The aristocracy of labour and the lives they ruin: The lessons to learn from the car industry and Qantas and…

William Hutt studied the rise of the British trade unions in the 19th century and especially the way they developed what he called the “strike threat system” to maintain a rigid stratification of the workers with those in the most powerful and reckless unions at the top, those with less powerful unions on the lower levels and the unemployed out of the game altogether. Those who were prepared to use murder, standover tactics of the crudest kind and sabotage (on the docks, concrete pours, handling perishable goods etc) became what Hutt called “a bloody aristocracy of labour”.

See how this plays out in the car industry. As I read Grace Collier, the unions have got terms and conditions which essentially transfer the government subsidies into the wallets of the unionists without productivity gains to lower the costs and improve the quality of the product to benefit the taxpayers who buy the cars and also enable the car makers to export more effectively. These guys are among the aristocrats of the labour movement with the wharfies and the big building unions. Thanks to the subsidies and gutless management and the Fair Work Act they get remarkable terms and conditions, including very generous redundancy packages when the end finally comes. They also get a ludicrous amount of control over the micro-management of the firm which helps to kill productivity and morale in the firm.

There appear to be in the order of 3 to 4000 jobs at risk in the car makers but they are just the aristocratic tip of the iceberg. I gather that there are some 30,000 employed making parts and components and their jobs are at risk also. What sort of terms and conditions and redundancy packages have they got? What has trickled down to them from the tax payers money that was put into the car makers? The are not the aristocracy, they are the lower orders.

Tough luck you guys. But everybody should think about the options and what it means for the future, or would have meant if the industry had only found the foresight and the integrity to think about the future a few years ago instead of delaying hard decisions by holding out for more support. Do you think the component makers and distributors should have a union that puts more pressure on the management in their small businesses to get more pay with no extra productivity, or do you think we need a system at the top of the car industry (the big business that thought it was too big to fail) that rewards smarter and harder workers who will opt for win/win outcomes by offering productivity and quality gains in return for better terms and conditions?

More on William Harold Hutt (1898-1988). His page in the Rathouse.

His demolition of the myths that sustain the exploitive and divisive forms of trade unionism is now summarized in an ebook so be prepared to spend the cost of a cup of coffee to read it.

This is an extract from his account of “labor’s so-called disadvantage” in one of his books to describe how the minimum wage, once called “the going rate” destroys the employment of people who are not highly skilled and experienced. This is a topic that David Leyonhjelm will address in an op ed in the Fin Review tomorrow (Thursday 12).

The ‘Standard Rate’ essentially an excluding device

The exclusive policy of unions is not confined to the obvious method of visible exclusion by apprenticeship restrictions and the like. Every insistence on an artificially high rate will tend to reduce the number it will be profitable to employ. Those within the combination will still benefit at the expense of those outside. This method of obtaining monopoly is more pernicious than that of apprenticeship exclusion as it enables the monopolists to plead that they are acting in the interests of those whom they are in fact excluding. They can claim that they are raising the standard of living of the very ones whose competition they wish to eliminate, and even get the support of legal enactment to enable them to carry out their policy. The evil in labour monopolies lies not only in their driving the less fortunate to relatively badly paid occupations but also in their raising the cost of living to them as well.

The chapter on “Labor’s Disadvantage“.

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13 Responses to The aristocracy of labour and the lives they ruin: The lessons to learn from the car industry and Qantas and…

  1. And Another Thing

    Very interesting view of union tactics in those days that shows nothing has changed. Whatever is said by either side of politics about the demise of the car-making industry here, one fact cannot be challenged: this is another industry the unions have driven offshore.
    Their makers have been gutless in dealing with the unions. They were in America too, now look at the condition of Detroit. It’s easy to given to union demands when taxpayers are on call to pick up the bill.
    On the positive side, perhaps tariff walls can be dropped to the benefit of those who would like access to good cars that are sold for much more realistic prices elsewhere in the world.

