Hostess Bankruptcy: What Role Did Policy Play?

http://finance.townhall.com/columnists/chrisedwards/2012/11/19/hostess_bankruptcy_what_role_did_policy_play ^ | November 19, 2012 | Chris Edwards

[Kaslin]

The demise of Hostess and Twinkies is not a national emergency, but it is certainly sad when a major business goes under and thousands of people lose their jobs.

If federal and state policymakers want to play a useful role here, they should study why Hostess couldn’t make a go of it. Were there tax or regulatory factors that stood in the way of the company earning a decent rate of return?

Unions were an important factor that pushed up the firm’s costs and reduced its operational efficiency. The policy reform here is obvious for people who appreciate market economics: repeal America’s coercive union laws. If policymakers don’t kill so-called collective bargaining, these rules will keep on killing companies.

Sugar apparently played a role in the demise of Hostess, as discussed in this excellent CSM article. Food manufacturers that use a lot of sugar are at a competitive disadvantage in the United States because federal import barriers on sugar substantially push up prices for that production input.

Perhaps taxes played a role as well. Income taxes may not have been a big factor if Hostess wasn’t earning profits in recent years. However, I suspect as a manufacturing firm, the company payed substantial property taxes. In this study, I discuss the anti-investment effects of state/local property taxes on U.S. businesses.

Some Democrats and Republicans may use Hostess as a political football, and some politicians will probably want to bail out the company. A more constructive response would be to find out what governments are doing that makes it so hard for some manufacturing firms to survive in this country.

[ridesthemiles]

Unions are the new Organized Crime syndicate.
They infect private employers “””””

Just remind yourself- The NLRB-National Labor Relations Board—which operates outside the approval of Congress, wants EVERY SINGLE EMPLOYER in the country to give them complete data on every single EMPLOYEE they have—all personal data & all pay scale data & history.

We were raised to think that only ourselves, our employer, the Social Security Administration & the IRS would ever have access to such information. Now that info is supposed to be handed over to unions? Some backstabboing that is!!!

The Unions are striving to make every single private employee a UNION member. Obama has promised Card Check to Trumpka (union thug) in his 2nd term. What would prevent the Unions from forging a persons vote on card check to unionize a company?

If I were still in business, I would absolutely shut the doors before I would comply with the NLRB. There are many parts of the Federal government which are totally out of control & NLRB, EPA, HHS and Homeland Security are only the tip of the iceberg.

This has to stop or there will be only the owner of each company working—non-union.

[factoryrat]

Headed that way all along. Hostess declares bankruptcy, sells rights and equipment to Bimbo in fire sale, whole operation moves to Mexico, problem solved. Does that mean that the price of twinkies will go down now?

[ksen]

I keep hearkening back to the 1950s when everything conservatives don’t want to do, i.e. unionization, high taxes, etc., was occuring and yet we had tremendous growth and a strong, vibrant middle-class.

How on earth were these things possible if high taxes and unionism are so destructive?

Of course the only thing the above items are destructive too is the accruing of most of the nation’s income among very few people but I’d like to hear your opinion.

[RedMDer]

[Foolsgold]

We had a wonder bread bakery here in San Diego,when you went downtown the smell of fresh baked bread wafted over the city, kinda like San Fran sourdough used to. Enter environmental wackos, "Air pollution" ended it all, as filter were required to eliminate all aroma. Sad day in San Diego.

[traditional1]

"Of course the only thing the above items are destructive too is the accruing of most of the nation’s income among very few people but I’d like to hear your opinion."

I live in an area that once was very "vibrant" with UAW, USW, and other Blue Collar Unions that drove their wages and benefits to the sky. ALL those industries are GONE, as they priced themselves out of the market, and those "very few" you say accrued the wealth are STILL accruing the wealth, but now are doing so with foreign investments.

Those who are willing to work (up until the past 10 years or so), could start out on their own, free to build a business, start a trade, provide a service, etc., free of government over-regulation, over-sight, over-red-taped, etc., and now INCREASINGLY over-taxed, and STILL trying to stifle them even more with MORE taxes, just to buy more votes with handouts, and destroy/control/take over private sector business.

In the early days of America, the least among us were helped up by direct charity and benevolence, not FORCED handouts to establish the handouts as the SOLE source of income, housing, food, etc.

Unions depress work ethic, and foster the same style of DEPENDANCE ON THEM, and funnel money to their benefactors from the Dues of the Members.

America is now a 3rd world-style country, with a virtual Dictatorship (executive orders and regulation, bypassing Congress), and the Socialist Workers' Party is alive and well, just like ACORN, living under assumed aliases like SEIU, AFSCME, UAW, AFT, etc.

[traditional1]

"Of course the only thing the above items are destructive too is the accruing of most of the nation’s income among very few people but I’d like to hear your opinion."

I live in an area that once was very "vibrant" with UAW, USW, and other Blue Collar Unions that drove their wages and benefits to the sky. ALL those industries are GONE, as they priced themselves out of the market, and those "very few" you say accrued the wealth are STILL accruing the wealth, but now are doing so with foreign investments.

Those who are willing to work (up until the past 10 years or so), could start out on their own, free to build a business, start a trade, provide a service, etc., free of government over-regulation, over-sight, over-red-taped, etc., and now INCREASINGLY over-taxed, and STILL trying to stifle them even more with MORE taxes, just to buy more votes with handouts, and destroy/control/take over private sector business.

In the early days of America, the least among us were helped up by direct charity and benevolence, not FORCED handouts to establish the handouts as the SOLE source of income, housing, food, etc.

Unions depress work ethic, and foster the same style of DEPENDANCE ON THEM, and funnel money to their benefactors from the Dues of the Members.

America is now a 3rd world-style country, with a virtual Dictatorship (executive orders and regulation, bypassing Congress), and the Socialist Workers' Party is alive and well, just like ACORN, living under assumed aliases like SEIU, AFSCME, UAW, AFT, etc.