Union greed and government social engineering

It is high time that people wake up to the role that both the government and the unions have played in the economic disaster that we find ourselves in at this point. We are at a point where we are socializing the automobile business. Of course I don’t think that the liberals would be pushing so hard for a bailout if it were not for one of their major backers involved. The trade union. If you take a look they are demanding to control the wages of the executives but are doing nothing about the bloated benifits to the employees. Most of us do not have these bloated benefit packages and have seen our 401Ks drastically reduce in value and yet we are expected to pick up the tab for this.

But high current costs are only part of the problem. So-called “legacy costs” leave Detroit paying an enormous sum of money for mistakes made in the past. In 2004, GM, Ford, and Chrysler employed approximately 370,000 people in their U.S. automotive operations but supported more than 800,000 retirees with expensive pension and health care packages negotiated through collective bargaining.[7] From 1993 to 2007, General Motors alone spent an average of $7 billion per year to fund legacy pensions and retiree health care.[8] These legacy costs create a catch-22 for automakers: Not only are they nearly impossible to trim outside of bankruptcy, but as firms downsize existing operations, they become a proportionately larger burden on the company.

Just as the liberals helped cause the financial crisis by forcing banks to give risky loans to low income people they and the government unions did the same with the government pension funds. I sometimes wonder if this push for a cap and trade tax is nothing but a feeble attempt to bolster their bad investments and cover their tracks.

The largest public pension fund in the United States, the California Public Employees Retirement Security System (CalPERS), lost a staggering 20 percent of its value in just three months last year. In May 2008, Vallejo, California, became the largest city in the state ever to file for Chapter 9 bankruptcy, thanks largely to unmanageable pension obligations.

During melting markets, all pension funds come under siege. If you’re covered by a “defined contribution” plan, contributions are invested, usually by your employer and usually in the stock market, and the returns are credited to the employee’s account. Your retirement savings grow if the market rises or, as is the case now, bleed when it crashes. You carry the risk on your shoulders.

The risk shifts to the employer under “defined benefit” plans, in which future outlays are guaranteed. That seemed like a great idea for business as recently as 2007, when the market was rising and the pension funds of America’s 500 largest companies held a surplus of $60 billion. Now they’re at a deficit of $200 billion, with fund assets dropping like a lodestone.

Here is where the social engineering comes in. Instead of thinking like a businessman and investing in sound projects that would maximize the profits of the fund. They used the money to fund pet projects and investments that they deemed “socially acceptable”

Traditionally, public investments and union-based corporate pension funds were managed according to strict fiduciary principles designed to protect workers and taxpayers. For the most part they invested in safe government securities, such as bonds or U.S. Treasury bills. Professional managers oversaw the funds with little political interference.

But during the last 30 years, state pension funds began playing the market, putting their money into riskier and riskier securities—first stocks, corporate bonds, and foreign investments, then real estate, private equity firms, and hedge funds. Concurrently, baby boomers whose politics were forged in the 1960s and ’70s began using those pension funds to advance their social visions. Investments designed for the long-term welfare of retirees began to evolve into a political hammer.

Many union funds and larger state pension plans screen stocks and investment opportunities based on what are known as “socially responsible investing,” or SRI, principles. Instead of focusing solely on maximizing value, fund managers have used the economic clout of concentrated stock holdings to make a statement by divesting from companies that don’t make it through certain “sin screens.” These included companies involved with weapons, nuclear energy, tobacco, alcohol, natural resources, and genetic modifications on agriculture, many of which did well over the past decade. Stocks of public companies deemed to have poor records on labor, environmental issues, women’s rights, and gay rights are also frequently screened out, as are corporations that do business with regimes that activists consider unsavory.

I don’t know about you but I find this very disturbing. The government has never been able to run a business that could break even much less make a profit. The railroads and the postal system are classic examples. Do we really trust them to run the automotive industry?


About Marshall Keith

Broadcast Engineer Scuba Diver Photographer Fisherman Hunter Libertarian
This entry was posted in Libertarian, Nanny State and tagged , , . Bookmark the permalink.

3 Responses to Union greed and government social engineering

  1. Wow, the venom aimed at unions and government is amazing.
    I love that you blame liberals for the financial crises. That’s something i’ve never seen before.

  2. Marshall says:

    perhaps you should have noticed the warning signs eight years ago. Who warned about them and who poo pooed it.

  3. So how much GM stock will YOUR tax dollars buy?

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