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SyndicateThe Auto Worker Bailout, Part II: Employee Rights
By Robert Ringer - Friday, December 5, 2008
In Part I of this article, I said that a high ratio between executive pay and worker pay is neither good nor bad – that it is, in fact, irrelevant. Why? Because in a truly free market, “employee rights” have nothing to do with it. An employer would decide what he is willing to pay an employee, and the employee would be fully protected by the market. (Not the government – the market.)
When I say “protected by the market,” I mean that if he’s worth more than what an employer offers him, he is free to sell his services to another employer who places a higher value on what he does. In response to a blasphemous statement such as this, I’ve heard people say things like, “That sounds good in theory, but what if the employee can’t get a job somewhere else?”
Duh … it means, plain and simple, that the market does not believe he is worth more than he is being paid. You might say it’s the ultimate reality check. In a perfect world (not the insane one that we actually live in), every salaried worker would be mentored by an entrepreneur – preferably one who has gone bust several times. I say this because entrepreneurs are used to being rejected by the market. And when they get rejected enough, they often end up not being able to pay their utility bills or put food on their tables. They can even end up losing their homes.
True entrepreneurs recognize that there are no guarantees in life. They understand what Viktor Frankl meant when he said that “man has a right to suffer.” Out of suffering comes wisdom, appreciation, and renewed determination. Best of all, suffering can be a blessing in disguise, because it tends to straighten out one’s thinking.
Now, back to the bad guys – the CEOs and other top-level execs. Shouldn’t they have to suffer as well? If they fail to satisfy their employers, they will certainly suffer to the extent that they will lose their jobs. And many do, every year. Some, who commit fraud or theft, even end up in prison.
But, like any other worker, a high-level executive needs only to please his bosses – and his bosses are the company’s shareholders, who elect a board of directors to represent their interests. Thus, in no way, shape, or form is a CEO’s compensation related to what rank-and-file workers make.
So, if a board of directors wants to pay someone a king’s ransom to be their CEO, that’s their business. And if they want to fire him, that’s their business, too. The fact that many top executives walk away from a job with millions is because that is what their bosses agreed to give them in order to get them to take their jobs in the first place. It’s no different than the signing bonuses athletes receive, except athletes usually get most of theirs on the front end rather than when they leave their team.
One last point: When workers lose their jobs, the solution is not to give them unemployment benefits. As unpopular as it may be to say it, to pay someone not to work has nothing to do with employee rights. It is unconstitutional, immoral, and not healthy for the company, its shareholders, or the employee. Throughout my roller-coaster career, nothing – absolutely nothing – ever motivated me as much as the threat of starvation. Again, I wish every worker could be mentored by an entrepreneur.
Either the Big Three will have to be allowed to declare bankruptcy – and, I believe, eventually go out of business – or, as a result of throwing them billions of taxpayer dollars, they ultimately will be nationalized. And once the government takes over, these automakers will be free to operate at a loss and be kept artificially alive by taxpayers.
So, my fellow Americans, I say: Ask not what GM, Ford, and Chrysler can do for you, but what you can do for GM, Ford, and Chrysler. It has a nice ring to it, doesn’t it?
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Copyright © 2012 Robert Ringer
ROBERT RINGER is a New York Times #1 bestselling author and host of the highly acclaimed Liberty Education Interview Series, which features interviews with top political, economic, and social leaders. He has appeared on Fox News, Fox Business, The Tonight Show, Today, The Dennis Miller Show, Good Morning America, The Lars Larson Show, ABC Nightline, and The Charlie Rose Show, and has been the subject of feature articles in such major publications as Time, People, The Wall Street Journal, Fortune, Barron's, and The New York Times.
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12 Responses to “The Auto Worker Bailout, Part II: Employee Rights”
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I’m sorry to say that we have a really uphill battle with this line of thinking. Don’t get me wrong, I completely agree. Sometimes I feel like a voice in the wilderness. I can hear Robert Ringer on a distant mountain singing my song, but there isn’t much action in between.
I teach art at a university. I can’t tell you how many times I’ve heard a student say to me: “I put in so much work on this project and I believe I deserve an A for it.” They say it in all seriousness with no apparent regard for the fact that it is usually mediocre work or it is not done according to the directions.
And in case anyone is wondering what goes on at college these days, B+ or A- is the new C, except in my class. (I am very mean.)
Pitch says:
As usual, you have once again shown your ability to not only tackle the tough issues but quickly drill down to the core of any given situation in a rational and intellectual manner.
It is however my opinion that we will in fact have a brand new “Department of Auto Manufacturing” quickly formed by our new President and the Socialist leaders Pelosi, Reid et al churning out billions and billions of ever more worthless fiat currency to keep these once great but now antiquated, disgraceful American relics afloat. One would think that the millions of employees that are employed by America’s Auto Manufactures would finally awaken and begin to see the writing on the wall and take note of what subsidized, government mandated, regulated Auto Manufacturing Plants will eventually bring about and the tremendous loss in every aspect of their employment that this will eventually mandate.
It is however my belief that for the most part the American working class has become so spoiled that they are totally oblivious to the monster that lies in wait just beyond the horizon.
