FReeper Book Club: Atlas Shrugged, The Sign of the Dollar

A Publius Essay | 30 May 2009 | Publius

[Publius]

FReeper Book Club

Atlas Shrugged

Part II: Either-Or

Chapter X: The Sign of the Dollar

Ping! The thread is up.

Prior threads:
FReeper Book Club: Introduction to Atlas Shrugged
Part I, Chapter I: The Theme
Part I, Chapter II: The Chain
Part I, Chapter III: The Top and the Bottom
Part I, Chapter IV: The Immovable Movers
Part I, Chapter V: The Climax of the d’Anconias
Part I, Chapter VI: The Non-Commercial
Part I, Chapter VII: The Exploiters and the Exploited
Part I, Chapter VIII: The John Galt Line
Part I, Chapter IX: The Sacred and the Profane
Part I, Chapter X: Wyatt’s Torch
Part II, Chapter I: The Man Who Belonged on Earth
Part II, Chapter II: The Aristocracy of Pull
Part II, Chapter III: White Blackmail
Part II, Chapter IV: The Sanction of the Victim
Part II, Chapter V: Account Overdrawn
Part II, Chapter VI: Miracle Metal
Part II, Chapter VII: The Moratorium on Brains
Part II, Chapter VIII: By Our Love
Part II, Chapter IX: The Face Without Pain or Fear or Guilt

[Logic n' Reason]

Ping

[Still Thinking]

Life at the Twentieth Century Motor Company under The Plan bears an interesting resemblance to life in a unionized plant. Let’s explore why this is so.

Being in a union is similar to communism in that it severs the cause-effect relationship of getting rewarded for superior work. Management is required to treat all workers as precisely interchangeable. Any preference is given on factors such as seniority and sometimes "pull" that bear little if any connection to the quality or quantity of work produced, and most insidiously, over which one has no immediate control. There's no proper way to better your own situation.

Now I'd say a bad union shop is ideologically about halfway around to the fully Communist management method being tried at 20th Century. Superior performance is still viewed as more desirable in theory, but this just leads to disrespect for any who excel in quantity or quality, because it might raise the performance bar for everyone else.

Now that's in a bad shop. I've also been around union shops in which most were pretty good people who were skilled and did very good work. But it wasn't BECAUSE it was a union shop, it was because they were good people, and avoided the pitfalls the union atmosphere might lead to.

In a sense I have a soft spot for unions conceptually, because to say unions shouldn't exist is to say that management, which surely has the advantage over any one individual, should have to face no equalization in their bargaining power, which seems wrong. As an example I worked in a small consulting business, the vice president of which made a negative comment about unionization and that it was bad because it made it impossible to reward the best employees. BUT, his company had a deal with two competitors in town not to hire each other's employees if they were looking to move. So it's bad if the individuals band together to bargain collectively with larger entities, but it's perfectly OK for several of the larger entities to band together and bargain collectively with INDIVIDUAL employees. I couldn't convince him this was a hypocritical postition. Doh! Now I said I had a soft spot for the theoretical union, and the first ones no doubt did serve a purpose in putting a check on abusive management, but that doesn't mean that I'm sympathetic to the real flesh-and-blood ones and how they normally end up operating.

[Still Thinking]

But you know, managers, even ones that claim to be political conservatives, aren't immune to this sort of thinking, and sometimes a healthy dose of hypocrisy to go along with it.

I worked for a guy with a reputation for ruthlessness in business dealings, usually with competitors. He was honest in the sense that at least theoretically, he intended to give a good product for the money, and he wanted to be a good employer to his people (although now that I think of it, the ways in which he chose to do so often felt a little paternalistic to me).

Anyhow, his business was in serious decline, with maybe 20% of the number of employees that it had at its peak, and he was moving to make everyone, from engineers to machinists, into contractors. And not just in name, paying them by the hour and issuing a 1099, he was having people bid jobs at a flat price. So he was pissed when this one machinist was producing more than he ever did when paid by the hour, even though the piece rate for the part he was making resulted in the boss getting it for less than he did while paying hourly. "Why didn't he work that hard when he was on the clock?" he asked. I found the hypocrisy beyond limits. Everything he ever did in his professional life was to make money and better his own position, but if anyone else works harder when they can make more money, it's the equivalent of stealing from him. Moron. Besides, the company was likely to fold within the next year so it was also possible that the machinist was just making hay in the sunshine by working at a rate he couldn't have sustained indefinitely, which is the mindset you have to have as an hourly employee.

[r-q-tek86]

In a sense I have a soft spot for unions conceptually, because to say unions shouldn't exist is to say that management, which surely has the advantage over any one individual, should have to face no equalization in their bargaining power, which seems wrong.

Management does not always have the advantage. I own an architecture firm in Fort Worth. Over the past few years, finding good employees was very difficult because the market was so hot. We decided to give pretty hefty raises to keep the people we had since we couldn't find anyone even marginally qualified. People were moving from firm to firm all over town. Employees had the upper hand.

