There's been a lot of overheated rhetoric around the pending National Labor Relations Board (NLRB)/Boeing matter, in which the NLRB is considering whether Boeing's attempt to move plane production to South Carolina from Washington State, because of the more employer-friendly labor laws in the former, violates federal labor law. However, we have an unquestioned winner in the most absurd, off-the-topic commentary: Thomas Geoghegan's piece in the June 20, 2011 Wall Street Journal entitled "Boeing's Threat to Free Enterprise."
I'm addressing his arguments not on account of any personal antipathy -- I have never met or even spoken with Mr. Geoghegan -- but because I think that intelligent discussion of economic options for recovery from the Great Recession requires a critique of ideas which are, so far, off the mark.
Geoghegan argues that the NLRB is acting in the best interest of our economy and of Boeing by making sure that Boeing gets high quality labor -- i.e. union labor -- instead of the poor quality work that would be obtained in a nonunion state, where wage levels are much lower:
The subhead reads: "When major firms move to the South, it's usually a harbinger of quality decline. Why let that happen?"
And the author argues:
"Here is yet another American firm seeking to ruin its reputation for quality. Why? To save $14 an hour! Seriously: Is that going to help sell the Dreamliner? In terms of the finished product, the labor cost is minuscule: $14 in hourly wage, at most."
In order to demonstrate that this is rank sophistry, it is necessary only to refer to the American auto industry, which did not seem to obtain much quality benefit from paying union wages, compared to foreign producers who were not organized either within or without the U.S. Even granting his acknowledged, understandable bias toward unions resulting from his long and distinguished representation of them, his argument that higher wages equate to higher quality is still unfounded.
In any event, this is for Boeing's management to determine, without the NLRB weighing in as to what is in the best interest of the company and its shareholders or even of the national economy. The NLRB is there to enforce the labor laws and not function as a shadow Federal Reserve, Treasury Department or National Economic Council, pursuing its own fiscal or monetary policy.
Recognizing the latter, Geoghegan attempts to argue that the NLRB is simply enforcing the provisions of the Wagner Act, a fundamental labor law which prohibits retaliation against workers for their organizational activities. He is correct that such law exists and must be enforced, but greatly extrapolates insofar as he indicates that it prevents companies from moving work from union to nonunion environments to reduce costs. Many recognized labor law scholars see a major difference between an economically motivated decision to shift production of an entire product line and retaliation against individual workers for pursuing union organization efforts. Even that hard core right wing publication, the Washington Post, makes the same distinction, in arguing that the NLRB's approach is "neither good law nor good business."
Our experience over many years indicates that, for our economy to function properly, government must not try to tell private sector managers what is in their economic interest. Efforts to facilitate the spread of alternative energy technologies -- can anyone say 'ethanol'? -- are but one example of why government makes it best contribution by setting general ground rules and butting out.
Given the fragility of our economic recovery, I feel compelled to speak out in opposition to well meaning, but potentially disastrous, suggestions by Mr. Geogheghan for having government tell a private company how to enhance the quality of its output.