5 ms·

Do the American unions eschew financial interests in their employers out of choice?

by mrow84 13y ago

VLM 13y ago
Well, the first problem is its not true, or at least badly out of date. The UAW is close to gaining control of Chrysler aka over 50% ownership. Sounds insane, yet its true. Also I think UAW is a hair under 20% stock ownership of GM at this time. Of course there are innumerable smaller unions who own no stock and pretty much have no assets on the balance sheet, which at least makes them judgment proof if nothing else. Another problems is the concept of the local electricians union owning stock in a sole proprietorship small industry where one union card carrying industrial maint electrician works part time, and spends the rest of this time freelancing at residential small jobs, doesn't even make sense. The fundamental problem is you really can't have two masters. So you work to optimize your stock profits; or employees? You might have to screw over some employees to boost the stock price to pay for health insurance for the retirees? So you want to move into Toyota plants but honestly, frankly, the best thing you could possibly do financially for your GM stock ownership would be to completely screw up the Toyota plant IF you moved in? Are you a non-diversified mutual fund representing the financial security of retirees, or a labor union representing the desires of the workers, or as a major owner you are by definition management representing the interests of management? If unions start owning lots of stock, who exactly is representing who and when? The game is a lot simpler if each player only has one master. You could probably make an interesting startup game and/or cardboard eurogame of the whole crazy situation where multiple player factions represent multiple other player factions but you never really know who's representing who at what time as the game progresses.
- mrow84 13y ago
  Thanks for the extra info. As to your point(s) - I get that having two (or more) 'masters' makes things more difficult, but it seems to me to be a pretty desirable state of affairs. After human decision making, the next major mechanism we have for optimising economic activity is the market, and whilst it seems pretty good in situations where there are a lot of interactions (allowing it to price things effectively from the aggregate behaviour), I'm really not convinced it can handle these more subtle situations, where single big decisions have to be made that can have large, long lasting impacts. The game sounds fun, you should try to make it!
  - VLM 13y ago
    "it seems to me to be a pretty desirable state of affairs." Oh I wouldn't put it that way... One interesting issue/analogy is a lot of lawyers (labor lawyers?) won't take conflict of interest jobs where they financially benefit if their client loses / opponent wins. Too much opportunity for malpractice motive, or appearance of it anyway. If you take it out of labor law, as an analogy, say you were suing a company, you'd never hire a lawyer for "your" side who gets most of his net worth by owning a 20% stake in the company you're suing, would you? Would a board of director hire a CEO who spends part time at two jobs, both direct competitors of each other in the same field?
    - gnarbarian 13y ago
      While there may be divergent goals between stock holders and employees I think it's incorrect to call all but the worst of them "Conflicts of Interest" (pump and dump situations maybe?). Both the employees and the stockholders rely on their business being successful. as I posted in another comment: "I think it's important to consider the rights of the owner as well. If I am a captain on a fishing boat, and I built/paid for the boat, I can then hire fishermen to work on my boat. There are more fishermen than captains, if there is a disagreement between the fishermen and the captain regarding where they should be fishing and it was up to a vote, the fishermen would win. What incentive does the captain have to invest in his own boat if he has no control over where it goes or how it is run? Why don't the fisherman go build their own boat if they don't like where the captain is fishing? The majority in this example microdemocracy is effectively stealing the boat from the owner by using the force of the 'state' to reallocate his resources to themselves." In this situation it's in everyone's interest to catch more fish. The conflicts will come down to how much of a cut each person gets, who gets the more comfortable cabin etc but these competing goals aren't really conflicts of interest.
      - mrow84 13y ago
        Sorry to hijack your actual point, but I think the financial investment model of company control does leave something to be desired. In particular, people invest time as well as money into their economic ventures, but this is rarely reflected in the level of control they have. The common retort is that you get paid for your time - but then a lot of people get paid for their money too, often quite handsomely (that's the whole point of investment). What would be interesting (albeit awkward, perhaps to the point of being unworkable) is if an individual's level of control was equal to the weighted sum of the time and money (or money equivalent) that they had put in. This would mean that early investors would start with a large controlling stake, but it would diminish over time as the effects of the time people spent working at the company started to kick in. I await the rubbishing of my ideas with moderately bated breath! ;-)
- philwelch 13y ago
  UAW was forced into being vested in Chrysler and GM as a condition of the bailout, and it's a condition that they fought tooth and nail.
  - mrow84 13y ago
    Interesting. Apologies for not taking the time to do the research myself, but do you have any idea why they were so reluctant to take a stake in the companies that (I presume) their members work in?
    - philwelch 13y ago
      Chrysler has been circling the drain for decades and GM isn't too far behind. Why own stock in them when you can just drain them of their remaining wealth?

