May 14, 2009 - Freedomain Radio - Stefan Molyneux
13:52
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| Hello everybody, it's Stefan Molyneux from Free Domain Radio. | |
| I hope that you're doing very well. This is the auto bailout part two with a slightly more friendly swing at our good friends in Kodiaks and Lumberjacks, the unions. | |
| And just before we go ahead, a wise and deeply learned listener or watcher sent me a correction which I wanted to mention. | |
| That I had said that when you raise the price of labor by 20%, the price of everything goes up by 20%. | |
| Completely wrong. | |
| Well, not completely wrong. Largely wrong. | |
| The price of the labor portion of whatever it is you're producing goes up by 20%. | |
| So thank you for that correction. | |
| Well, I'm actually appreciated. | |
| I think it's really important to understand when we look at the general arc and decline of the auto industry, particularly in the United States, that we understand that masses like this take generations, literally generations, to come into being. | |
| And we'll go over a couple of the major issues that have occurred, so you can put this in context and we will do a usual go-go juice extraction of moral principles from what it is that has been happening. | |
| So, clearly, healthcare costs for Chrysler and GM are staggeringly through the roof, right? | |
| So, in 2006, it was $2.3 billion for Chrysler, scheduled to rise to $4.5 billion per year by 2013. | |
| They have an overall exposure of $10.9 billion for about 80,000 employees through their retirement. | |
| GM for $350,000 has a liability of $46.7 billion in health care costs. | |
| So basically they've become health care companies that subsidize the provision of medical expenses by selling cars, which is not really a very productive thing. | |
| Of course in America health care is Fascistic as opposed to socialistic, right? | |
| In that it is heavily subsidized and regulated by the state, but for profit for certain corporations. | |
| More than 50 cents on the healthcare dollar is spent by the US government. | |
| Regulations run into the hundreds of thousands of pages, but profit is privatized, right? | |
| That's fascistic, right? Cost is socialized. | |
| Regulation is socialized, but profit is privatized. | |
| Whereas in the rest of the Western countries there is socialized medicine, which means that everyone profits except the patient. | |
| So, how did this come about? | |
| How on earth did car companies end up providing healthcare for workers, right? | |
| They don't provide life insurance. | |
| Why would they provide health insurance? | |
| Well, to get the answer to that, we need to go back to the dark and dismal days of the Second World War and after the American entry into the Second World War. | |
| The administration put on wage controls so that the price you couldn't bid more to get better workers. | |
| So your wages were fixed and increases in wages were not allowed. | |
| However, the allocation of resources and competition must still continue in order for resources to be allocated even remotely efficiently. | |
| And therefore what companies did was they began paying expenses for employees rather than providing them bonuses or wage increases, which they weren't allowed to do under the administrative laws. | |
| So if you wanted to get a guy and you couldn't pay him more than a thousand dollars a year or whatever the going rate was at that point, You would say to him, okay, well, I'm going to pay your car expenses, and what's another big thing? | |
| I'm going to pay your health care expenses. | |
| And so, it really was because of a very bad law that was put into place with the idea of controlling inflation, look how well that worked, that the provision of health care benefits and other benefits to employees began to occur. | |
| And this then became something that was not taxable. | |
| This was sort of a concession that was made. | |
| So these non-taxable benefits were handed out in lieu of wages originally. | |
| And then, of course, if somebody was paying, I don't know, $500 a year... | |
| No, the company was paying $500 a year for his health care costs. | |
| I'm talking back in the 50s or whatever. | |
| Probably less. But if the company was paying $500 for health care costs... | |
| Then the person would have the option then when there was no wage controls anymore to say, okay, well, I'll assume that cost because I'd rather have my own choice or whatever. | |
| But then it would become taxable, right? | |
| So it stayed and remained within the corporation, not for the individual. | |
| And this, of course, was partly responsible for the rise of unions, which was the pursuit of non-taxable benefits for employees. | |
