Rand, TTI and Disaster Capitalism

[Amarantus Cerularius]

I'm in the midst of reading Naomi Klein's book 'The Shock Doctrine' which deals with the environment of fear and 'shock' that has been created with free license in the post-9/11 world, and has allowed for radical political, social and economic reforms. She discusses the fall away from traditional social structures like defense and humanitarian aid, into the world of for-profit industry and corporate politics. Groups like Blackwater, Custer Battles, Haliburton who make a huge profit on the contracts of war and their sister-companies who generate great revenue in reconstruction. There's some very tangible and compelling evidence given that big business is setting up a lot of these conditions or at least permitting them to flourish, since the larger the disaster, the easier it will be to push through massive change.

Now, I have two questions. One, how do I reconcile this with Ayn Rand, because as much as I'd like to think that 'making profits at all costs etc.' is a wonderful way of doing things (a la Marty Friedman), there's a line where reciprocity between the capitalist and the capitalized upon ceases to exist. Remember the run of the John Galt line with the old engine, and the explosive incident with the Army Express? I think that may have been a very precise metaphor for the Political and Military disaster machine. Beyond that, I have troubles blending a lot of my reading of Rand with the concept of capitalizing on the already dispossessed and downtrodden. I can't see Hank Rearden masturbating with glee over reports that a hurricane had wiped out the 9th ward in New Orleans and he had access now to a cheap source of very disposable labour that through humanitarian 'assistance' could be rendered indentured. And on that note, I can't see any of Rand's characters outsourcing to sweatshops either...

My second question is this: Disaster Capitalism, maybe an evil of the free world but a plausible business model for the EVE universe? I'm speaking specifically of POS's and the only creatable disasters being economic collapse or cataclysmic warfare. Should a system be ravaged by warfare indirectly, opportunities might arise to capitalize on the disaster and obtain the system and or access to its resources for a significantly reduced rate. A sort of indirect hostile takeover, relying on pre-existing conditions that can be influenced in corporate favour.

Maybe I'm just talking out of my rear end here, but I think that these same principles can probably be applied. I don't know how well it reconciles with Rand and would welcome further discussion. I'm not even really sure how to feel. The part of me that smoked pot in high-school wants to proclaim that big capitalism is an evil of epic proportions, and part of me understands that it's people who have become very good at turning a profit and that lives and numbers are in a sense, very much the same thing. So... if you have anything to add, correct me on or any questions, shoot me a response. I'll be around later this evening (after I return from work, and fulfilling my obligations to my corporate overlords. Ahaha.)

[Tolthar Lockbar]

The problem your having here is the same one that people have with the sweat shops in the early 1900s. They call it cruel and immoral of the owners of those factories to have people work for a "low" wage and have "horrible" working conditions.

That is true, they were horrible and the wages were small, but thats if you compare it to today. You have to compare it to what they had before that. Before then, if you were a kid, or a mother, and you were on your own, you could kiss your life goodbye. It was the factories that made it possible for people to live. It was not some glorified living conditions in cities before factories--those sweat shops juust made it better actually.

Apply the same logic about the hurricane and such. People are out of the job, have no homes, and crime is out of control. Is that better or worse than what those "greedy profit turners" offered or not?

Now one has to keep in mind individual rights and justice, of course. So "greedy profit turning" goes too far if it does one of two things:

1) Breaks someone's individual right to property.
2) Institutes more than one source of law.


So if US marines came in and said, "I AM THE LAW", and blackwater marines said, "No, I AM THE LAW", then we have a problem that could lead to anarchy. There must be one source of law in a society, and only one for hell to remain unbroken. I think blackwater actually went to far at one point (if I remember right) but i don't know the details. For the most part, Black water was really under US directions.

So basically, one should always compare what is offered to what is currently had when determining if its bad or not--but while keeping in mind individual rights.

