the highest paid union boss in the US (not that union members shouldn't keep taps on how much their bosses make).
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        Nov 22 2012: Llyod Blankfein understands business and the corporate / stockholder mandate is to make money. I find it funny that you chose Blankfien as a model for robber baron. That Goldman Sachs (GS) was involved in the London Interbank Offered Rate (LIBOR) is a fact. However GS is not a bank and did not either initate of influence this action. They did profit from it as did many corporations. Blankfein is a frequent visitor to the White House and many GS executive now hold positions in the Obama administration ..Gary Gensler Commodities Futures trading, Matt Patterson Chief of Staff to Treasury Secretary, Robert Hormats Under Sec for Economics, etc ... Recently Jack Lew Obama's Chief of Staff had lunch with Blankfein and asked about his political future.

        Obama made the political statements about labor in China but holds stocks in companies that do business there, Romney called him out on this during the debate but he ignored the challange as he is aware that his money is offshore and some questionable.

        It is funny that you defend the union but do not object that I directly related the unions to Marx, communists, democrats, micromanagement, top heavy in executives, etc ... Instead you go to the tired argument that CEOs make money. That you call Blankfein a robber baron and that Obama appoints GS execs to his staff and that he is inquiring about the political future of Blankfien speaks volumes about the deciet of the administration to the party members. Ain't politics wonderful.

        About those Chinese people who make 200 a month (I cannot find this fact anywhere) ... what is the average wage in that country. For rural workers it is 4325 Yuan .. for urban workers it is 7942 yuan per year. The US 200 (you state) is equal to 1258 yuan per month or 150956 per year almost double the national average. Don't you just hate facts. I hope someone exploits me in the same manner by doubling my wage expectations. They hate it so bad they are lined up to be exploited.
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    Nov 21 2012: Unions delivered a vital result.
    In a world of de-collectivized corporate individuals, they have no relevence whatsoever.
    If unions wish to survive the the new paradigm, they must evolve to resemble a labour agency - and compete to refine services that the membership demands - as customers.

    However, the paradigm of the corporatized individual is already obsolete - it requires that all interaction is reciprocity.
    Not all interaction is reciprocity. There is also: dominance, leadership and communality - all of which operate separately from reciprocity.
    The corporatized individual has no access to these, and the individual thus corporatized will atrophy for lack of them.
    Unions would do well to anticipate the upcoming paradigm: the dissolution of the corporatized individual. If this new paradigm does not arise, we are condemned to the definition of the corporation - which is a dead thing, that when animated requires an environment of total psychopathy.
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    Nov 20 2012: There's a short but interesting video on the Twinkie issue at the Economist, one of the most balanced news magazines available: http://www.economist.com/
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    Nov 20 2012: Ahhh, the vaunted TPS is truly impressive. It's really a system that has evolved over a very long period of time with a unique culture within Toyota. The great thing is that Toyota values the opinions and skills of their employees already. No union required.
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      Nov 21 2012: It was created over a long period of time. But the Fremont plant demonstrates that it does not need to take a long time to recreate or even requires model employees as the Fremont employees were there own caricature of Homer Simpson type employees only worse.
  • Nov 20 2012: "Hostess is closing eliminating 18.500 jobs due, in part, to 5,000 bakery union members striking while the Teamsters had already accepted a deal. True, the company had been mismanaged but this appears to be an example of a union cutting off its nose despite its face."

    Don't you think it would be useful if we first established how much damage the mismanagement did vs. how much damage the strikes did? Also, what would be the point of having unions if they didn't destroy a company once in a while to make an example? Would you always stick to the speed limit if the cops only gave out warnings without ever arresting someone? Part of good management is taking care of the workforce that is the lifeblood of your business.

    "The US has some of the best worker-protection laws in the world."

    It doesn't, but even if it did, how long do you think those laws would survive if billionaire-funded super-PACs that want to do away with those laws go unopposed?

    "Are unions still relevant in the US today?"

    Yes, they are, especially now in this age of rising inequality (which has been going on since the gipper's senile ramblings filled the halls of the White House, with only a short halt in the booming late 90s).
    • Nov 20 2012: "Also, what would be the point of having unions if they didn't destroy a company once in a while to make an example? "

      Wow! If only we lived in heaven, where we would not be hurt by our own actions.
      http://www.nhregister.com/articles/2012/11/16/news/doc50a637359d147224493235.txt?viewmode=fullstory
      "We were gainfully employed. We had benefits," he said. "Now, we have nothing."

