Last Updated:September 19 @ 12:09 pm

Sowell: Killing The Goose

By Thomas Sowell

Killing the goose that lays the golden egg is one of those old fairy tales for children which has a heavy message that a lot of adults should listen to.  The labor unions which have driven the makers of Twinkies into bankruptcy, potentially destroying  18,500 jobs, could have learned a lot from that old children's fairy tale.

Many people think of labor unions as organizations to benefit workers, and think of employers who are opposed to unions as just people who don't want to pay their employees more money.  But some employers have made it a point to pay their employees more than the union wages, just to keep them from joining a union.

Why would they do that, if it is just a question of not wanting to pay union wages? The Twinkies bankruptcy is a classic example of costs created by labor unions that are not confined to paychecks.

The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks.  Moreover, truck drivers were not allowed to load either of these products into their trucks.  And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.

All of this was obviously intended to create more jobs for the unions' members.  But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs.  The union is killing the goose that laid the golden egg.

Not only are there reasons for employers to pay their workers enough to keep them from joining unions, there are reasons why workers in the private sector have increasingly voted against joining unions.  They have seen unions driving jobs away to non-union competitors at home or driving them overseas, whether with costly work rules or in other ways.

The old-time legendary labor leader John L. Lewis called so many strikes in the coal mines that many people switched to using oil instead, because they couldn't depend on coal deliveries.  A professor of labor economics at the University of Chicago called John L. Lewis "the world's greatest oil salesman."

There is no question that Lewis' United Mine Workers Union raised the pay and other benefits for coal miners.  But the higher costs of producing coal not only led many consumers to switch to oil, these costs also led coal companies to substitute machinery for labor, reducing the number of miners.

By the 1960s, many coal-mining towns were almost ghost towns.  But few people connected the dots back to the glory years of John L. Lewis.  The United Mine Workers Union did not kill the goose that laid the golden eggs, but it created a situation where fewer of those golden eggs reached the miners.

It was much the same story in the automobile industry and the steel industry, where large pensions and costly work rules drove up the prices of finished products and drove down the number of jobs.  There is a reason why there was a major decline in the proportion of private sector employees who joined unions.  It was not just the number of union workers who ended up losing their jobs.  Other workers saw the handwriting on the wall and refused to join unions.

There is also a reason why labor unions are flourishing among people who work for government.  No matter how much these public sector unions drive up costs, government agencies do not go out of business.  They simply go back to the taxpayers for more money.

Consumers in the private sector have the option of buying products and services from competing, non-union companies-- from Toyota instead of General Motors, for example, even though most Toyotas sold in America are made in America.  Consumers of other products can buy things made in non-union factories overseas.

But government agencies are monopolies.  You cannot get your Social Security checks from anywhere except the Social Security Administration or your driver's license from anywhere but the DMV.

Is it surprising that government employees have seen their pay go up, even during the downturn, and their pensions rise to levels undreamed of in the private sector? None of this will kill the goose that lays the golden egg, so long as there are both current taxpayers and future taxpayers to pay off debts passed on to them.

 

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com.

COPYRIGHT 2012 CREATORS.COM

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32 Comments

  1. powertothepeopleComment by powertothepeople
    November 20, 2012 @ 10:05 am

    Agree, the unions once served a purpose when there were no child labor laws and when the early industrial revolution had little or no safety guidelines for the rank and file workers.

    Today, the unions are a far broader political PAC that goes far beyond basic wage and benefit issues but into the workings of many liberal causes. What do the liberal causes have to do with wages and benefits?

    The rank and file members are many times intimidated into voting the way they are told or the alternative for them is not pretty. Hoffa style tactics! In these times it is better to get a little bit of something than a whole lot of nothing!

    Reminds me of a young person that once worked for my company that said to me (one of the owners) that she and some of her co-workers had a right to refuse to do what was asked of them.
    I asked based on what reason…her answer”because she and the other associates do the work so they should make the rules”!
    It never crossed her mind that I invested in the business, paid her salary and benefits, provided her employment. No wonder we have so many problems.

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    • sexysadieComment by sexysadie
      November 20, 2012 @ 11:12 am

      Just take a look at the teacher unions and federations. They clearly have a clandestine agenda and it has nothing to do with education.

