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November 12, 2008 – Comments (3)

This post was inspired by Varchild2008 posts on unions and by Fooluser17's post reminding us all to spend as our soon to be retired President instructed.

Varchild posted that Circuit City's employees were unionized and that they caused CC's downfall. However CC's employees were not unionized, blowing a gaping hole in the theory. There has also been a stunning uptick in the number of posts I have read here blaming unions for the downfall of GM and Ford. Then I read Fooluser17's post reminding us all to spend, and her comment that she meant to only spend what you have.

Central to the GM/Ford downfall theory is the idea that higher union employee costs forced GM to be uncompetitive, because it forced them to sell their cars at prices that were too high, and that no one could afford. This opened the door for Toyota to undercut GM pricing and created opportunity for Toyota to outsell GM. Unfortunately there is a flaw in this theory also. The flaw is that Toyota's car and truck sales fell off a cliff, just as GM's did.

So Circuit City could fail without a union, and Toyota could flounder without a union. And yet XOM and Verizon are doing very well with their unions while GM is not. Best Buy reports slowing sales, and they are not union.

In fact less than 14% of US workers are union members today. And we constantly hear about them on these blogs. "Overpaid gov't workers" and "overpaid Cops and teachers" "too may benefits" is what we hear about the few remaining union workers.

So I got to thinking about all this seemingly unrelated information, and when the smoke finally cleared, an idea had formed.

Sales of overpriced stuff are falling and something needs to be done. As Fooluser says, someone has to start buying, and start buying without credit.

Only overpaid workers can afford to buy overpriced Fords and Toyota's and Cadillacs. Or can afford to buy overpriced TV's and Ipods.

So what we need is more overpaid union employees with overly generous benefits that can allow them to keep buying overpriced cars and electronics even after they stop working and retire. 

So from now on, insist upon being overpaid. Buy overpriced stuff. Restore the upward spiral to our economy.

Join a Union, Save the Economy.

3 Comments – Post Your Own

#1) On November 12, 2008 at 2:16 PM, motleyanimal (57.48) wrote:

Read the sad story of Vallejo, California, where the salaries and benefits of police and firefighters were so exorbitant, they forced the city into bankruptcy.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/10/MNFKVEV4L.DTL

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#2) On November 12, 2008 at 3:12 PM, devoish (96.50) wrote:

Vallejo is a perfect example. From this sfgate article we learn that Vallejo has a 9mil shortfall trying to reach a budget of 80mil. Lets load up the budget to past 80mil all the way to 90 mil. We also learn from the article that Vallejo has 117,000 residents. 90mil/ 117000 equals $769.00 each. Now I'm sure all the City's union employees are making enough to cover their share. So it must be the lower paid non-union employees that do not make enought to foot the bill. They should join a union and raise their living standard, while simultaneously saving their city from bankruptcy. That $769 would be only two weeks work if they were making 20k each year, or $10.00 an hour.

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#3) On November 12, 2008 at 3:26 PM, fooluser17 (< 20) wrote:

Thanks for the mention :).  I think somethimes about the real Great Depression, with its 25% unemployment and the way the people who lived through that were so afraid for the rest of their lives to be in debt or to be wasteful.  Try explaining to someone who lived through the Great Depression that it's ok to carry a $7,500 balance on your credit card, while your home that's only worth $300k has a $150k mortgage on it and a $50k home equity loan that you took out to buy a luxury car and pay off the last credit card you ran up. 

People were terrified of what the future might hold for them, so much so that they took every dime they could and stuffed it in their mattresses.  They didn't trust the banks; the banks could fail (FDIC insurance will now cover you up to at least $100k, it was raised recently but I understand that's temporary).  If they saw Americans spending more than was coming in, they'd be in shock.  If they saw Americans having no money in the bank in savings, in case of an emergency, they'd be in shock. 

If you have the money to spend, don't decide not to spend money out of guilt about the bad economy.  That's the point I made in my blog post.  The woman said it was "inappropriate" for her to shop in this economy.  It would be "inappropriate" for her to open a new credit card account and charge up a storm, yes.  But if she wants a new pair of shoes, or to go out to dinner, good for her.  Pay cash, or pay your credit card bill when it arrives.

We've lost our way, and we need to get back on track.  The past generations of this country would see the hole we have dug for ourselves and be amazed that we be so ignorant.

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