[musashi]

You are right Amarantus we are entering a brave new world. A world where massive multi-national corporations wield influence to both cause a problem and sell the solution. I think a group of futurists “the cyber punks” have done a wonderful job of telling where this story will lead. And like it or not we are all just grist in the mill.

[Oleksandr]

You are right Amarantus we are entering a brave new world. A world where massive multi-national corporations wield influence to both cause a problem and sell the solution. I think a group of futurists “the cyber punks” have done a wonderful job of telling where this story will lead. And like it or not we are all just grist in the mill.

Was that a joke, dude?

[musashi]

Was that a joke, dude?

Nope. No one is laughing at Enron. And I am not laughing at Halliburton and the Carlyle Group either. A strong case has been made that the US went to war in Iraq specifically to appease these two companies (the companies certainly earned huge windfalls).

Just because a company is a business venture doesn’t preclude from becoming a collectivist organization. We saw plenty of examples of looter companies within the text of Atlas Shrugged, and most of them were only manipulating a single domestic market.

Yes I’d say that companies can and do go bad.

[Oleksandr]

To Amarantus: What is Good? What determines Good? What is the standard of Good? Since you judge capitalism as negative in that example of yours, then you must have already some answers to these questions. What are they?


To Musashi: I don't undestand you at all, Musashi. The only thing that can help here is a short sentence describing your point.

[Amarantus Cerularius]

In my opinion, the argument that could be made in favour of Klein's Thesis (it is a good book, regardless of its political alignment) is that pulling a Gail Wynand and using opportunities for careful generosity (as discussed elsewhere) under the guise of charity can in fact be a means of creating reliance. Since this reliance is very much a matter of basic survival (let alone comfortable survival) in the aftermath of a given disaster, be it war, hurricane or tsunami, the point could be made that 'service or suffering' is very much an argument made from intimidation. However, to preserve the moral clean-slate, the disaster capitalist mentality relies on natural or coincidental violence to base these arguments on. Being in a position to assist the needy and then making a business of charity is no more noble than being selflessly charitable in the first place. Instead of a welfare state, you wind up with a debt ridden welfare state. Additionally the mentality uses the confusion surrounding naturally violent occurences and the resultant shock to dupe populations into surrendering their property (violating their rights to property,) a la Hurricane Katrina and the decisions not to rebuild but to disperse or leaving them no ability to claim their property, a la Iraq and the Tsunami victims (whose beachfront properties were nationalized and sold off to Hoteliers.)

Maybe I'm still not making sense, I'm having trouble finding the root of my own argument here... maybe another couple questions? Hah.

Simple example then. A trained paramedic is assisting a gunshot victim. He explains matter-of-factly that he will remove the 9mm hollowpoint bullet lodged in the victim's spleen in exchange for his father's watch and his own wedding ring. Failure to remove the foreign object swiftly will induce blood poisoning and a host of medical complications potentially leaving to death. Isn't the obtaining of the victim's capital by refusal to assist equivalent to having pulled the trigger? I'm not on about the strong protecting the week or an obligation to assist in the first place, but giving a life or death option in relation to property and possession seems like the definition of outright robbery.

[Oleksandr]

Maybe I'm still not making sense, I'm having trouble finding the root of my own argument here... maybe another couple questions? Hah.

Check out my questions above in case you missed them while making your post just now.

[Amarantus Cerularius]

As far as I'm concerned the only wrongs are violations of the right to life and the right to property. I think I present adequately in my above statements how I feel that the contemporary creed of disaster-fuelled capitalism runs in contravention of these values. Making money is fine, but I'm an advocate of reciprocal capitalism, not the exploitive sort.

That being said, I still think exploitive disaster capitalism would be an awesome business model in the EVE verse.

Cause two factions to go to war with each other and begin selling discounted (but inexpensively produced) defence and security equipment in their regions, using the crisis to drive up demand.

[Oleksandr]

Making money is fine, but I'm an advocate of reciprocal capitalism, not the exploitive sort.