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    • crosstownbus1Comment by crosstownbus1
      November 20, 2012 @ 11:28 am

      You obviously live in a cave. Come on out once in a while and get some fresh air. Unions do not intimidate it’s workers into voting as they are told. I was a union member for thirty years and can attest to that. Had it not been for my union, our workers would survive at, or near the poverty level and struggle mightily without healthcare under adverse working conditions. Our members pay their share of taxes and contribute to the economy by purchasing homes and automobiles. People like yourself pay workers minimum wages at best with less than full time hours and no benefits. Your workers are lucky if they earn $15,000 a year. Under your rules, American workers would receive public assistance and have to resort to dumpster diving just to make ends meet.

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    • bna42Comment by bna42
      November 20, 2012 @ 12:52 pm

      “People like yourself pay workers minimum wages at best with less than full time hours and no benefits. Your workers are lucky if they earn $15,000 a year. Under your rules, American workers would receive public assistance and have to resort to dumpster diving just to make ends meet”.

      Crosstownbus, I normally don’t make a comment like this, but those remarks are blatant lies. I have been a union member who was FORCED to join the union in order to work. I have also been employed by a company that had both union and non-union facilities, and I was in one of the non-union areas. We received better raises and better benefits than the union goons in order to keep us from joining the union. I have never had to resort to public assistance or “dumpster diving” because I worked for a non-union company.

      Unions have outlived their usefulness and are now concerned only with greed and power. We now have laws protecting workers in the area where unions were once valuable such as working conditions, hours, pay, etc. so unions are antiquated and need to be put our of business.

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    • mysticComment by mystic
      November 20, 2012 @ 2:09 pm

      For BNA42: Great post. Gave you five stars. Those who pull the ‘union’ rhetoric line do not, or can not pull back far enough to see the reality instead of the fantasy they live within. (yes, I made a huge generalization…shouldn’t lump all union employee’s into this category….just the one’s who push this Admin./union agenda instead of doing what is needed to fix the issue.)

      Business, Corporate or not, small or large, regardless what they make or produce, can not uphold the constant thievery of those who don’t want to work…but live off the work of the ‘boss’. It’s insane. It’s like walking through a mirror and having everything upside down and backwards!

      Was their a point in our history where unions bettered their environment and wages? Yes. Was it needed at that time? Yes. Did business take advantage for profit sake their workers? yes. Is that now the case, or has it been the case in the past 3 decades? No…No NO.

      Give unions enough rope, and they will most certainly hang themselves by it.

      ~M

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    • wallybluComment by wallyblu
      November 20, 2012 @ 4:00 pm

      To crosstownbus,

      You sound like the union workers I know who preach union rights and solidarity but when it came to a strike you would scab jobs for themselfs and berate those others who tried to work other jobs outside their trade.

      There’s another children’s nutsery story the union members should read, “The Little Red Hen”. It teaches that those that don’t work and produce have no right to the products of that work.

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    • mrwilsonComment by mrwilson
      November 20, 2012 @ 5:30 pm

      The old idiom: “There is a time and a place,” seems more important every day.
      Children are no longer being forced to work in sweat-shops in America.
      The blown-out economy before the national health.
      A working lithium-iron-battery, before an elcetric car.
      Add away my fellow Americans…

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    • mrwilsonComment by mrwilson
      November 20, 2012 @ 5:35 pm

      I clearly remember some 35 years ago talking to a young man about his job/fiture. I was visiting in up state New York as I remember. He said his wish was get joining the union and getting on the GM assembly-line.
      I did, I bit my tongue, and did not say this is America kid aim for the sky, dream great dreams; you are free as an eagle.

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    • drifterdanComment by drifterdan
      November 20, 2012 @ 9:13 pm

      You are right. Unions used to be the solution. Now they are the problem.

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    • cap21Comment by cap21
      November 23, 2012 @ 8:23 pm

      unions are a problem but there is a solution have everyone you know who wants change to write call or email the electoral college in every state that Romney won to withhold their vote. if they do it will be up to congress to elect the president

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  2. sanecitizen98Comment by sanecitizen98
    November 20, 2012 @ 10:09 am

    I certainly hope this Twinkie union fiasco will remain in the minds of the consumer when the next union battle comes along.
    I certainly hope the successes that Scott Walker (Wisconsin)in battling back the union continues.
    As for these stupid union workers who killed the “Twinkie” golden egg, I hope they end up spending a rough holiday season thinking about what their greed did to their future prospects.