Now the situation is different. We, as management, have the upper hand as the market cools. It's that same old supply and demand equation.

[Still Thinking]

Well, I’m glad you get a turn at the helm, RQ. The first firm I mentioned was an AE firm doing mechanical.

[r-q-tek86]

It occurs to me that the collectivists have changed tactics. “Need” is no longer the basis for compensation, “victimhood” has replaced it. “From each according to his past sins to each according to his past victimization.” The race now is not to be the most needy, but the biggest victim.

[Publius]

The race now is not to be the most needy, but the biggest victim.

Very good. And Gresham's Law also applies to victims, in that bad victims drive good victims out of the market.

(I should make that my tag line.)

[r-q-tek86]

I think I like it better the other way. Worrying about how to get it all done is better than worry about getting something to do.

In either case, I do my best to trade value for value and not try to abuse those times where I have the advantage. I think my employees know that and they didn’t try to take advantage during the boom times. Of course, we (I have a partner) tried to stay ahead of them instead of waiting for them to make demands. In return, they busted their asses when we got to chrunch time and couldn’t find new hires.

We have not had to lay anyone off... yet. I dread that because I have a really strong group.

[r-q-tek86]

the machinist was just making hay in the sunshine by working at a rate he couldn't have sustained indefinitely, which is the mindset you have to have as an hourly employee.

I've always tried to live by the axiom "give two hours of effort for every hour of pay and you will never be in need for a job"

[Publius]

There is another angle on unions.

A century ago, 10,000 employees died every year on America's railroads. The railroad companies simply wrote this off as the cost of doing business. Life had no intrinsic value.

It was the unions that forced safety on the railroads, defining safety standards that still are in effect today.

[Still Thinking]

Exactly you have honor and treat them with respect because that's who you are. This inspires the same sort of attitude in them and/or causes similar minded people to gravitate toward you. That's exactly the way it should work, but too seldom does.

As for myself, it was precisely the facets of office life that had no bearing on the job at hand, and conceptual hypocrisy like what I've described that led me to decide the corporate world isn't for me, and I struck out on my own. Nothing but my performance (and the level of demand in the market) has any effect on my compensation. Customers relate to you in a much purer, less political fashion as a contractor. If the work you did works, you're OK, here's your check. Very clean, and based on only proper factors.

The guy at the second place always presented himself as a big free-market conservative, abhored excessive regulation, etc, etc. But he was all for government projects whose beneficiaries he liked. For example, he was a big sports fan, and he was incensed that anyone would oppose municipal funding for a new pro baseball field. My attitude was that if there were a market for a pro baseball team in town, building a field would justify itself. Why should the taxpayers subsidize businesses whose business model is inadequate to the circumstances? So I always though of him as a faux conservative, or at least a fuzzy minded one. I recently learned that he was a big Obama supporter in 2008. Finally showing his true colors I guess.

[Still Thinking]

Very true, but one can certainly reach unusual heights in a burst that is known beforehand to be limited in duration.

[r-q-tek86]

bad victims drive good victims out of the market

Exactly.

I don't have to deal with it very often, but sometimes I am required to use HUBs (Historically Underutilized Businesses). Instead of being free to use the best qualified, I am forced to select consultants based on their skin color or what is in their pants. The HUBs know the game and take full advantage.

[Still Thinking]

That's kind of my take as well. When they were founded there was certainly a problem crying out for a solution. And, as I noted before, saying the concept of a union is evil as my conservatives do, seems inequitable. But the real-life implementation is often very bad for all involved.

[Still Thinking]

Oops. “many” conservatives

[r-q-tek86]

I have a friend who is a big ol' flaming liberal... nearly a Marxist. He always throws the "unions as a means to ensure a safe workplace" argument at me. I'm not sure of the answer.

**SPOILER ALERT**

I don't think that life as described in the next few chapters is any more realistic than the worker's paradise view from the collectivists. I concede the need for unions when that balance of power tips too far toward management's favor. But how is management protected when the balance shifts the other way?

[r-q-tek86]

Off to start Saturday chores. Thanks for the exchange.

[Still Thinking]

I have a friend who is a big ol' flaming liberal... nearly a Marxist. He always throws the "unions as a means to ensure a safe workplace" argument at me. I'm not sure of the answer.Explain that some freedom (to negotiate independently, etc.) is being traded for the safety, then go Franklin on him and say that people who would willingly trade away freedom to get safety deserve, and will get, neither. Does this guy seriously think that in today's safety obsessed world, where you have to wear a helmet to take a piss, getting rid of unions would lead to unsafe workplaces? If he has a sense of humor and you've made the point that unions trade freedom for safety, you might even say that since we all know the dial has been twisted FAR too far toward safety, abolishing unions might help restore the balance!