| And, of course, as taxes began to rise through the 50s, and particularly in the 60s, and hugely in the 70s, the unions began to negotiate for more and more non-taxable benefits. | |
| Now, some of those could be competed with through other countries, but healthcare could not, because healthcare costs in the U.S. go up quite a lot, quite considerably, which makes no sense, right, relative to... | |
| I mean, technology is supposed to lower the cost of things, as you can see with computers, but, of course, when you have a fascistic... | |
| A healthcare model, then your costs are only going to go up, while service of course begins to decline, though not as quickly as it does in purely socialized healthcare systems. | |
| So this is sort of one of the main reasons why we had the sort of growth of unionism and why these healthcare costs have just become so staggeringly high. | |
| You know, these little decisions, and they're not little decisions in general, but they're little decisions relative to the mess we have now. | |
| Little decisions like wage freezing in the 1940s lead directly to the collapse of the industry two generations later. | |
| And it is a real tragedy. | |
| And of course, it is because the initiation of the use of force is like an escalating wave pool. | |
| Right. | |
| So you throw people in jail who are daring to offer competitive wage incentives or increases to valued workers. | |
| You threaten to throw people in jail. | |
| You pull out the gun and throw it down at the contract table. | |
| And then you get these ever escalating reactions and ricochets and responses. | |
| It is like a wave pool that gathers strength and momentum and becomes a tsunami that wipes out entire industries. | |
| And it is completely tragic. | |
| But this is the context in which people ended up supporting these unions and the unions ended up with that much extra to do because it was the securing to a large degree, to some degree of wage increases, but to a large degree of non-taxable benefits, because really it's the non-taxable benefits that have killed these companies. because really it's the non-taxable benefits that have killed these companies. - So I sort of wanted to mention that. | |
| Another thing that I think is important is that People say, oh, the management of these companies, the Chrysler, GM, and so on, the management of these companies has just been so wretched, they don't know what they're doing, these people are idiots, and so on. | |
| And I think it's important not to use... | |
| A null hypothesis called idiots, right, to compare things. | |
| Oh, well, the answer is that they're idiots. | |
| Well, it's really not a good answer at all, because it stops you from asking intelligent questions, right, to say, oh, this person's just an idiot. | |
| I don't necessarily believe that... | |
| The auto company managers are just idiots, or if they are idiots, there's a better explanation than X, right? | |
| So, I would sort of put out, and I would say, I don't mean to flout my resume, but I think it's relevant here. | |
| I co-founded a company, grew it. | |
| I was the chief technical officer for seven years in the software industry. | |
| And then a marketing director thereafter. | |
| So I have some experience managing. | |
| Now, I mean, most people, I've managed about 30, 35 people, but, you know, still with the prima donnas in the software industry, that could be quite a challenge. | |
| My closest experience was being a director in the theater before. | |
| But I will say that as a manager, you need... | |
| The management that is the most attractive is the one where you can make quick, nimble decisions and really get things squared away quickly. | |
| And you can negotiate with your workers and so on. | |
| And I would negotiate quite hard for higher wages at some of the companies I joined where people were underpaid. | |
| So it wasn't against the interests of those who worked for me. | |
| But the question is, when you have an industry... | |
| That is so incredibly heavily regulated. | |
| As the car industry. | |
| And the regulations go on every level, right? | |
| I mean, you've got the union regulations, you've got the union contracts, you've got EPA regulations, you've got OSHA regulations. | |
| And I'm not saying that protection of the workers is bad, but using the gun is not a good way to do it, as you've probably heard me argue before. | |
| But what kind of manager, like if you're just some brilliant manager, You know, some just hyper genius manager. | |
| Where is it that you're going to be attracted? | |
| What field, what industries are you? | |
| Because really good managers can work anywhere. | |
| Where is it that you're going to end up wanting to work? | |
| Are you going to want to work in an industry where you can't lift a finger without having 12 grievances lodged against you in the next six minutes? | |