Do the American unions eschew financial interests in their employers out of choice?

by mrow84 13y ago

Do the American unions eschew financial interests in their employers out of choice?

VLM 13y ago

Well, the first problem is its not true, or at least badly out of date. The UAW is close to gaining control of Chrysler aka over 50% ownership. Sounds insane, yet its true. Also I think UAW is a hair under 20% stock ownership of GM at this time. Of course there are innumerable smaller unions who own no stock and pretty much have no assets on the balance sheet, which at least makes them judgment proof if nothing else. Another problems is the concept of the local electricians union owning stock in a sole proprietorship small industry where one union card carrying industrial maint electrician works part time, and spends the rest of this time freelancing at residential small jobs, doesn't even make sense. The fundamental problem is you really can't have two masters. So you work to optimize your stock profits; or employees? You might have to screw over some employees to boost the stock price to pay for health insurance for the retirees? So you want to move into Toyota plants but honestly, frankly, the best thing you could possibly do financially for your GM stock ownership would be to completely screw up the Toyota plant IF you moved in? Are you a non-diversified mutual fund representing the financial security of retirees, or a labor union representing the desires of the workers, or as a major owner you are by definition management representing the interests of management? If unions start owning lots of stock, who exactly is representing who and when? The game is a lot simpler if each player only has one master. You could probably make an interesting startup game and/or cardboard eurogame of the whole crazy situation where multiple player factions represent multiple other player factions but you never really know who's representing who at what time as the game progresses.

mrow84 13y ago
Thanks for the extra info. As to your point(s) - I get that having two (or more) 'masters' makes things more difficult, but it seems to me to be a pretty desirable state of affairs. After human decision making, the next major mechanism we have for optimising economic activity is the market, and whilst it seems pretty good in situations where there are a lot of interactions (allowing it to price things effectively from the aggregate behaviour), I'm really not convinced it can handle these more subtle situations, where single big decisions have to be made that can have large, long lasting impacts. The game sounds fun, you should try to make it!
- VLM 13y ago
  "it seems to me to be a pretty desirable state of affairs." Oh I wouldn't put it that way... One interesting issue/analogy is a lot of lawyers (labor lawyers?) won't take conflict of interest jobs where they financially benefit if their client loses / opponent wins. Too much opportunity for malpractice motive, or appearance of it anyway. If you take it out of labor law, as an analogy, say you were suing a company, you'd never hire a lawyer for "your" side who gets most of his net worth by owning a 20% stake in the company you're suing, would you? Would a board of director hire a CEO who spends part time at two jobs, both direct competitors of each other in the same field?
  - gnarbarian 13y ago
    While there may be divergent goals between stock holders and employees I think it's incorrect to call all but the worst of them "Conflicts of Interest" (pump and dump situations maybe?). Both the employees and the stockholders rely on their business being successful. as I posted in another comment: "I think it's important to consider the rights of the owner as well. If I am a captain on a fishing boat, and I built/paid for the boat, I can then hire fishermen to work on my boat. There are more fishermen than captains, if there is a disagreement between the fishermen and the captain regarding where they should be fishing and it was up to a vote, the fishermen would win. What incentive does the captain have to invest in his own boat if he has no control over where it goes or how it is run? Why don't the fisherman go build their own boat if they don't like where the captain is fishing? The majority in this example microdemocracy is effectively stealing the boat from the owner by using the force of the 'state' to reallocate his resources to themselves." In this situation it's in everyone's interest to catch more fish. The conflicts will come down to how much of a cut each person gets, who gets the more comfortable cabin etc but these competing goals aren't really conflicts of interest.
    - mrow84 13y ago
      Sorry to hijack your actual point, but I think the financial investment model of company control does leave something to be desired. In particular, people invest time as well as money into their economic ventures, but this is rarely reflected in the level of control they have. The common retort is that you get paid for your time - but then a lot of people get paid for their money too, often quite handsomely (that's the whole point of investment). What would be interesting (albeit awkward, perhaps to the point of being unworkable) is if an individual's level of control was equal to the weighted sum of the time and money (or money equivalent) that they had put in. This would mean that early investors would start with a large controlling stake, but it would diminish over time as the effects of the time people spent working at the company started to kick in. I await the rubbishing of my ideas with moderately bated breath! ;-)
philwelch 13y ago
UAW was forced into being vested in Chrysler and GM as a condition of the bailout, and it's a condition that they fought tooth and nail.
- mrow84 13y ago
  Interesting. Apologies for not taking the time to do the research myself, but do you have any idea why they were so reluctant to take a stake in the companies that (I presume) their members work in?
  - philwelch 13y ago
    Chrysler has been circling the drain for decades and GM isn't too far behind. Why own stock in them when you can just drain them of their remaining wealth?