Can you explain why it's an exploitation?

What are capitalists taking away that belongs to those people?

[Arakasi Takeda]

I think Musashi's point is well taken - it used to be one I argued with Quin Haden about all the time. The biggest issue I see with the application of Objectivist theory to the 'real world' is that most Objectivists simply can't tell the difference between Rearden Steel and Associated Steel.

Enron manipulated the energies markets, and then defaulted on its contractual obligations to its employees. That would be akin to Dagny Taggart siding with James Taggart against Phoenix Durango on the Anti-Dog-Eat-Dog law, and then, when discovered, looting Eddie Willards pension fund as she jumped ship.

Groups like Haliburton and Carlyle make their money by manipulating their connections to the government, using them to gain unfair advantage in the market. They are part of the aristocracy of pull.

When will real-world Objectivists start seeing things clearly as they run around defending any and all questionable business practices simply because they come from those who don't share their view? If Objective Reality supports the claim, then it is true, regardless of who delivers it.


AT

[Oleksandr]

I think Musashi's point is well taken - it used to be one I argued with Quin Haden about all the time. The biggest issue I see with the application of Objectivist theory to the 'real world' is that most Objectivists simply can't tell the difference between Rearden Steel and Associated Steel.

What is 'real world'?
Also how is the problem with most "Objectivists" (I don't know who are these people? How do you define an Objectivist?) viewing something wrong, show something wrong with Objectivist theory?
The theory is not compounded from people who agree or think they agree with that theory.

When will real-world Objectivists start seeing things clearly as they run around defending any and all questionable business practices simply because they come from those who don't share their view? If Objective Reality supports the claim, then it is true, regardless of who delivers it.

Again, would you kindly explain who are "real-world Objectivists"?



You seem to have a problem with "RL Objectivists" but then you start by blaming the Objectivist theory. So, which is it?

[Ginuad Amarasen]

I've got another angle on this.

To me, one of the big themes of Atlass Shrugged is Don't Piss In The Soup.

Many of the 'looters' in the novel were ignorant of the fact that their own livelihood was entirely dependent on the businessmen and industrialists they despised. Time and again they sabotaged the economy, believing all the way that they were doing fabulous and virtuous thing.

There's a lesson to be learned there.

Capitalism, these days more than ever, is depenent on a free society to exist. It cannot exist in un-free societies, except as a shambling mockery of its true form.

As such, I believe it is very important, as Capitalists, to be careful that in the pursuit of profit, we don't undermine the very things that make the pursuit of profit possible. Because in the long run, that's very, very bad for us.

If we find that a business venture has a non-trivial liklihood of corrupting the proper operation of the market, or society itself, it is imperative that one refuse it. This is not so one can go "Oh look how selfless I am, putting society first!" but simply because corrupting our operating enviromment is a really dumb business move.

Take for example the Anti Dog Eat Dog rule. That was fantastic for Taggart...for a while. For a while they enjoyed unfettered access to Colorado, but then as the political situation grew more insane, the lack of competition which temporarily boosted Taggart ruined the economy of Colorado and thus America, which put Taggart in an even worse position than before.

While the temptation for companies to use regulation as an anti-competitive bludgeon is the most obvious example of this problem, that's not where it ends. Anti-competetive behaviour of many kinds can choke the market, restrict innovation and end up hurting the company that was trying to create the situation in the first place.

While control is important for any collective enterprise to succeed, many who run companies suffer from a love of control that runs unchecked to a pathological extent. To a certain extent, chaos needs to be present for opportunities to grow. Companies must be wary of trying to control things too much, because it is not necessarily to their advantage.

An example I would consider is the heavy-handed attitude many companies have towards intellectual property. Intellectual property is important, but at the same time the innovations that can make a company billions depend of a thriving and vibrant public domain.

