Crush Liberalism

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1. John,

   Don’t you think a company should be bound by the contracts they make?

   Many companies traded cheap labor for fat pensions later on for their workers years ago. Now, they want to welch on their promises. If a company goes bankrupt due to bad contracts, why should the workers who followed through on their end of the contract not get what they earned? It seems to me it’s the companies fault for making bad contracts. The creditors are going to get theirs, shouldn’t the retired workers have a stake in the bankruptcy or at least have their interests protected by law?

   Comment by Steve | September 26, 2007

2. Steve,

   In general, yes, companies should indeed be bound by the contracts they make. Good point. However, when an individual files for bankruptcy, he/she is going back on his/her agreement with his/her creditors to pay on time, so why should companies be any different?

   Cheap labor? By and large, unions have it written into their contracts that their employees are to be paid a nice chunk of change (teacher’s unions excluded, since (politics of the teachers union itself aside) most of us tend to agree that teachers are underpaid). I recall the UPS driver’s union going on strike because the $14/hr. that their part-time drivers made was considered by them to be chump change.

   It’s not the companies’ fault for writing a bad contract. It’s the companies’ AND the unions’ fault. After all, a contract is an agreement between more than one party. If the contract results in financial ruin of the company, I would say that both sides bear the brunt of the blame. I have little sympathy for thuggish unions demanding the moon and the stars and then bellyaching when their outlandish demands can no longer be met by the market forces at work.

   Comment by Crush Liberalism | September 26, 2007

3. John,

   If I claim Bankruptcy, under the new laws, I still have to pay off my creditors in full (unless I negotiate a deal) just on a different schedule and without occurring penalties. When a cooperation declares bankruptcy, the pension funds, set up by the company can be considered assets for creditors to go after. Isn’t it fair that the workers contracted pensions, in the hands of the cooperation, should be protected by law from the creditors and couldn’t the pensioners be considered creditors in that sense? It’s really not the cooperation money to begin with. The money is contractually obligated to the employees.

   Secondly, if a company offers a bad contract to the employees, how is it the unions fault? The union’s obligation is to the workers to get the best deal they can get in the negotiations. The union has no obligation to the cooperation to keep them afloat. It’s the company’s job to look at the bottom line to see if they can afford to do it.

   Inversely, it’s the union member’s job to make sure the union negotiates a good contract for the employees. If the members accept a bad contract, there stuck with it until we’re able to renegotiate in the next cycle. Do you think the cooperation is going to renegotiate when its employees can’t pay their bills? Heck no. It’s live with the contract. Same has to apply to the companies.

   Comment by Steve | September 28, 2007

4. If I claim Bankruptcy, under the new laws, I still have to pay off my creditors in full

   Not totally correct. You and your spouse (if married) each get an exemption (used to be $2,000 each, I think) of clothes, furniture, etc., that can’t be touched. If you own anything beyond that, it’s assigned a garage sale value, and the creditors can come try and collect from that stuff to get paid. Your creditors would, in all likelihood, NOT get paid in full.

   When a cooperation declares bankruptcy, the pension funds, set up by the company can be considered assets for creditors to go after. Isn’t it fair that the workers contracted pensions, in the hands of the cooperation, should be protected by law from the creditors and couldn’t the pensioners be considered creditors in that sense?

   It’s not so much the pensions that I’m stuck on, Steve, as it is the wages and benefits. If a company can no longer afford the inflated wages and bennies that it foolishly agreed to, then it can’t afford them. Period. You can’t squeeze blood from a turnip. Just as you would deserve bankruptcy relief if you filed, so would a company. No different, at all.

   Secondly, if a company offers a bad contract to the employees, how is it the unions fault?

   The same way that it’s also a lender’s fault for lending you money that you can’t pay back. If you took out a loan that you had no business taking out, AND the lender agreed to finance that loan, then both you AND the lender are at fault for foolishly entering into such an agreement should the loan default one day.

   By the exact same token, if a union strongarms a company into accepting a contract that the company has no business accepting, then once that company gets driven to financial ruin due to competition from companies that were smart enough not to deal with unions, then both the company AND the unions are to blame for the company’s demise.

   The union’s obligation is to the workers to get the best deal they can get in the negotiations.

   I’d love to hear you explain to me and everyone else here how negotiating a deal that ultimately bankrupts the company and costs the employees their jobs and benefits is getting the workers the best deal possible. Me, I’ll just stick to my lousy deal and remain happily and gainfully employed.

   It’s the company’s job to look at the bottom line to see if they can afford to do it.

   This is where you and I agree, though from different angles. I agree, it is a company’s job to look at its bottom line before agreeing to the thuggery’s deal. Where you and I disagree is that when the company fails to look at its bottom line (or it does so, but it makes errors in forecasts or whatever), then the resulting corporate collapse is the fault of both the company (for the agreed reasons of poor execution of its fiduciary responsibilities) AND the union (which imposes an unconscionable and oppressive cost that non-union companies will never incur). I again refer to my lender analogy.

   We’re just going to have to “agree to disagree” on this one. Not the first time, and I’m sure it won’t be the last.

   Comment by crushliberalism | September 28, 2007

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