      But hey! The out-of-jobs workers can now come together, form a cooperative, and make bread on their own! Get rid of the management and the mismanagement!
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      Nov 20 2012: You're absolutely correct that the company was very poorly managed. They were in serious trouble and the union simply made the situation worse.

      But you make an interesting point that the US doesn't have the best worker protection in the world. That's certainly true. Who has the best? I suspect Norway and Germany would be at or at least near the top. Germany clearly has been able to maintain manufacturing competitiveness with very labor involvement. So there is clearly some middle ground.

      You're also right that inequality is soaring right now.But are unions the right model? That seems to restrictive. What is the optimal model to promote worker mobility, rights, decent salaries, mitigation in terms of layoffs, and something to promote equality?
      • Nov 20 2012: "They were in serious trouble and the union simply made the situation worse."

        That's one way of looking at it, I like to look at it like this: if the management had their act together trouble with the union would not have caused the company to go under.

        "But you make an interesting point that the US doesn't have the best worker protection in the world. That's certainly true. Who has the best? I suspect Norway and Germany would be at or at least near the top. Germany clearly has been able to maintain manufacturing competitiveness with very labor involvement. So there is clearly some middle ground."

        Northwestern European countries have a system where the unions and employers are always on speaking terms and the employers have their own equivalent of a union, the two sides negotiate at predetermined times (often for an entire sector, for example the car industry, at a time) and they never villify each other in the media many people are members of a union and workers are willing to temporarily work fewer hours so the man or woman next to them gets to keep his/her job during a recession. Contrast this with the way things are done in Southern Europe and the US where unions and employers are in a perpetual state of war that is visible in the media. That said, Northwestern unions aren't perfect, they do tend to favor the interests of older workers over those of younger workers, but it's a hell of a lot better than not having unions at all.
      • Nov 20 2012: @Greg Worden: "I suspect Norway and Germany would be at or at least near the top. Germany clearly has been able to maintain manufacturing competitiveness with very labor involvement."

        It's better than the US. At least in western Europe, companies don't make a loss on goods manufactured. However, the prices here cannot compete with East Asian countries. With some things, it is more expensive to transport from China than to make it right here. Such things are made here. Everything else is made in China, Malaysia, Thailand, etc.

        From the NY Times article you cited, "One work rule required that two separate trucks be used to ship bread and cake products to a single retailer". This is a perfect example of the kinds of horror stories I have heard from colleagues who visited our US branches. With such rules in place, it is completely pointless to negotiate salaries. To use a cliché, that's like re-arranging the deck chairs on the sinking Titanic.
  • Nov 20 2012: I have been employed by big multinationals in the past. Two of them went through Chapter 11s, in part, to get rid of the unions that had held them hostage. "Held hostage" describes it perfectly. Internal documents within one company demonstrated how for each part that they make in the US, they incur a loss of x$. I have also heard horror stories from European coworkers who went to the US on a business trip, and witnessed the shocking laziness of union workers, or saw how well-paid they are, compared to highly qualified white-collar workers.

    In theory, unions have a good role to play, when employees are dealing with oppressive employers. For example, joining one company might severely affect your employability in another company that works in the same domain. http://www.theverge.com/2012/1/27/2753701/no-poach-scandal-unredacted-steve-jobs-eric-schmidt-paul-otellini However, these days, when I look at unions, I see just another corporation that wants to milk its victims dry.
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    Nov 20 2012: Hello Neighbor! I'm right over the hill in Vt., and when communicating with another person in New England, it feels close and "neighborly", compared to some of the communications here on TED, which are often on the other side of our world. I LOVE that our world is getting more connected through this great forum:>)

    Regarding Hostess:
    I saw a documentary the other day about Hostess, their challenges (mismanagement for one), and the ingredients they put in their product! They had to do a major overhawl, if they wanted to survive. Did the union "cut off it's nose"? Or did the Hostess management "cut off it's nose"? The job loss is certainly unfortunate.

    I'm not sure how relevant unions are any more. While the concept and practice certainly changed some things in our world that needed to be changed, it seems like sometimes, unions are creating more problems then they are solving these days. Perhap their focus is on the "union", and not on the people they are supposed to be representing? Too big maybe?

    The Unuiversity of Vermont staff were faced with voting for union/no union or which union last week. They voted in favor of union representation in Sept., but failed to give a majority vote to either of the two competing unions. Last week, they voted down a plan for union organization 443-189, with approx. 80% voting. It seems that many voted against the union representation because union representatives were harrassing staff members at their homes and work places. In this situation, it appears that the union really undermined themselves!!!
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      Nov 20 2012: What station ran the documentary?