If too much art, culture and design principles are locked away from the dabblers (and all creative people start as dabblers) under threat of legal action, it stifles the ability of people to create and innovate in all sorts of fields. Too many companies are attempting to have it both ways and want to treat patents like trade secrets.

A patent is essentially an artificial monopoly on a particular design given on the condition that you have to make that design public and that exclusivity has a time limit. If you want exclusivity with no time limit, you have to keep it secret! That's a trade secret, but that can only be done with some things, like formulas and software code. But some companies, despite operating in a free economy, want to keep a government-controlled monopoly in perpetuity. And that's riding a tiger that could devour them all!

Advances in information technology are creating opportunities, but they're also making intellectual property theft easier. Many companies have responded by attempting to tighten their control with heavy-handed legislation like the DMCA. That doesn't work, because it creates too many restrictions on people trying to create new intellectual property. Practially anything that could be considered a threat to existing intellectual property is outlawed under the DMCA.

Given how dependent Capitalism is on creativity and innovation, this causes a fundamental problem. If companies continue to take this heavy-handed approach, the credibility of intellectual property is going to suffer. It's already taking a serious hit. If they persist, eventually the inevitable legislative backlash is going to be severe and everyone's going to get hurt.

[Oleksandr]

If they persist, eventually the inevitable legislative backlash is going to be severe and everyone's going to get hurt.

The main problem isn't legislative backlash, but a government that's allowed to do so.

Without such powers, there wouldn't be any problem at all.

Business definitely should not try to appease government. Especially, since government isn't rational, and will try to impose restrictions regardless of rationality and what's best.

So, main idea is to support ARI in its efforts to bring about new Enlightenment.

[Ginuad Amarasen]

Well, do bear in mind that patents and copyrights are artificial monopolies created by government.

They are one of those interesting counterexamples to the notion that government involvement in economic matters is axiomatically wrong. patent and copyright protection, done prudently, has been very beneficial to the economy. The Founding Fathers understood that, which is why the US Constitution is unusual in having a constitutional basis for patent law.

[Arakasi Takeda]

Arakasi Takeda wrote:
I think Musashi's point is well taken - it used to be one I argued with Quin Haden about all the time. The biggest issue I see with the application of Objectivist theory to the 'real world' is that most Objectivists simply can't tell the difference between Rearden Steel and Associated Steel.

What is 'real world'?
Also how is the problem with most "Objectivists" (I don't know who are these people? How do you define an Objectivist?) viewing something wrong, show something wrong with Objectivist theory?
The theory is not compounded from people who agree or think they agree with that theory.

I would define 'real world' simply as the objective reality in which I exist day to day, as opposed to - say - the synthetic reality of Eve Online. I happen to believe the real world is the same existent Universe I perceive, and which I share with other individuals, such as yourself.

I define a 'real-world Objectivist' as someone who self-identifies themselves as an adherent or 'believer' in Ayn Rand's Objectivist philosophy. It is not a term I grant to someone, but rather a moniker that individuals take to themselves. For instance - Trey Radcliffe, who founded Taggart Transdimensional in Eve Online, is a self-avowed 'real-world Objectivist'. Quin Haden, a character many old time Eve Online players might remember, was also a 'real world Objectivist'. Leonard Peikoff, Rand's principal disciple, is a real world Objectivst, etc.

Neither of these terms is meant to express anything more than a literal meaning, nor to label something with a particular bias. They are simply terms used to differentiate between our shared reality beyond the computer, as opposed to the shared world we all here experience in Eve. The expansion of the term to an individual is merely one who practices the philosophy outside of Eve Online, by their _own_ admission.

In my discussion, I wasn't making a particular reference to whether or not the _theory_ of philosophical Objectivism was somehow flawed, but rather that the practice of it, by individuals who claim to believe it's tenents, is, in my own experience, flawed. There are other reasons I have explored in previous discussions as to why I believe there are _gaps_ in Objectivist theory which may, in fact, render it utility questionable _as a philosophy_, but my first post wasn't meant to deal with that subject specifically.

