GM and the unions, again

Matt Yglesias writes that management, not the union, is ultimately to blame for spiraling health care costs:

GM could have struck a different bargain with its workforce that entailed higher salaries and lower long-term pension obligations. Its management thought it would be wiser to strike a different bargain, and the results have wound up being non-pretty. Running a large enterprise is difficult which, I think, is why the executives make the big bucks. But when decisions don't pan out, you take the blame. Meanwhile, car company management could have strongly backed the Clinton administration's effort to get health care under control back in 1993.

But the massive explosion in U.S. auto companies' labor costs has not been all due to the run-up in health care prices. A lot of it was just the inevitable piling up of non-health-care pension obligations. The huge costs that GM's union contract would eventually entail were largely predictable.

So if you want to say "management is at fault for negotiating a bad contract with the union," fine. But realize that managers of other companies ar going to look at this example and conclude "Unions = kiss of death." Which is pretty much what's happened, with the U.S. having one of the least unionized workforces in the developed world.

Instead of blaming management, it seems just as easy to blame the problem on short-sighted unions. By negotiating bloated pension plans for today's members, unions basically screw the next generation of workers out of a job; when the pensions come due, the company has to downsize, which means far fewer manufacturing jobs for the kids. This is exactly what happened in the steel industry, and it's exactly what's happening in the auto industry right now. Contrast this with Germany and Japan, whose unions often negotiate wage cuts to preserve the jobs for the long-term.

I don't know why our unions are (apparently) short-sighted. Is it culture? Collective bargaining laws? Or some twist of institutional history? All I know is that the U.S. is on the fast track to complete de-unionization, and our steel and auto industries are shadows of their former selves. The system failed. It did not work.

If liberals are going to keep unions as a cornerstone of our support base, we're going to have to find a way to make unionization sustainable. Somehow, we need to shift the focus of unions from short-term compensation to long-term employment growth.