| Without lawsuits, without unions phoning your house and frightening your children, without regulators, without the EPA and OSHA and everything. | |
| You'd be so stifled, you'd be so controlled, so restricted, that you couldn't make... | |
| Any reasonable decisions, right? | |
| So why is it that they haven't made decisions to save their companies? | |
| Well, of course, partly because they know that they're such big employees that the government's going to bail them out, which doesn't make them idiots. | |
| Pretty amoral, but not idiots. | |
| And secondly, because the kind of people who really are just dynamic and want to make changes and want to make decisions and want to save things and want to turn things around and want to be decisive I'm telling you, the last place those kinds of people are ever going to want to be is in the auto industry, where your hands are tied with multi-year union contracts and you can't piss off the workers or they'll all go on strike and then you'll have back-to-work legislation, you'll have threats, you'll have regulators all hanging off your neck. | |
| You're in a straitjacket, right? | |
| And somebody who's a real gymnast in the management department does not want to writhe around on a mat I think that's another important aspect. | |
| When you create this kind of hyper-regulated environment, this hyper-violent, controlled, restricted environment, what kind of people want to end up being managers there? | |
| Well, people who... | |
| Stand, stare, and collect the money while the Titanic goes down and then go off in their helicopter, right? | |
| So that's, I think, an important aspect to understand. | |
| When you create an environment like that, you invite certain people into it inevitably, and I think that we've seen the effects of that, which I think is a real shame. | |
| And the last thing that I mention, I'll keep this brief, I'm trying to keep these short, is that The real corruption extends so deep into our personal relations from these kinds of situations. | |
| So let me sort of give you an example. | |
| Like if you're a union rep or some pro-union guy, and your son comes up to you and says, Dad, I've got a great idea. | |
| We're going to put it into practice tomorrow. | |
| You know, I've got this paper route, right? | |
| I've got this paper route. And some buddies of mine, what we've done is we have ensured that no other paper can be delivered along the street. | |
| And if anybody does try and deliver papers along the street where we've got the paper out, we are going to beat the shit out of them. | |
| And that's the business plan. | |
| We're going to get a monopoly on this, and if anyone tries to order other kinds of papers, not from us, from these houses, we are going to slash the tires on their cars and leave a little note saying you might want to switch your subscription back to XYZ Gazette that we deliver. | |
| If your kid came to you and said that he was going to use violence to create an artificial monopoly in his market, What would you as a dad say to that? | |
| Would you say, that's fantastic. | |
| You know, if you need any additional muscle, you throw me a bat and I'll come along on a banana seat bike with tennis balls on the spokes. | |
| Well, of course, right? | |
| You wouldn't. You'd say, oh my god, that's shocking, that's appalling, that's terrible, you can't do that, that's wrong, it's illegal, it's violent, it's this, that, and the other. | |
| And so you see, this is how statism actually really starts to work to undermine family trust and virtues. | |
| The toxicity of the acid seeps into the very marrow of our social bones. | |
| If you would be shocked, appalled, and incredibly upset if your child attempted to increase his income in the same way that you have, and you would call that immoral and wrong and absolutely unacceptable, then you have a problem, because you are defending and touting as morally virtuous and good that which you're doing to increase your income, while at the same time you are castigating and attacking as morally bad or wrong or evil. | |
| What your child would be doing. | |
| This creates a huge intergenerational unease. | |
| And I think that's something that I've touched on in some of my podcasts. | |
| I mean, it is to save the family and to make sure that the family bonds are as strong as possible. | |
| That statism, among other evils, simply has to go. | |
| Thank you so much for watching. | |
| I look forward to your donations. | |
| I will talk to you. I will be talking in July 4th in Philadelphia. | |
| I'm giving a speech. | |
| I will post more details about it on the homepage of my website. | |
| Thank you so much, as always. |
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