I submit to you, however, a simple philosophical question - is the utility and correctness of a philosophical theory truly independent of the practice of that philosophy by individuals who claim to adhere to it? If a theory holds certain principles to be true, but none of the 'followers' of that theory actually hold those principle _in practice_, can those principles really be called 'true' within that theory? A principle without practice is a meaningless concept. This is exactly the matter Rand asserts with the concept of 'intention' versus 'action'. A principle without practice is merely an 'intention to practice'.

Now, you can clearly argue that those who _claim_ to be 'real world Objectivists', but who do not act on its principles are not _truly_ 'real world Objectivists'. That is a value judgement you place on their words vs. their actions, and I certainly wouldn't argue that. All I can say, in the Enron example I cited, is that _in my experience_ individuals who claim to be real world Objectivists do not _in my experience_ often practice what they preach.


AT

[Ginuad Amarasen]

I have encountered a great example of this Pissing In The Soup I refer to.

In the example given, Tomtom, (which like any other corporation, relies upon the sanctity of contract in order to operate) commits an ethical breach staggering in its audacity, pointlessness and mind-blowing stupidity. They attempt to undermine one of the fundamental aspects of contract law by attempting to get customers to accept a contract before they can actually see it.

Given that almost nobody bothers to read liscencing agreements, one can only wonder at what they have put in their EULA which is so shocking they think their customers wouldn't dare agree to it except if Tomtom attempted to deceive them?

Now, imagine if Tomtom had attempted to pull this kind of con-artistry on their suppliers or distributors? I'm pretty sure they would find themselves short of people willing to do business with them very, very quickly.

So, given the obviously corrosive effect such practises have on the effectiveness of contract and consumer confidence, how can it be right for Tomtom to do such a thing? They are showing a contempt for the very institutions that make business possible and acting as if they only exist for their own convenience. They don't. The rule of law is the rule of law is the rule of law and companies which believe they can flout the conventions and institutions they rely on deserve to be punished.

Now what form that punishment takes, I'm flexible on. It can be a consumer boycott, widespread public mockery and humiliation or possibly even government action (but it would have to get far worse before I considered the latter appropriate).

But I simply can't see how behaviour like this could possibly considered morally acceptable. As far as I'm concerned, corporate entities which engage in reprehensible behaviour like this deserve to be branded as traitors to the principles of capitalism. Every time they do things like this, it makes it more difficult for real capitalists to operate without needless government interference.

[Kushan]

Actions have consequences. If you piss off enough people through exploitive & dishonest business deals, you will have a problem at some point.

The main problem isn't legislative backlash, but a government that's allowed to do so.

Before legislative backlash, there was "angry mob with pitchforks" backlash. If you exploit the masses, the masses fight back. And when that angry mob reaches critical mass... it's surprising the lengths some people will go to when they feel unjustly wronged. Those lengths just might include them overthrowing the local government and setting up their own "democratic" (mob rule) system. Or perhaps a crippling strike that lasts months. While angry mobs in modern society tend to be less violent than they used to be, they aren't any less self-righteous and dedicated.

[Oleksandr]

Or perhaps a crippling strike that lasts months. While angry mobs in modern society tend to be less violent than they used to be, they aren't any less self-righteous and dedicated.

That's what government should be for: to protect individual rights.

And those strikers give up fast, once they are all fired at once.

I'm curious was there a historical precedent where all strikers were fired? Haha.

[Arakasi Takeda]

And those strikers give up fast, once they are all fired at once.

I'm curious was there a historical precedent where all strikers were fired? Haha.

That's a quite curious attitude - follow a thought experiment with me - you are the CEO of a large manufacturing business. Your workers are unionized. They decide you are paying them an abyssmal wage compared to the work they are performing to you, and go on strike. Believing yourself to be infallible in your valuation of their work, you chose to fire them all.