      Can you imagine what the harassment would have been like if card check had been passed?
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        Nov 20 2012: Hi Pat,
        I don't honestly remember what station...perhaps Public tv, which is what I watch most of the time. It may have been a newscast or something like 60 minutes too. The thing I remember most is that they spoke about the ingredients in hostess cakes, twinkies, etc. I'm no purest when it comes to food....I eat healthy, and also like ice cream, cookies, cake, pie, etc.:>) However, to think that so many people in our world are eating all the "stuff" that is in the hostess product is what influenced me the most.
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      Nov 20 2012: Universities are fascinating because tenure is a form of a union unto itself. Tenure is great but it doesn't necessarily lead to great professors or great outcomes for students. I remember several of my undergrad professors who routinely wrote the wrong assignments or equations on the board, couldn't remember the material, or were otherwise too busy to bother helping students. They were protected by tenure and the dean wouldn't hear any complaints. That's a system that needs a rethink too.
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        Nov 20 2012: Hi Greg,
        Tenure seems to be a form of protection against almost anything! Years ago I took some classes, and in one of them, the professor showed up for the first three classes under the influence of alcohal. I reported it to my advisor and to the administration, and they all said....well she's tenured! That seemed to be a reason, or cover-up for anything the professor wanted to do. I found out that in her 27 years of teaching at that institution, there had been reported complaints for the same thing many times. They simply moved her to another class for awhile....out of sight, out of mind, and she continued as a tenured professor. I was in my 40s at the time, and was not willing to accept that.....so with a little gentle pressure, she was asked to retire:>) I agree....it's a system that needs re-vamping!

        At UVM, professors have their own union, and the action recently was for the administrative staff.
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    Nov 20 2012: If you have the choice of a Chevy volt(without the government rebates) or a Prius which do you choose? One is a product of a union and one is not. If you drive a Prius and you believe in equality brought about by unions you are a hypocrite as Toyota does not have unions.

    This article will learn you something about unions. If you are capable of Looking.

    http://townhall.com/columnists/thomassowell/2012/11/20/creators_oped

    MSRP for the top of the line Prius $30,000

    MSRP for the top of the line Volt $39,145
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      Nov 20 2012: Thanks for posting, Pat. I thought your article was going to be pro union but it certainly is not. What it does do, is point out some of the inherent difficulties with union contracts. The fact that Twinkies (yuck) could not be loaded onto the same trucks as Wonder Bread (double yuck) is not surprising in a union scenario but insane by operations management efficiency standards. I remember a story about Chrysler pumping out Jeeps as the recession deepened. They couldn't sell them and had so many they had to rent parking lot space from other car companies. It was because the union contract specified how many Jeeps they had to make at that particular plant.
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        Nov 20 2012: The story that I found interesting is that Toyota and GM had a joint venture in Freemont Calif. The Freemont plant was a GM plant which was the worst performing plant in the United States. When the joint venture started Toyota threw all of the work rules and implemented TPS (Toyota Production System) soon had them as the most productive GM plant in the U.S.
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    Nov 18 2012: In your text you ask if this is an example of good union leadership. I think it is based on the purpose of a union being to empower employees in matters of disagreement with employers. This is a perfect example of that purpose being fulfilled. There was a disagreement between employees and employers; the union enabled the employees to put pressure on the employer; the employer chose to yield to the pressure and 18,500 families are facing life-changing events along with many more associated jobs and families. The union bosses collected the dues and did what they were paid to do. The final effect of the union's actions will be played-out in the coming hardship for tens-of-thousands of people. But, yes, the union did its job. What a job!
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      Nov 20 2012: That's a good, balanced reply. You make a good point. The union leadership did exactly what it was paid to do. From an internal perspective that's great. From an external, societal perspective it's right to question whether the job should have been done at all.
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        Nov 20 2012: Absolutely your question is right to ask about the relevance , or value, of unions today. Personally I say they do far more harm than good. I was speaking specifically to your sub-question about the Hostess debacle being "an example of good union leadership". Thank you!
    • Nov 20 2012: "The final effect of the union's actions will be played-out in the coming hardship for tens-of-thousands of people."

      The unions have to make an example: what happens in one factory can affect an entire industry, sometimes that means letting a mismanaged business go bust. See, if the unions had promised Hostess to cut everyone's wages to minimum wage then the next day every foodstuff factory in America would suddenly announce that it was in so much trouble that the only way to survive would be to cut everyone's wages to minimum wage (well, except for the management of course) and then other industries would follow and eventually they'd lobby congress to lower the minimum wage or just not raise it for many years (so inflation eats up people's wages). Union leaders have to think of the big picture. What good is having a job when you can't pay rent with your wage?
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    Nov 17 2012: I feel that in the context of the global economy, unions are simply outdated. Yet we wouldn't want to let the capitalist engine grind through our workers anew. The solution, as you allude to, is enlightened government-- better basic worker protection laws. The destiny of unions should be an attempt to fight for the basic rights of ALL through the government of all, no longer the pocketed protection of some.

