TW: Oh the irony...the Republicans abandoning Adam Smith to set wage rates. Now if the Republicans propose capping financial worker wages (and not just the top level folks) then we will know the Republicans are really serious and not merely grandstanding.
From Surowiecki at New Yorker:
"...[the UAW refusal to cut wages again in 2009] has almost nothing to do with the core problems faced by G.M., Chrysler, and Ford. The wage gap between U.A.W. workers and workers at other car companies is no longer that big, and labor costs at this point account for only ten per cent of the cost of producing a vehicle. So rolling back wages was not going to suddenly make G.M. and Ford significantly healthier than they are today, and not getting those rollbacks did not materially change the economic value of the bridge loan. In other words, if you could support the loan with the givebacks, you should have been willing to support the loan without them.
More important, having the government dictate the wages of employees—which is literally what the G.O.P. was insisting on doing—is precisely the kind of government meddling in the marketplace that Republicans normally abhor. There is no reason to think that G.O.P. senators have a greater insight into labor dynamics, the appropriate wage for Ford workers,and how labor-management relations affect productivity than the Big Three’s executives do. Yet the senators were insisting that their judgment on these matters should trump all other considerations.
I recognize the logic of saying that if we’re going to offer the automakers a loan, we should have conditions attached. But those conditions should be similar to the ones any lender would attach. They shouldn’t be an attempt to have the government dictate wage levels. What’s next? Price controls?"
http://www.newyorker.com/online/blogs/jamessurowiecki/2008/12/government-medd.html
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