Exactly how much manufacturing do you think you will accomplish as the CEO of an empty factory? How many gadgets do you think you could produce with only your two bare hands and no employees, compared to your regular rate of production?

It never ceases to amaze me when I encounter the simplistic view that a corporation's productive power rests entirely in its top management tier - as if one person could pour a heat of steel or build a car by themselves in anything resembling a profitable time frame. If you want to increase your productivity, you must employ others who are productive. And if you employ others, you must pay them a fair value for their work. To take the attitude that your workers are inconsequential to the productive capabilities of your business, and can be fired en masse at your slightest whim is to completely ignore the realities of operating an industry.

AT

[Oleksandr]

That's a quite curious attitude - follow a thought experiment with me - you are the CEO of a large manufacturing business. Your workers are unionized. They decide you are paying them an abyssmal wage compared to the work they are performing to you, and go on strike. Believing yourself to be infallible in your valuation of their work, you chose to fire them all.

My attitude is about being moral. It's the same approach that was taken in Atlas Shrugged by John Ghlt.

Producing while being a slave was the exact reason John Galt stopped producing. Productivity has requirements, if workers think they can set the terms by force, then they break such requirements.

Follow the example of American car industry. It used to be the best of the best in the world. Then unions stepped in, and businessmen followed your suggestion of taking it up the bottom. The result? Chrysler had to be saved by the government itself or it would have falled into complete bankrupsy. And the rest of car industries are now of a crappy quality. No wonder other countries took over in car quality.

History proved unionized workers wrong many times. It's only b/c Reardens who decided to allow workers to suck them blood-dry that the industries are still pushing forward.

So, the question that CEO must himself is: should I produce while being a slave?

[Oleksandr]

Every time they do things like this, it makes it more difficult for real capitalists to operate without needless government interference.

Capitalism is a system with zero gov't intervention (except protection of individual rights, such as contracts, etc.). If you are afraid of other "fake capitalists" because they might "unleash" gov't powers, then it's not a Capitalism in the first place. Real capitalists simply can't operate under unfree soceity, unless they wish to surrender at any time to gov't laws like Bill Gates goes.

In actual Capitalism their mistakes would face reality and they will dissappear.

In modern Socialism/Fashism/Whatever Statism, they get a government loan at the cost of actual producers, and actual producers get slapped with more laws.

[Arakasi Takeda]

Producing while being a slave was the exact reason John Galt stopped producing. Productivity has requirements, if workers think they can set the terms by force, then they break such requirements.

My turn to ask for a definition - how are you defining 'force' in the above? Are you suggesting the union workers stormed into the CEO's office, held a gun to his head, and demanded he sign away his rights on a dotted line?

Force has a very specific definition in Atlas Shrugged, one that Galt himself takes a great deal of time to define in his speech and later talk with the Looters. Force, in AS, literally means an attempt to deprive someone of their life or liberty.

When a business negotiates with a union, it is exactly that _a negotiation_. It's bargaining. The union establish one set of values for the work of it's members, and management sets another. Negotiation is simply the reasoning of both groups (both traders, in Rand's terms) towards a common objective value. It's a negotiation for exchange for mutual benefit.

According to Rand (and Galt), if two traders cannot agree on a mutual value for their work, then they are free to go their separate ways. In the case of a union and management, the union is free to reject the valuation of its worker's time and effort as regarded by the business, and chose not to work. This is what we call a strike. To suggest that this is somehow 'force' is to suggest that only one side - management - has the right to determine a value for labor, and that labor _must_ work for that, regardless of whether or not it amounts to a slave's wage. All you have suggested in the above is a change of victims - instead of the CEO being a slave, now the workers must be. In either case, one is giving up their effort and productivity without receiving due compensation from the other. That's not Objectivist - it's Anti-Marxism. It's the elevation of the capital _over_ labor, rather than labor _over_ capital. Objectivism treats CEOs and line-workers as equals - both are producers, both deserving mutual respect, both working towards a common objective value, and both exchanging their production for mutual benefit.