    But this is why I also have a bit of disdain for GOVERNMENT UNIONS. Government should rightfully exemplify the highest protection of the worker, so to unionize against government is outright excessive! By unionizing against government, a pocket of people are unionizing against the rest of their fellow citizens, in essence. Is there a greater travesty than this?
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      Nov 20 2012: I certainly agree. I'm tend to be biased in this discussion. I've never been part of a union nor had any occasion to want to be so I naturally question their relevance today, at least in the US. I should think that unions are needed in places like China or Vietnam though. Workers there need protection and civil rights. You also make a good point that we can't simply let employees be completely ground down so some level of protection is needed but I think we're in agreement that that is largely in place already at least in the US.
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    Nov 17 2012: I have a BIG problem with unions among public employees. If you want to be part of a union, work in the private sector. I don't care of you are a teacher or a fire fighter or a police officer. I'm tired of being held hostage by public workers.

    As to private sector unions, I think that many of them are prone to hard-line extremism among inadequately educated members. If you can't read balance sheets or understand business management, you shouldn't be voting to strike.

    But that's not the whole problem. The disparity of wealth between rich and poor also disincentivises owners when it comes to compromise or even explaining reality clearly to workers. At some point, you are so wealthy that it is no huge loss to simply close and start anew with something else if manufacturing is more profitable than other ways to produce an iincome.

    Example of how this can be: Back when Ross Perot walked away from his bid for the presidency, he wanted to improve his reputation. So there was a lot of hoopala about his giving 350 million to build a youth center in Texas. At first I was impressed, but then I realized that for such a wealthy multi-billionaire, it was only peanuts. So I compared his billions to my net worth at the time and realized that he gave the equivalent of my 8 cents. And when I compared his tax-free income (his income was from tax-free bonds) to my small taxed income, it was considerably less than 8 cents. Still, the papers were lauding him and singing his charitable praises.

    We need to even out the imbalance of wealth in the USA. If that means capping salaries and bonuses, and evening out the tax load, so be it. And if that means a hefty property tax on the multi-billionairs, so be that too - as long as the money is used to get rid of the deficit. But you won't see that because the wealthy are the ones that are buying our politicians.
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      Nov 20 2012: My son was doing a project for his social studies class and he was asking me why Ronald Regan fired so many air traffic controllers. I explained it in just about the same words you started out with, "being held hostage by public workers."

      Your point about relative wealth is also very correct. I was reading a story about a man who phoned Mercedes Benz for a new limousine and they asked if he wanted the new sports car too. He said, "sure throw that in too." That's unthinkable for me but if you're a multibillionaire it's peanuts, as you say. Kudos, for your critical thinking!
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        Nov 20 2012: There has always been and always will be financial inequality. The correct thing to look at is economic mobility.

        This meme was started by politicians who influenced people through this propaganda as they are ignorant on this subject.

        One of the fun facts that they use is household income has gone down for 30 years. But if you use them as your educational source you don't find out that the reason this is true is that divorce rate changed dramatically, every time there is a divorce the household income is divided in half.

        Another fun fact that does not get relayed to the people who buy into this trope is that upper income people suddenly are increasing their income over the last 30 years. What they don't realize is that due to changes in the tax law high income earners started paying their income tax as personal income through Sub-chapter S or a LLC instead of a chapter C corporation. It only appeared like their income changed.

        Another thing is you will not get a job from a poor man. Like it or not the reason for the anemic (think albino) "recovery" is that this equality crap along with the other crap has driven entrepreneurs off shore or into a cave.
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          Gail . 50+

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          Nov 21 2012: Yes, the divorce rate has changed considerably over time. The 70s had the highest divorce rate. They have been dramatically reduced every decade since. They are now at their lowest since the 70s. Your suggestion that divorce is reason for the decline in income is provably not true. You also seem to forget that most divorcees remarry.

          The major difference between a Sub-chapter S, a d/b/a, and a C Corp is how many tax filings one has to make. There is nothing stopping a C Corp from paying all its profits out as owner's salary. My husband's business was S corp. Mine was a C corp. I can say with certainty that your claim doesn't meet reality. In 1990, the typical CEO made 5 times more than the typical production worker. By 2,000, the typical CEO made over 400 times more than the typical production worker, whose relative income actually dropped because of inflation. This alone is proof that you are mistaken.

