Monday, December 13, 2010

Toronto Star Has Gone Communist!

I know it's a left-wing 'liberal' paper – but this is ridiculous. Isn't liberal supposed to mean limited government? Hayek was right. The Star had a field day when Don Cherry called Mayor Ford's opposition 'pink kooks'. Now it looks like the Star is proving Cherry right by driving another mile down the road to serfdom.

Here's last Saturday's editorial by John Cartwright, The President of the Toronto and York Region Labour Council.

“Wealthy stockbroker drives by nine men who have been locked out of their jobs at the First Canadian Place...“The watch I’m wearing is worth more than you earn in a year. Get out of my way!””

You can see where its going to go from here.

“Across the country, corporations are engaging in an unprecedented series of lockouts of their employees, demanding that workers’ standard of living be reduced.... Sears in Vaughan, U.S. Steel in Nanticoke and now Hamilton, St. Mary’s Cement in Bowmanville, Genpack in Peterborough, Cadillac Fairview in downtown Toronto, the list goes on.”

If Cartwright really does believe that businessmen are “demanding that workers' standard of living be reduced” then he really is skirting along the shores of Marxism. If what these businesses are doing result in a lower standard of living for their employees, it is hardly their fault. It is a sign of a bad economy or government interference or both.

Low interest rates make it easier for owners borrow money. They do this to expand business, open up new stores or factories, beef up the old ones and hire more workers. As interest rates are inevitably going to rise (some predict this May) it will be harder to maintain these new expansions. The “wealth” the consumers have right now is just debt and as people pay off their debt, they shop less. When business cuts back, a lot people will lose their jobs. To no fault of the owner, employee or the consumer, it is merely out insane central bank screwing around with the economy.

Hard-working families are seeing their standard of living undermined by the actions of CEOs whose salaries count in the millions or tens of millions....[Do they] really need to save a few thousand dollars in order to keep its profit margin? Not at all. It’s doing this because it has the power to, and today that’s all that counts.

For the record, There is a mutual interest between employer and employee to see the company do well. In the case of these "CEO's",

A lot of the CEO's incomes are from shares in the company and other stock market adventures. Can a CEO use insider trading to rake in billions on his own company? Yes, but then he's acting as an individual and the fraud is on his shoulders – not the Corporation in question. The CEO can always be replaced by the board of directors, and the directors themselves could be replaced.

John Carwright is forgetting that a corporation isn't a single entity (although it is recognized as one by law). A corporation is a business made up of working individuals. Are the “hard-working family” accountants using real business sense to realize the company needs to save a few thousand dollars to maintain profits? Yes, that's how all businesses work, small or big.

A CEO can refuse to share his stock market gains with the company he owns or works for. It is his decision. If he acquired this money by illegal means, then an investigation should be conducted. Considering that government is quite content to ignore this problem, a citizens advocacy group could press the issue.

The 21st century corporate culture demands that pension plans be gutted, benefits weakened and jobs outsourced wherever possible.

No, economic realities and government interferences demand that. Why would the mechanics of business change just because it's a new century? And if there is a “culture” between different corporations, then why should Cartwright, or any of us, care? If you worked hard to become a millionaire CEO wouldn't you want to dine with other millionaires and go on cruises with girls in bikinis, do coke and drink champagne? I would.

Are they paying for this through their personal income or out of their companies profits? If the latter, I totally agree with Cartwright's damnation. If it is personal wealth from betting on the stock market, then it is their wealth to spend.

Even Mayor Rob Ford promises to outsource city cleaning services to contractors who pay poverty wages. And he claims to be “standing up for the little guy.”

Hey a Rob Ford swipe! Should have seen that coming, it is the Star after all. Here's the deal about this – "city cleaning services" is a fancy name for janitor, and city janitors get paid a whole lot more than their private counterparts. Ford is going to save taxpayers money by contracting the jobs out to people who are willing to accept market wages. “Poverty wages” do not exist in this country, it's hard to say where the standard unskilled market wage lies, but I'm willing to bet it's below the $10+ minimum wage level. To paraphrase Jim Rogers, those who are unemployed in Western countries live better than the employed in third-world countries.

Governments created laws that struck a balance between the power of corporations and the rights of working people.

This is the core of what I've been trying to get at. I'm glad Cartwright has given me a chance. Despite his claims, governments haven't struck any balance with laws. The laws that exist tend to swing radically in each direction. Governments favour working people by meddling in private affairs and they favour corporations by laws that inhibit competition. All these issues are best left between the employees and the employer.

To 'help' the workers, regulations and union demands are enforced by coercion. All these interventions make it more profitable to do business elsewhere, outside of the government's jurisdiction. Wages are another intervention, as well as bureaucratic health and safety rules. Arbitrary rules that conform all businesses to standardized working condition means less investment for businesses not up to code or with the inability to pay higher wages. Instead of being free to gradually reinvest profits to raise working conditions and wages, these smaller companies are forced into complying with bureaucratic rules.

In this trade-off, a small business must have less workers in order to provide better working conditions. This disproportionally favors bigger businesses that can afford better working conditions and higher wages. The result is unemployment and less competition for the bigger guys.

A double standard in the State bureaucracy as governments will further entice business by market interventions that disfavour competition and award inefficiency.