Follow the example of American car industry. It used to be the best of the best in the world. Then unions stepped in, and businessmen followed your suggestion of taking it up the bottom. The result? Chrysler had to be saved by the government itself or it would have falled into complete bankrupsy. And the rest of car industries are now of a crappy quality. No wonder other countries took over in car quality.

History proved unionized workers wrong many times. It's only b/c Reardens who decided to allow workers to suck them blood-dry that the industries are still pushing forward.

I'm sorry if this sounds insulting, but seriously, you need to learn real history. The fall of the American Auto industry has nothing to do with unions - it was completely _market_ driven. American car companies spent decades under the illusion that they were the 'best' producers - that they were _entitled_ to their top position in the market. They stopped innovating, stopped improving their processes and stopped being leaders. And then other producers sent a better product to market. When a competitor starts beating you in the market, you don't blame the guy on the line who screws in the windshield wipers and wants an extra $0.02 cents an hour because he believes his work is worth more than you are paying him. It's your fault for not being a better producer and having a better product. You've reversed cause and effect in your above statement.

Also, perhaps you aren't aware that it was the businesses who pressured the government to first install tariffs against foreign products, and then begged for handouts. If they had been Objectivists, they would have realized they were beaten fair and square, rather than seeking a bailout.

And what about those 'demands' made by the unions? Are you not aware that it was the Auto Industry, _not_ the unions who proposed paying for workers health care? In the 1940's, the UAW president - Nelson Lichtenstein - warned the automakers that it would be wiser not to make deals on healthcare and pension benefits that might come back to haunt them in the future. The Union was pressing for a base salary increase, but the Automakers believed they would spend less by taking on health care instead. Now, we live with the results of their shortsightedness. Salaries have remained stagnant while the cost of retirement benefits and healthcare have skyrocketed, and, again, it's the auto-industry crying foul and begging for government intervention. All because they thought they could get away with offering less at the time they made a _contractual agreement_ with their workers.

You have an incredibly obvious contempt for unionized workers - I've seen it in many 'adherents' of Objectivist theory, and I am convinced it stems from a shortsighted and immature understanding of the philosophy. Read Atlas Shrugged again - Rearden has his own workers union at the mills, and he respects them. It's mentioned that they never strike, because it was filled with men who believed as he did, men whom he respected and dealt fairly with. It's noted that his men were paid better wages than any other business and were far more productive. Unions are a good and convenient way of opening communication with the management of a business, and getting fair and equitable negotiations between managment and workers about everything from salary to workplace safety. They are a good thing for _both_ sides. Even Rearden realizes that.


AT

[Ginuad Amarasen]

The funny thing is that in the days of yore, unions tended to be much more fiscally pragmatic than they are now.

Now, many unions just see everything in black and white ideological terms. Which dissappoints me greatly because I do not think an adversarial relationship between employers and employees benefits anyone.

An enterprise is an essentially co-operative endeavour and while disputes and disagreements are certainly a normal and healthy part of such things, I do not see how on earth one can work for someone they consider fundamentally an enemy.

I generally find there is a problem in that both employers and unions tend to be not particularly bright about the economics of wage pricing. I find there's a tendency for employers to try and push wages down even below the point at which the opportunity costs in lost productivity are higher than the savings. Likewise, there is a tendency for unions to try to push wages up to the point where they're bleeding their employer dry.

Since I find that when it comes to economic education, you can lead a horse to water but you can't make it drink. I find the important thing in wage disputes is to make sure that neither employers nor unions dominate the negotiations too much so that they will be able to come up with an agreement that actually benefits all concerns. (despite the fact that both tend to take an idiotically adversarial approach)

Of course, I suspect this is precisely the sort of cynical attitude which keeps me out of the Industrial Relations profession, despite it being my area of specialty =P

[Arakasi Takeda]

In general I agree with you Ginuad - relations between employers and employees does appear to be very divisive. The thing I take issue with is that there is a perception amoungst many in the 'business field' that the cause of industies problems is the stubborness of unions.

