Unions, Lenin, and the American Way (Part III)

American trade unions spent almost a billion dollars in the recent election to put pro-union politicians in positions of power in Washington. The Service Employees International Union, in the words of its own president, has "spent a fortune to elect Barack Obama." According to the Washington Examiner, the United Auto Workers had taken a break from bringing the auto industry to its knees and gave $1.98 million to Democratic candidates, plus $4.87 million in independent expenditures to Obama's campaign.

The money came from the mandatory dues of the workers who often wouldn't have donated or voted for these people. In return, the Obama labor shop is cutting back on the enforcement of federal disclosure rules, without which the workers won't be able to see where their money is going. The union bosses have a very good reason to hide their activities: the AFL-CIO has been spending so much on politics that they're going deeply into debt.

But they are getting the expected payback. The United Auto Workers have been rewarded with owning 55 percent of Chrysler and 39 percent of General Motors, with the rest of the shares owned by the Obama government. Let me use the occasion to give Detroit automakers solidarity greetings from the Donbass coal miners. If this trend continues, the younger generation may as well wonder how a town without any motors could ever be called Motown.

When the current recession began, the first weak links to break in the damaged economy were unionized businesses -- most notably, the Big Three carmakers dominated by the UAW. By contrast, in the "right to work" southern states of Alabama and North Carolina, non-unionized Japanese and German carmakers with hourly labor costs 65 percent lower than those in Detroit continue to employ more than 60,000 American workers without asking for a taxpayer-funded bailout. And, unlike many of its unionized competitors that have gone bust, the non-unionized Wal-Mart remains profitable.

While the financial crisis itself was not caused by the unions, it was a product of the same economic philosophy which prompted the government to tamper with the housing markets. It started with the desire to help a designated class of low-income families by endowing them with home ownership in the name of "economic equality and justice." But it ended with forced inequality, as countless home loans are now being repaid by taxpayers, many of whom don't even own homes and whose prospects of buying one are getting slimmer as a result.

The initial market distortion created an economic gremlin -- a younger cousin of the Donbass economic monster, if you will -- only this time it was strategically placed right in the center of the world's economic engine. What can go wrong when self-righteous campaigners for economic equality in the government order the banks to issue risky home loans to the poor? Only a ripple effect. The demand goes up, real estate prices rise, chances of repaying the loans get slimmer, the government further pressures the banks to turn a blind eye, the banks begin to repackage bad loans, the bubble bursts, the banks collapse, a recession ensues, borrowers lose jobs and can't afford payments, and the entire financial system goes down. In the worldwide crisis that follows, countless poor people overseas who will never have a house become even poorer than they were before the U.S. government decided to enforce "economic equality and justice."

Predictably, the fiasco is blamed on capitalist greed and selfishness.