DAVID BRIN's world of ideas

David Brin's "off-axis" political suggestions

Suggestion One: Offer a Fresh Deal to Labor and Management

By David Brin, Ph.D.

[image from California National Guard]

It's a new century and time to chuck some obsolete ways of thinking. Take this bemusing realization: On paper, the sum of all obligations owed to union workers, company health plans and pension funds would make organized labor by far the biggest net owner of capital in the United States.

By some ways of reckoning, the workers already own the means of production. This was actually foreseen a long time ago. Indeed, for decades, both labor and management have sought ways to avoid confronting this fact -- for example, by separating off pension funds to be controlled by neutral specialists. Both labor and management are comfortable with an old-fashioned, adversarial relationship. The idea of sharing some hybrid role terrifies them. Moreover, a few experiments in worker-ownership -- such as United Airlines -- seemed to prove it a bad idea. (These were contrived-to-fail.)

But there may be no avoiding this issue, any longer. With unfunded obligations adding up to hundreds of billions, the pension plans need to start getting imaginative, or taxpayers will be stuck with that bill, in addition to all the others that are piling up. In striving to preserve an illusion, labor may risk losing everything. Meanwhile, American car companies with UAW contracts suffer a crippling competitive disadvantage against foreign automakers who pay far less for non-union labor, just a few states away -- a situation exacerbated by the blatant, greedy corporate vampirism of a dullard, parasitical managerial caste.

Is the solution yet another a mammoth federal rescue plan? Not without a stiff price, please! There has to be a meeting of the minds, to thrash out an entirely new deal.

Everybody may have to give up something. Stockholders, much of their delusional equity. Managers, most of their recent crony-voted bonuses, even digging back some years. Unions, their illusions. And non-union states, their unfair intra-national advantage in cheap labor laws. Workers in Michigan might have to get NewGM or NewChrysler shares, in lieu of a third of their wages. Workers at a Honda plant in Kentucky may have to get used to some "burdens" of unionization -- like health care and pensions.

In fact, just after I wrote this in first draft, the United Auto Workers announced (December 3) that it is willing to change its contracts with U.S. automakers and accept delayed payments of billions of dollars to a union-run health care trust to do its part to help the struggling companies secure $34 billion in government loans.

That's fine. We're negotiating at last. But it still reflects a desperate will to avoid facing the obvious.

The unions and pensions funds should "defer" nothing. They should instead accept payment in the form of preferred, convertible stock in completely re-shaped and renewed companies. And if worker-ownership hasn’t worked in the past, then it is high time that due attention is paid to making it work.

(In fact, there are many examples of worker ownership working and plenty of analysis of what it takes. See, for example, Property and Contract in Economics: The Case For Economic Democracy, by David P. Ellerman. A more accessible article exploring the topic appeared on CNNMoney. Another, by Chris Mackin, explores the UAW and newspaper employee-ownership possibilities on Ownership Associates.)

What should not be accepted any longer is the illusion that stockholder equity in GM etc. is sacrosanct. This is a bankruptcy reorganization. Accept it. Get past it.

On a broader scale, this notion of holding a grand conference, at which everybody sits and everything is on the table, will be raised again, and again. After twenty years of partisan intransigence, we can no longer afford ideological impracticality. All parties, from environmentalists to free-traders, all the way to xenophobes, will have to gather up a new maturity and go back to the old, American genius at negotiating for the best deal -- the best positive sum game -- trading away a little, in order to get a little. So that we all can move forward. More about this, soon.

[image from Marines]