But step back for a moment, and analyze the facts. I see the phrase 'bleeding them dry' being bantered about in several posts - what's that mean, exactly? You mean like Hank Rearden promises to 'bleed Taggart dry' when negotiating the first sale of Rearden metal? According to Rand, 'bleeding someone dry' isn't a bad thing. Productive individuals are _encouraged_ to take advantage where they can. It's an Objectivists _virtue_.

I addressed the 'unreasonable' demands made by unions in my reply to Oleskandr - the whole issue of pensions and healthcare, which is a real drain on American industry right now, is a monster of their own making. Those are the terms they negotiated when they thought they were getting a cheap deal in a market they dominated. It's not the worker's fault that industry miscalculated. Nor is it encumbent on unions to be altruistic and bail out executives for making bad decisions. It's also not the worker's fault that the competitors from foreign countries are dominating American markets. That's exactly what one expects to see in a free economic environment where one side has a superior product.

According to an Objectivist model, a business that's losing market share has to shape up or go down. Members of a worker's union may _chose_ to allow their pay to decrease, or their benefits to slip, but that is purely charity on their part. Those benefits were guaranteed by contract to them - a contract negotiated and signed in good faith by them and their employers. Perhaps union members should be more 'farsighted' if they want to keep a job in a business that may fail without concessions, but it's not their responsibility to sacrifice their legally acquired pay for the owner's benefit.

When you get down to it through, the whole issue of pay for American workers really comes down to an issue of standard of living, as compared to workers in other countries - a blindspot in Objectivist theory. For a long time, our economy was domestic - we bought and sold our products internally, and we did it _well_. The standard of living of an American citizen was head and shoulders above that of their counterparts in other countries. But as American industry began to decline, and the _products_ of foreign companies became more desirable, those foreign goods came in at a much lower price than similar American goods - and the reason is because the cost to produce those goods was much less; because _labor_ in those countries cost much less. Foreign companies made greater profits because their costs were less. Of course, their workers live in squalid conditions and dangerous environments, but most foreign companies didn't concern themselves with that.

American workers, used to much higher standards of living continue to demand that the standard be maintained. No one in America wants to live like a third-worlder in some ragged hut, working 16 hours a day for pennies. Of course, so long as they demand good pay, American companies will continue to be unable to match the low prices of foreign goods.

So the question is - do American workers have to accept third world wages? The answer appears to be Yes, according to many business leaders. They say American workers, especially union workers, 'are overpaid and have too many benefits.' They should 'have to sacrifice' to bring themselves in line with the 'new realities of the market'. Some businesses have gone as far as to fire their American workforces altogether, and moved to other countries where labor is cheap. This condition of 'globalization' is a blindspot in Objectivist theory. In Atlas Shrugged, there's no chance for businesses to go outside the US to get cheaper labor - all the other nations are Peoples States - a contrivance of Rand's to simplify the world picture in her novel.

In a truly globalized world - where both labor and capital are extremely mobile, there will be a balancing of standards of living across the globe. Well established industrial nations who accept free market principles will see the standard of living of most citizens go down, while those nations with little skills but cheap labor will go up. Over time, this will stabilize, but we really are at the beginning of this cycle. We can see the proof of the theory most especially in the relationship between China and the US on trade. Right now, Chinese goods are cheap and plentiful, and large amounts of American capital flows to China's coffers. Meanwhile, American industries suffer from the inbalance. Yet, in many areas of China, the standard of living which comes with this new wealth is creeping up slowly. This will play out across the globe. In the short term, America will be one of the losers. Not because of unions, not because of laziness, or any other human excuses, but because of simply, basic economics. The math is what drives it.


AT