Your points about the pay discrepancies between worker and CEO are will made and any thinking person can easily see this discrepancy is truly irrelevant. However, it is just exactly what any smooth talking huckster Politician is looking for to direct attention away from the real issues involved and inflame the general uninformed masses awaiting their next Government Free Lunch.
I for one am looking forward to purchasing my new Obamamobile! Guaranteed and certified by the new Department of Certificates and Certifications proudly directed by Reverend Whrighty and Jesse Jackson. Those two great orators that have followed in the tradition of Abraham Lincoln and “Never Told a Lie!” This new Model is sure to become the most nifty and thrifty ride of the 21st century backed with an authentic Government hand stamped warranty which stipulates the following: We guarantee to repair or replace any defective item forever as long as the printing presses are not broken and we can continue to steal Tax dollars from your neighbors and great, great grandchildren! sic
These three huge, important, troubled companies have a way out to finance their business: The stock market.
If its supply-demand mechanism thru its buyers and sellers do not want to put -more- money on these automakers’ hands; taxpayers should not be the answer.
By asking for money without giving value back to the owner’s money (taxpayers), they are going completely against the natural rules of market.
I need more understanding. It is being bandied about that the USA is actually in debt to the tune of $53 trillion. Given that amount is true, then where is the money going to come from for the bailouts? What happens when the US defaults on all its loans, as it surely will have to do? Do we sell them Alaska? How can the USA rebuild when many of its industries have been lost and we are now buying from overseas? Can the USA default on its debts without getting “thumped” by those who made the loans?
Robert,
Your writing is great and I have some of your articles on my wall!
I like “Out of suffering comes wisdom, appreciation and renewed determination.” That is true.
However, I don’t think I would have enjoyed the suffering recently (were it not for unemployment) when the company I worked for was purchased and I was laid off. It allowed me to keep my apartment rather than have to live in my car and gave me some space to find another job. I have a feeling the 530,000 people that lost their jobs in November would agree with me.
You make great points, but I think there must be some middle ground. Some suffering is unavoidable, but I think we should do all we can to prevent it as a society.
Keep writing!
Bill Montgomery
Reply to Robert Ringer
Joe South sang a song called “Walk a Mile in My Shoes.” Apparently most people have no problems seeing themselves walk in the shoes of the “downtrodden” worker. However few seem to possess the ability to visualize walking in the shoes of an entrepreneur. Could this be the reason most people fail to achieve happiness, success and prosperity in their personal lives?
Instead of allowing hate, envy and jealousy to control their lives wouldn’t it be in their best interest to generate positive thoughts, acquire a positive knowing that they can succeed and take purposeful actions to accomplish their goals and desires?
Of course, since government interference with the marketplace destroys the hopes and dreams of countless number of individuals they can always say that the “little guy” doesn’t stand a chance. It does make an intelligent person wonder why they turn to predators that destroy everything that is just and sublime believing these same predators will make their lives better. It’s like thinking a thief and an inncocent victim can scratch each other’s back.
Tsk, tsk, tsk. And I suppose that you think that the fans determine the salaries paid to professional athletes too?
Response to Pitch
Pitch–you definitely threw a called third strike. The Obamamobile will probably be built “efficiently” enough go in any direction but straight forward. It will veer either to the left or the the right–mostly to the left. When you place it in reverse it will take off backwards at an incredible speed–running out of gas or whatever alternative fuel is being used somewhere in the dark ages. Our only hope is that if it is built, there is no fuel to run it.
Response to eclecticlarry:
I’m not exactly sure what you’re getting at, but the fans determine a player’s salary only indirectly. It is the the market that directly determines how much a player can command in salary.
Owners bid against each other for a player’s services in the marketplace. If one owner is more convinced than another owner that a ballplayer will draw more fans to his ballpark and bring bigger TV audiences (and, thus, more TV revenues), he’ll make the highest bid for that player.
In business, a CEO’s services are also available to the highest bidder. It’s actually pretty simple. The marketplace can never be wrong, because it is based on voluntary exchange (i.e., consenting adults) rather than force.
Hate to say it, Robert, but it looks like Big Brother didn’t get your message:
http://news.yahoo.com/s/ap/20081206/ap_on_go_co/congress_autos
Hmm.. Interesting. I’ve been telling young people for years that “job security” (if it ever existed) is gone and never coming back. I tell them that they need to look into becoming self-employed.
The idea that being “self-employed” is so much “riskier” than being an employee is beaten into our heads at a young age. I think that unemployment insurance is used to perpetuate the myth that somehow employees are immune from the laws of economics. I think that large corporations would be the most resistant to the idea of ending unemployment insurance- large corporations want thousands of servile employees, not thousands of nimble competitors. This is why unemployment insurance will continue on, in some form or another.
So, build an automobile of inferior quality, stack managers, board of directors, foremen, accountants etc. and call it good. Let’s not forget the “must haves”, jets, hunting lodges, etc. Last, but not least, the tradesmen that assemble the products clamoring for more. Its all good except one thing, the inferior product won’t sell. The competition is so good they don’t even worry about losing market share to the big three. I know if I was in the same situation what the future would hold for my company. Nature is brutal, but merciful, and the survival of the fittest is the only rule in business. Sorry, no bailouts at taxpayers expense, they should be ashamed of themselves. How many floor hands did they listen to about improving the product, or manufacturing methods that could have improved productivity?
Regards,
Dwight Kothmann