          The way to measure economic disparity is not by the type of company they own or work for. It is by measuring net worth - house, stock, toys, etc. value.

          As to economic mobility, The US ranks very low compared to other developed nations. The United States has about 1/3 the ratio of mobility of Denmark and less than half that of Canada, Finland and Norway. France, Germany, Sweden, also had higher mobility. All studies show that the idea of economic mobility is part of the US cultural myth.

          As to your "equality crap", statistics do not bear you out. 97% of all business owners are in the middle class. You have fallen for the myth that the rich are the job creators. That's just not true - provably. The middle class start businesses and if there is popular support for the product or service, the business can grow if the owner wants it to. Some are then sold for mega bucks.

          I understand that you feel strongly about some things, but if you would verify what you hear on Fox News, you will be amazed by how many lies you are being told.
        • Nov 23 2012: "The correct thing to look at is economic mobility."

          Which is quite low in the United States, compared to other developed nations.

          "But if you use them as your educational source you don't find out that the reason this is true is that divorce rate changed dramatically"

          It changed alright, but not in the direction you're thinking, it has been decreasing since 1981.

          "Another fun fact that does not get relayed to the people who buy into this trope is that upper income people suddenly are increasing their income over the last 30 years. What they don't realize is that due to changes in the tax law high income earners started paying their income tax as personal income through Sub-chapter S or a LLC instead of a chapter C corporation. It only appeared like their income changed."

          The top 1% are usually executives and businessmen, not business owners. TED lover's CEO pay statistic is striking.

          "Another thing is you will not get a job from a poor man."

          You don't need a rich man to give you a job either, any tiny business can give you a job and any business you start can be invested in by pension funds and banks. Anyway, supply needs demand needs supply needs demand needs supply... A circle has no beginning.
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        Nov 21 2012: I don't know the numbers on remarrying do you have them? But when they remarry they will have half the assets they had.

        What you fail to realize is that C corps pay 35% and S corps pay 28% if your accountant did not tell you this maybe you should look for a new one. The owner has the choice to file either way and naturally as law has changed since 83 people have changed the way they file. Notice that was about 30 years ago.

        How do you arrive at the income mobility number? Certainly it has changed recently? Just from a common sense perspective I look at how the U.S. has changed the standard of living of the world over the last 100 years or so. I also go by this index:

        http://www.heritage.org/index/

        Who ever said all business owners are in the middle class?

        I don't have time to dig out the numbers about business investment creating jobs right now but if you insist I will. For right now suffice to say when ever taxes have gone down (only a couple of times in the last 100 years) investment has gone up and employment has gone up. Something the current administration and you fail to realize. This is absolute fact the sun may or may not come up tomorrow but investment creates jobs.

        The equality trope says that demand creates jobs this just isn't so supply creates demand. Maybe Krisztian can indicate the truth on this?

        You pointed out the fallacies in the history around Lincoln (which I bet does not get mentioned in the Spielberg movie) you did this by doing your homework in the Anti Federalist papers and I listened. The same thing is true in economics you have to do your homework it is not learned by sound bytes.
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          Nov 21 2012: "The same thing is true in economics you have to do your homework it is not learned by sound bytes."

          Wisely said, and it's fun also.
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        Nov 21 2012: Fritzie

        I wonder if you realize that I do not speak from sound bytes about economics? It may surprise you and others that I do have a working knowledge of this subject? based on quite a few books and discussions and videos and operating in the business world for over 3 decades.
  • Nov 17 2012: Union membership is way down in the United States Times were better when it was higher. Maybe this is not really relevant. The big variable is the poor quility of management in America and its real influence on the pooring of America to expand someone else's wording. Look at Shewart statistical management as advocated by Deming and Juran. This has had very much more influence in Japan and Korea. Whop has improved more relative to the United States. Good leadership There is no substitute.
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      Nov 20 2012: Good leadership and good management can indeed be hard to find. In my experience the worst leadership was displayed when the person in charge had the chance to either make far greater money than the subordinates or when they had a greater chance of promotion. In other words when there was skewed incentives the leadership felt little regard for the subordinates. The best leadership I experienced was when the team was committed to building something great. When the focus was less on personal gain and more on building something great people really came together.
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    Nov 17 2012: The only unions I have a problem with are the public employee unions that area allowed to have collective bargaining.

    In the case of Hostess the only ones that will get hurt are the employees, that is fine by me if they want to do that to themselves.
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      Nov 20 2012: Public unions are definitely a common theme in this discussion!