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  3. bizzybuzzerComment by bizzybuzzer
    November 20, 2012 @ 10:09 am

    Right on Tom…again.
    Man at large has a lot of problems, most of which they bring on themselves. For example; when unions first began forming it was a good thing. So were factories when they first began. Factories started taking advantage, so unions came to rescue the workers. Unions started helping the workers then the union started taking advantage. Now, the Unions are paying the politicians to back them up. Now the politicians are taking advantage of the factories, unions, and workers.

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  4. frankmcmenComment by frankmcmen
    November 20, 2012 @ 10:10 am

    Mr. Sowell is right as usual except for one thing. Public unions are killing the golden goose which is the public itself. They are one of the major reasons our local taxes keep going up. I don’t know why no one has ever made the point that public unions actually EXTORT money from the taxpayer. The schoolteacher’s union, for example says “give us more money for doing less or we will stop teaching your children.” For anyone but a union this would be a crime.

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    • lokiswifeComment by lokiswife
      November 20, 2012 @ 4:33 pm

      My husband belonged to a union for many years before he retired, and when union negotiations were going on, there were representatives of the company on the other side of the table – lawyers, accountants, etc. who let the union know exactly what the company’s position was and how far they would go in negotiating. When public unions are negotiating, there are no representatives of the public and taxpayers sitting there to let the union know where the limits are. Who represents the taxpayers who have to pick up the tab for those pensions, which are larger than in the private sector.

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  5. mvotano58Comment by mvotano58
    November 20, 2012 @ 10:18 am

    The bankruptcy court is forcing them into mediation which is what a good bankruptcy judge should order. Not sure what good it will do but maybe the rest of the unionized workers will get the hint and stop acting like the bunch of “entitled”, spoiled brats they have become. I still think they are on Obama’s radar as something else to crush now that he got re-elected.

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  6. bizzybuzzerComment by bizzybuzzer
    November 20, 2012 @ 10:21 am

    The Postal Workers Union has been telling their members for years that they must vote the Democrat ticket because if the Republicans get control they will sell the post office to a civilian corporation and they will lose their jobs.

    Why do we question the loss of money with the post office? They are a government run department and involved with a union.

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  7. rllarsonComment by rllarson
    November 20, 2012 @ 10:25 am

    Agreed Unions have some uses, but when they start getting greedy it does no good.
    Why is it that a high school graduate, Starting out working a union job at a automobile factory makes more money per hour than some people with a college degree working in the open economy?
    also some unions are worse than the factories, had one vote that i heard of that to keep the extra day of overtime for the more senior workers, they had to lay off 20 newer employees, and by newer only been working there for 5 years.
    Management wanted to keep everyone, and cut down overtime, during the recession. of course they probably also new how expensive it is to hire new employees and train them, when production picks backup, and maybe they did not want to pay a higher unemployment tax, or maybe they thought of the people this would affect. but i think cutting back to just 40hrs a week and tightening the belt for everyone would be better than throwing the other 20 under the bus.

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  8. JDZComment by JDZ
    November 20, 2012 @ 10:35 am

    Particularly the public service unions, but big union at large have become money laundering entities for the liberal political agenda encompassed within the Democrat political party. They confiscate union dues from their members by having the dues taken out of their paycheck by the government and then use that money to fund the liberal politicians that will play their game for them. In this last election, big union poured hundeds of millions of dollars into the Obama campaign and other Democrats running for office. This is particularly problematic at the local level of government and up through the state level where collective bargaining is allowed. This incestuous relationship between unions and politicians has to be broken sooner or later. It is one of the major problems we have with the current cost of government as these unions gain more members as government grows which then gives them more control and influence on government policies.

    This problem is the root cause of the liberal take over of the state of California and the major reason why the state is now 19 Billion dollars in debt and working hard to find creative ways to take more money from taxpayers to pay the bills. It never crosses their mind to streamline and reduce the cost of government itself.

    The re-election of Obama to a second term was facilitated by these unions as the unions not only contributed millions of dollars to the Obama campaign and none to Republicans, but they also became the ground troops for getting voters registered and to the polls to vote for Obama. The Republicans have nothing like that to help them and have to depend on volunteers or paid help.