  2. It would all make much more sense if you stopped thinking of it as being an automotive manufacturing business. Cars are not what make them viable, they are not their core expertise.
    They are in the political claim licence business.
    The business model is as follows.
    There is a vague, romantic and poorly articulated sentiment among the voters that the existence per se of a manufacturing industry is important to the nation.
    So governments need a license to make the claim that we have a manufacturing industry, and by making that claim they benefit by receiving votes.
    They therefore purchase that license from car companies by subsidising them.
    But the cost of the licence is no longer justified by the electoral benefit.
    So they are going out of business.
    The cars were only ever a by product.

  3. Bruce of Newcastle

    The problem with being vampire is you suck your victim white until he dies when confronted with competition.

    Bye Holden unionistas. Hope you enjoyed your blood meals.

  4. blogstrop

    Yes, all small businesses should have a “union” or body which protects their interests. It has been increasingly futile to go into small business since Paul Keating declared war on the group in 1986.
    His Fringe Benefits tax was just one retributive measure against the Australian small business middle class for voting Liberal too often, and being rewarded for their enterprise. Above “award” rewards (often via sinecures) are only allowed for Labor mates as far as the ALP/ABC/Left/Green collective are concerned.

  5. tomix

    But, is Holden still a live issue for the next federal election? The ol’ aussie voter has always been partial to make-work schemes.

  6. tomix

    His Fringe Benefits tax was just one retributive measure against the Australian small business middle class for voting Liberal too often

    Suddenly unemployed restaurant workers in Melbourne called this “Keating Stops You Eating”

  7. Ant

    I think it flatters them far to much to say that they’re an “aristocracy” of any kind.

    They are more like mobsters overseeing a sophisticated criminal enterprise which infests every crevice of society.

    I remember years ago reading Mario Puzo’s The Godfather and every time since I hear of some union or Labor thug going about their business I’m reminded of how the mob takes care of business, too, without, perhaps, the characteristic public hit-jobs, of course. Although Kathy Jackson finding a shovel on her front verandah shows that maybe they don’t need to ‘go all the way’ these days.

  8. Poor Old Rafe

    Good to mention The Godfather. That was one of the first of a genre of films that celebrates and glamorizes the mafia. Interesting? Where is civilization heading when this kind of thing becomes standard fare?

    There is also a whole genre of literature, song and film that celebrates the tactics of the trade unions which in the “strike threat” mode are the same as the mafia.

    Unions can have many other functions as they demonstrated when they provided health and welfare services for the members of the cooperative but this was probably killed by the rise of the welfare state in the way that effective and affordable “penny schools” were driven out of business by “free” public education in the 19th century.

  9. Rob MW

    The bottom line is very simple. In both primary and secondary production Australia is a very high cost of production economy which is aided and abetted by the utterances and actions of screaming unproductive socially licenced shitheads who believe they have a God given right to be paid to live off the backs of other people’s hard work and economic risk takers, whether that risk taker is as an employer or an employee.

  10. duncanm

    I’m hoping some good will come of Holden closing.

    Maybe a smart operator will come in, pick up the pieces (and incoming supply chains) and re-hire on reasonable staffing levels and wages (ie: a big FU to the unions).

    If the US and parts of the Euro zone can have profitable auto industries (parts and/or whole cars), there’s no reason we can’t. We used to have a very successful few players developing cutting edge power steering and other systems that were sold around the world, also.

  11. Rohan

    Speaking of aristocracy, I receive emailed updates of award changes from FWA. Sometimes this means 4-5 emails per day. I didn’t get time to read today’s little gem properly so my understanding might be skewed, but the update stated that FWA was going review the awards 4 times a year. Can anyone verify this?

  12. Poor Old Rafe

    the update stated that FWA was going review the awards 4 times a year.

    Was that a Productivity Commission recommendation? [sarc]

  13. hzhousewife

    Good to mention The Godfather. That was one of the first of a genre of films that celebrates and glamorizes the mafia. Interesting? Where is civilization heading when this kind of thing becomes standard fare?

    There is also a whole genre of literature, song and film that celebrates the tactics of the trade unions which in the “strike threat” mode are the same as the mafia.

    Unions can have many other functions as they demonstrated when they provided health and welfare services for the members of the cooperative but this was probably killed by the rise of the welfare state in the way that effective and affordable “penny schools” were driven out of business by “free” public education in the 19th century.

    I suppose this is really poor old Charles Dickens fault, he will be rotating in his grave like a GM engine at high revs……

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