You see, this is what we’re talking about

In today’s economy, with the talk all “jobs, jobs, jobs,” and President Obama stressing the need to boost exports, you might think that Boeing, building a new South Carolina factory, would gets cheers from the federal government.

You might think that. But you’d be wrong.

In fact, the National Labor Relations Board is telling Boeing it can’t even open the factory.

Boeing’s main plant in Washington State had suffered repeated costly labor strikes, delaying delivery of planes. At least one buyer, Virgin Atlantic, said these delays had messed up flight reservations for its own customers, and it would think twice before ordering from Boeing again. So Boeing decided to locate its new factory in South Carolina, where it felt strikes would be less likely. (South Carolina, unlike Washington, is one of 22 states with a “right-to-work” law saying that workers can’t be forced to join a union even in a unionized plant.)

From The Economist. Their caption: "Come to Washington and never leave."

The NLRB (newly stuffed with pro-union Democratic appointees) has ruled that Boeing’s decision amounts to an illegal “retaliation” against the Washington strikers. Never mind that no Washington employee is being fired; indeed, Boeing is actually adding to their ranks! But no: Boeing is still not allowed to open its South Carolina factory (with a $1+ billion investment).

You see, this is what we’re talking about – those like me who supposedly advocate “unfettered laissez faire capitalism.” No, we don’t believe business should be totally unsupervised. That’s ridiculous. Businesses, just like people, should be barred from criminal acts. But we do believe that businesses should be left free to make business decisions, and too often the heavy hand of government gets in the way and hurts the economy. This Boeing case is a perfect example, with government regulators pursuing a daft partisan agenda, telling a company where it can or can’t locate a factory, with obvious harm to the economy, and to working people (whose interests are somehow supposedly being protected).

The NLRB’s twisted stance is unsupported by any precedent, and indeed would establish a very dangerous new precedent of government economic meddling. Boeing is fighting it in court. President Obama has not denounced this job-killing outrage by his NLRB appointees. You can read The Economist’s article, and editorial, about the case.

The Economist also reports the travails of Homa Dashtaki, an immigrant from Iran, who

Photo from The Economist

makes really really good yoghurt that she sells in small quantities in local farmers markets. Her little business has been squashed by California regulatory bureaucrats who insist that she must, in effect, build a big factory equipped for pasteurization – even though her yoghurt is made from milk that is already pasteurized.

I actually know something about government regulation because I spent 26 years doing it. I remember well one of my first cases as a fresh-faced Public Service Commission lawyer. My regulatory agency roughed up a small moving company for breaking the rules – by charging too little. Who were we protecting? Certainly not consumers. We were protecting the other moving companies, threatened by competition from this price-cutting upstart.

That is all too often the real-world face of government regulatory oversight.

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4 Responses to “You see, this is what we’re talking about”

  1. Lee Says:

    Is it that you think laws barring retaliation against striking workers are wrong or is it that you think that this is not an example of retaliation?

    [FSR comment: No striking workers were disadvantaged by Boeing’s action.]

    Regarding the latter, according to The New York Times:

    The labor board said that in 2007, Boeing announced plans to create a second production line that would make three 787 Dreamliner planes a month in the Puget Sound area to address a growing backlog of orders. That was to be in addition to a line already making seven Dreamliners a month there. In October 2009, Boeing said it would [instead] locate its second line at a new, nonunion plant in South Carolina.

    The N.L.R.B. asserted that on numerous occasions Boeing officials had communicated an unlawful motive for transferring the production line, including an interview with The Seattle Times in which a Boeing executive said, “The overriding factor was not the business climate. And it was not the wages we’re paying today. It was that we cannot afford to have a work stoppage, you know, every three years.”

    [FSR comment: If Boeing prefers to build a plant in SC rather than Washington because it thinks the likelihood of strikes is less, I think that’s a PERFECTLY REASONABLE decision, and for government to tell them they can’t is OUTRAGEOUS. I do not want government having this power.]

  2. Robert Says:

    Your point needs to be diluted with a major fact of truth; the new plant was decided upon years before the current strikes. The plant was not proposed after the strikes. Second point includes a review of the ‘order’. It does not prohibit the building of the new plant.

  3. Winton Bates Says:

    Frank: I think you might be interested in what I am talking about at the moment on my blog.

  4. Alfredo De La Fe Says:

    Unions served their purpose and have outlived their usefulness to the point of hurting the economy. Now that we have OSHA, the Department of Labor and the Federal Trade Commission employee rights are legally protected.

    I have been on both sides- as a union worker and as a unionized business. It is a racket that is at the mercy of corruption and organized crime.

    I got fed up with it. Look into “prevailing wage” if you feel like throwing up. I had taken a job as a sub-contractor to doing cabling at the TRAILORS of the Bronx County Criminal Court House. We were NOT told it was a prevailing wage job nor did we sign any special contracts to this effect. BUT- we were forced to pay our employees the difference between what the “government” (electrical union) says is the appropriate wage for a helper to hold a ladder and what we paid based on Communications Workers of America wages. (A whopping $30+ extra an hour) In addition, IBEW Local 3 (electrical union) tried to force us to hire one of their workers to “supervise” and threatened to walk off of the job if we did not comply. Both unions are AFL-CIO and are supposed to “respect” each others rights to work. (Which IBEW did NOT in practice)

    We were LEGALLY entitled to bid on jobs, but were repeatedly apologized to and told that they could not hire us for fear of labor issues. Our bids were always 20-50% lower than the electrical union companies WHILE being profitable. Our workers earned a decent wage, had medical insurance and a pension.

    The final straw was immediately after 9/11/01. My office was about 2 blocks from ground zero and I was informed that I had to sign the new contract with CWA. This new contract increased our contribution to pension by a tidy sum per hour AND demanded that we add dental insurance and a “better” medical insurance plan. They did not care that we were still closed and could not even reach our office to get to our check book and basically told us – take it or leave it. I left it.

    Want to turn the US economy around over night? Strip the unions of their incredible powers then force other nations to meet basic employment standards to qualify for the reduced or “free” duty. Give companies such as Boeing a reason to stay in this country and they will, even if it means paying more to their workers (as long as they are not held hostage by the unions)

    I would rather that we have a million jobs that pay workers $12-20 an hour (or the equivalent 10 years from now) for the next 50 years then to force them to pay $30-60 an hour and have them leave the country sometime in the near future.

    [FSR response: Alfred, many thanks for commenting (and subscribing). There are indeed a lot of “rackets” in the U.S. economy — ethanol subsidies is another one; class action lawsuits too. I just got a check the other day from a class action shareholder lawsuit — where lawyers essentially have stockholders suing themselves (because it’s the company owned by them that pays the judgement). I got $3.00; I wonder how much the lawyers got. Anyway, the common feature in all such rackets — “rent seeking” was the old descriptor — is the role of government. Good intentions are too easily perverted by individuals seeking advantage. It’s a basic reason why I am so skeptical about the role of government in economic activity.
    But if you think the general labor picture is bad in the U.S., you should look at Europe. The Economist magazine is constantly hectoring European nations to free up their labor markets by trashing tangles of restrictive regulations. These regulatory regimes tend to make things very cushy for those who have jobs — and very tough for those who don’t. Since the former outnumber the latter, reform is hard to achieve.]

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