    My guess is that these unions also sponsored whatever corrupt methods that were used to manipulate the outcome of the election. For example, 140,000 votes in a voting district in Florida where only 100,000 voters are registered. Or in Philadelphia where in 50 voting precincts Mitt Ronmy did not get one vote. This kind of behavior is wrong and unAmerican as it is unfair to those running for election and is unfair to the American people at large.

    These unions and their socialist activist friends are only concerned about taking total control of our country and they have convinced enough naive and stupid Americans to continue to vote for the politicians they have in their pocket who are supporting big union and anti-capitalistic legislation and policies.

    We are on this “transformation” path Obama and these excentric and unAmerican socialists are pushing and all of this will finally play out and our country will become a “me too” socialist nation run by liberal dictators like so many other third world or “nonAmerican” countries in the world.

    The great American experiment will have run its course and the minority of socialist/communist politicians and their union and other backers will have had their way with our great country. Welcome to the Socialist States of America.

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  9. jjkatComment by jjkat
    November 20, 2012 @ 10:36 am

    Unfortunately, what folks seem to have forgotten is that it is our FORM of government that is the goose lays the golden eggs. Instead they now view the government itself as the golden egg layer. That will be the end of the goose.

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  10. BobinmsComment by Bobinms
    November 20, 2012 @ 10:44 am

    I wondered when the Golden Goose analogy would come to mind. I thought of it in term of the takers and makers instead of Wonder Bread. Just a few years ago at the height of the recession a local union struck for increased wages, etc. at a time when everyone else was belt tightening. My union friends at other companies could not believe it. The strike continued for years and the plant finally shut down. There has to be a balance and the pendulum has swung too far left.

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  11. jchernicComment by jchernic
    November 20, 2012 @ 11:17 am

    This scenario is nothing new. The garment industry in cities like Philadelphia and New York, dur9ing the ’50s, lost jobs and companies to southern non-union states because of the increasing wage demands from textile workers unions. This eventually led to outsourcing manufacturing to overseas companies. In Philadelphia, for instance, a city with many garment companies (mens wear, womenswear, swimwear, etc.), lost many large manufacturers.

    Unions used to be valuable organizations for workers, but for the past half-century or so, they have become larger corporate organizations, paying almost no taxes in many cases, and, above all, detrimental to the American workplace.

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  12. wrhcComment by wrhc
    November 20, 2012 @ 11:53 am

    crosstownbus1 – you are the typical blind union supporter that fails to realize your greed is killing this country. Yes unions do intimidate their members to vote for their wants and desires – I also previously was a member of a union. We have lost major manufacturers in our community because unions became so greedy for more – when they were already the highest paid workers in the community?! So instead, they shut down these companies (which moved to Mexico, China, etc…) and not only affected their income – but all of the small businesses that relied on these citizens for economic support. So go try to sell your union propaganda somewhere else! It won’t work in our community in Georgia! With regard to your $15 K per year – I subsequently worked for an OEM NON-UNION automotive supplier as Operations Manager for $82K per year! Even now at Director level I am still not working for a union facility – and NEVER will!

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  13. nickster99Comment by nickster99
    November 20, 2012 @ 11:57 am

    The day of reality will soon be coming to the corrupt state of Illinois. The state is teetering on the brink of bankruptcy and it wont be long before all those public employees ex. teachers. firefighters, police, college professors and all public unions will be dissolved in a bankruptcy court and they will no longer have those golden parachute retirement plans they are currently receiving. They will have 401K style plans like the rest of us!

    I personally cannot wait for that day! I dont care if they were negotiated with the unions. The people CANNOT AFFORD TO SUBSIDIZE THEM ANYMORE. OUR REAL ESTATE TAX INCREASES ARE DRIVING US FROM OUR HOMES WE HAVE LIVED IN FOR DECADES! IT HAS TO STOP NOW!

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  14. bna42Comment by bna42
    November 20, 2012 @ 1:04 pm

    “People like yourself pay workers minimum wages at best with less than full time hours and no benefits. Your workers are lucky if they earn $15,000 a year. Under your rules, American workers would receive public assistance and have to resort to dumpster diving just to make ends meet”.

