Saturday, November 17, 2012

What Happened to the Cream Filling?

Hostess Brand Inc. is closing its doors after more than eighty years in the bakery business. Now we can ask in earnest : “Where’s the cream filling?”

The company that brought us the Twinkie, the Ding Dong, and the white-crossed cupcakes is closing shop. Why is the bread company choosing to cut its last slice? Were they unable to raise the dough? Or was it that the innovations in farming and baking technology so great, that the company could not reinvent itself fast enough? The real culprit, union power, already threatened then engaged a massive strike following cuts to pensions and benefits. The company had already filed for bankruptcy two times in the past ten years, yet the baker's union refused to budge so that the company could make a profit, which includes the salaries and benefits for the employees.

Union force forced a struggling company to its knees. If anyone wants to assess the full impact of union power against businesses and the community, look no further than the massive shuttering down of Hostesss Brand Inc.:

"I've been coming here with my grandmother since I was a little girl," said Amber Owings of San Bernardino . "Bread is expensive. I can buy five loaves here to the one loaf at the other stores, like Staters and those other stores."

Another frustrated customer shared:

"I feel sorry for those people who are losing their jobs, 18,000 people, but I feel like the union could have supported the workers more than they did," said Mike Baldivia of Highland.

The inevitable negatives of union power in the market place has been documented  not just by Milton Friedman, but by a lesser known yet still influential economist William Harold Hutt, whose paper “Trade Unions: The Private Use of Coercive Power” argued that unions which exercise force distort markets and hurt consumers, employees, and their communities.
Rather than faulting certain unions because of the immoral practices of some members, the voters deserve to see the widespread economic consequences of labor union actions on all members, including minorities. One union forces out other potential workers, depriving them of a portion of their paycheck to fund union politicking, much of benefits the union, not necessarily the workers.
Beyond the loss of jobs and snackfoods, California still has to suffer the sclerotic power of pubkkic  unions throughout. While Hostess Brand Inc. could file for bankruptcy and dispossess itself of the union strike-threats, Sacramento cannot disband its operations, nor disperse its workforce with one big pinkslip. The engine of government cannot stop rolling, and unions can keep influencing and demanding of our legislators favor or disfavor on certain bills, like SB 1530, which would have expedited removing teachers  who harm children from the classroom.
For decades, unions have been taking more of the cream filling from the company. In 2003-2004, the massive strike among grocery workers that hammered Krogers Food ultimately led to the dissolution of a number of stores in the region. The Great Recession that followed only pushed more stores to close, with layoffs to follow. Market forces, not union forces, better serve employees, employers, and the consumer. Under Governor Scott Walker, Wisconsin succeeded in implementing comprehensive reforms, followed by the rapid dissolution of public sector unions, with greater savings for cities and school districts. California needs the same reforms, or unions will suck what's left of the depleted "creamy center" of California.
Friedman engaged in a fervent discussion with labor union leaders and other free market economists to discuss "who protects the worker?"Now, labor unions are protected in the First Amendment of the Constitution. No government should interfere with voluntary associations.  Economists dispute and dismiss government legislation which restricts employment at the expense of private enterprise, or which supports collective violence to break up workers and industries which refuse to back to down to labor union actions.
Post Prop 32, California voters should reflect on the ongoing damage waged by collective action against Hostess Brand Inc. Consumers have lost the choice of purchase and 18,500 employees have lost their jobs. While the stockholders of a company can dissolve without greater loss, we the voters of California, who reluctanlty invest our tax dollars in the state, have no authority to rescind our invest, nor does our political class have the clout of the courage to stop the public sector unions from "eating up the cream filling."

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