According to Cartwright, governments are the solution to 'striking a balance' between corporations and working people. Of course, intervention has led to some businesses packing up and heading elsewhere, wages decreed by authority (not by the market) and bureaucratic rules that while seemingly favour workers, actually benefit the employer. Despite their efforts, governments have miserably failed to 'strike a balance'.

Nowadays companies are only happy if there are tax cuts, subsidized profits and a pliable workforce. The same powerful actors who nearly wrecked the world economy are now shamelessly demanding that governments and workers do their bidding — or suffer the consequences.

Second sentence first – I think Cartwright is still under the impression that the financial crisis was a result of unregulated free-market capitalism.

Companies are happy when there are tax cuts, subsidized profits and a pliable workforce. Tax cuts are good for everybody, subsidized profits are a result of government intervention and a pliable workforce can be taken to mean anything. Dumb employees? Employees companies can rip off? Employees that easily influenced? Whatever Cartwright meant by “pliable workforce” none of it is our business. The intelligence of the workforce is between the employer and the employees. If employees are too dumb to realize they're getting ripped off, then forget about it. In the case of this happening workers (on their own, eventually) will form a union or go on strike, or just quit and go somewhere else. But of course, with minimum wage laws there's a good chance nobody in this country is getting ripped off in wages. Unless you count the taxes the government takes off our paychecks.

The gap between rich and poor in this country has grown tremendously in recent times.

I don't disagree. But this is not from capitalism or individual corporations. This is from - you guessed it - government intervention. Our system resembles fascism more than capitalism, perhaps it can best be called corporatism. Remember that bankers from Goldman Sachs are running our central bank and are able to print up money and give it to their friends. Hardly, free-market capitalism. And hardly the fault of successful corporations. This problem reflects major flaws in our monetary policy, not the fundamental issues surrounding a corporation or its employees.

Extreme disparity is nothing new. That’s just how things were for centuries. But after the last Great Depression we learned that tough rules are needed to restrain the worst aspects of corporate greed.

We didn't learn anything from the Great Depression! That's why we're right back where we started from. And here we are in a perfect position to point the fingers at the real culprits (fiat money, central banking, government) but influential people like Cartwright are, once again, blaming “corporate greed.” All this is going to result in is more government interventions and a longer depression with even more unemployment.

It’s time to review the rules and fix them. Companies shouldn’t be allowed to lock out their employees and bring in replacement workers. Nor should they be allowed to utilize temp agencies to create a new form of indentured servitude where people don’t have a right to a stable job.

It's time to review the rules and throw them out! If replacement workers are willing to work at wages the former employees wouldn't, then it's obvious the “locked out” employees are asking for wages above what the market would provide. It's simple business. It's economics. It is not corporate greed.

And temp agencies are a great way of finding work. The employee doesn't have to waste time looking for a job and the employer doesn't have to waste time looking for employees. The Temp Agency brings these two parties together faster than they could have on their own. It's all voluntary. Nobody is forced into a temp agency. They still get paid, so it's not “indentured servitude”. And nobody, nobody has a “right” to a stable job. Nowhere in the Charter does it give Canadians a “right” to a stable job, nowhere in natural or common law do people have a “right” to a stable job. A stable job is nice, and everybody has a right to try and get one, but nobody has a “right” to a stable job.

Labour laws need strengthening so that ordinary people have a fair chance for collective representation. And the loopholes that allow companies to violate employment standards need to be closed.

Without the doublespeak, the first sentence calls for a strengthening of unions. I think unions have enough leverage in this country. It's interesting that Cartwright lashes out at "corporate greed", but says very little about "union greed."

Companies that use loopholes are trying override arbitrary rules set by an unelected bureaucracy. Most of the time these loopholes benefit both the employer and employee.

To give a personal example – I once worked at a job that took advantage of one loophole, not exactly sure how they did it, but as an employee I benefited. I was relatively new, but good at my job. I, and the other employees, were forced into the union (yes, really). I worked with another guy who had been there longer but was terribly lazy. Because he was higher in the union food chain, this guy got more hours and unless he murdered someone, it was very hard for the managers to fire him (union rules). The managers knew I was doing a better job and wanted to award me with more hours (for their personal gain too, obviously). They took advantage of some “employment standard” loopholes and I ended up with more hours, although not officially. The other “pliable” worker didn't seem to notice or care.

How long will it be before governments act on these issues? I don’t know. But one thing is certain. If they don’t find a way to stop the abuse of workers that is quickly becoming the norm, the next generation will be worse off than ours.

How long until governments act? Let's hope never. The next generation is already worse off partly due to the parasitical government class and the financial mess the baby boomers are leaving us in. If governments act let's hope they repel all the draconian regulation and taxation. Governments can make it easier for the next generation to open up their own businesses and allow them to hire, fire, and set wages at market levels. Economic freedom and personal liberty must go hand-in-hand in a free society. When governments act they are not representing “the people” but their own interests.

In a free society market forces will limit how big corporations can become. In a true market economy a monopoly is hard to come by, if not impossible. But this involves reforming our monetary policies. The current gap between rich and poor has nothing to do with capitalism. It's monetary socialism – central bankers sitting in a room and deciding what interests rates should be. Without that access to fiat money and the cancerous anti-social organization called government – none of the CEO's Cartwright speaks of would have become so rich and powerful.

Now why can't John Cartwright see that?

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