    Crosstownbus, I normally don’t make a comment like this, but your remarks are blatant lies and you have no idea what you are talking about. You seem to know a lot about non-union employers, so why don’t you offer some evidence to support your lies? Union people always use these lies because they depend on the union rather than depend on their own performance and abilities. They hide behind the union. Members should learn that jobs are not theirs, but the jobs belong to the company, and the company can do with those jobs what they want.

    Unions have outlived their usefulness and are now concerned only with greed, power, and control. We now have laws protecting workers in the area where unions were once useful, so unions are antiquated and need to be put out of business.

    I have worked for non-union companies and have received good pay, excellent benefits, and never had to rely on public assistance or “dumpster diving” in order to survive. My company paid well and offered good benefits in order to keep the union away.

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  15. petersenonmainComment by petersenonmain
    November 20, 2012 @ 1:58 pm

    Anyone that has half a brain will do everything they can to get all states to get in right to work laws which will stop the forcied uninization of workers. It will also stope the forced dues to the DemocRATic party.

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  16. powertothepeopleComment by powertothepeople
    November 20, 2012 @ 2:37 pm

    Crosstown it is you that must live under a rock! I have union members in my family and they relay the stories of intimidation, threats and strong arming to tow the “bosses” line. Keep the union at all cost political rant to yourself.

    With your attitude, I would not be surprised to see you dumpster diving!

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  17. ggfilthyComment by ggfilthy
    November 20, 2012 @ 2:44 pm

    Why is Mr. Sowell….NOT…. an adviser for these morons attempting to run our country? I mean really…. this man has … forgotten… more wisdom than this pinhead waisting space and air in the oval office will …ever… learn! We have so much talent in this country just going to waist. It’s a shame the “regressive socialist/marxist libs” are guided by blind political hackery, hate and pure envy of anyone that over achieves and excels in life. They will see to it that the entire country will burn to the ground… but… I’m looking forward for the PHOENIX to rise out of the ashes.

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  18. fubar22Comment by fubar22
    November 20, 2012 @ 2:53 pm

    When Homeland Security was formed the TSA was never to be unionized because a strike could cause a security problem. i believe they are now unionized, what happened?

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  19. smthnsmllsnthewhthowsmstbobaaaamaComment by smthnsmllsnthewhthowsmstbobaaaama
    November 20, 2012 @ 3:32 pm

    It’s interesting to see the sort of wisdom the Union leaders are using these days. I read a report where the Hostess company had been warning the strikers that if they went on strike the company would go out of business. For the company’s and employee’s sakes, considering how bad the economy could get pretty soon, I hope things get worked out and the employees be thankful that they are even working. And their leader use their head, not their lust for money and power, as their guide from this point forward.

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  20. norbertComment by norbert
    November 20, 2012 @ 3:33 pm

    Unions are not outdated? They are fair? They are Banana Republics unto themselves. My Dad died a 50 yr member of the IBEW. 30 years in, he found that , at his construction job site, the evening shift (electricians) was sabotaging equipment and work done by the day shift. HE did not report this to management, but confidentially reported it to the IBEW uppers, with evidence. The result was that HE was disciplined for breaking union ranks. Nothing was done and the sabotage continued. He was reassigned to a drone job. When he was younger, he was threatened by a Union Steward for giving a neighbor a ride to the polling center. The neighbor was Republican, and he was told he could taxi Democrats only. He died convinced the Unions were to be the ruin of this nation. That was 12 years ago. Before he died, he said he was glad I went to College and didn’t have to join any union.

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  21. jmikes1951Comment by jmikes1951
    November 20, 2012 @ 7:21 pm

    When I was in buisness several years ago I nhad a young employee ask “Just what do you do?” I replied ” I write the checks!” and promptly wrote out his last one.

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  22. rushbabe49Comment by rushbabe49
    November 21, 2012 @ 12:37 am

    And don’t forget that private-sector unions are also employers, and don’t have a history of treating their own employees well. They are unsympathetic to their own employees who try to unionize. Turnabout isn’t fair play to them! The big union bosses are VERY well-paid in comparison to their rank-and-file members; it’s a wonder the members don’t complain more.

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  23. Pingback: Unions kill the golden goose | Western Free Press

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