Obama at Boeing to Praise the Dreamliner He Almost Killed

I am surprised President Obama showed his face at Boeing Corporation last Friday in Washington state to cheering union crowds to praise Boeing’s new 787 Dreamliner, declaring eloquently: “I am here to sell stuff.” 

As the Times account reported:

“the White House also carefully calibrated the optics of the trip, choosing to visit a unionized Boeing plant in Washington State just a few months after the NLRB dropped a lawsuit against Boeing over complaints it built a nonunion plant in South Carolina to retaliate against the union in Washington State for strikes.”

Indeed, the Obama administration’s NLRB held Boeing’s multi-billion Boeing 787 hostage by ruling it could not build an extra production facility for the  Dreamliner in right-to-work South Carolina (after Boeing had already completed construction of its new plant there). The Obama administration blackmailed Boeing just as it was to begin mass production of its 787 aircraft – a project already four years behind schedule and facing stiff competition from Europe’s Airbus 380.  

The Obama administration was telling the nation’s premier manufacturing exporter where it must do business or else.

Had Boeing not caved to its Washington State unions on a new contract, the Dreamliner would have still be in limbo today.

And Obama, the President who threatened to ruin the project on which Boeing’s fate depends, stood before cheering crowds in Washington state to praise Boeing and its new 787, as "the perfect example of American ingenuity."

What nerve! What chutzpah! I imagine the Republicans will wish to revisit this mugging on behalf of organized labor during the election campaign.

American Labor Unions: Underpaid, Overproductive Or Overpaid?

None of the common arguments for labor unions hold water.

Let me begin with three quotations used in defense of unions and of higher union wages:
Our entire economic system rests on the principle of paying someone less than his or her labor is worth.

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There are reasons (unionized) workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: "productivity," "skill level," "quality

read further at Forbes.com

Let Labor Compete: Why Does It Need NLRB Protection?

The National Labor Relations Board May 10 “notice” requires reviews of cases involving businesses that move production to curb labor costs. The May 10 notice was overshadowed by the NLRB’s ruling against Boeing’s new plant in South Carolina, but it could have a more substantial effect. While businesses can locate plants on the basis of other costs, they must think twice about locating production to take advantage of labor cost savings. It is an attempt to intimidate companies that are considering moving operations to right-to-work states. The May 10 Notice will be challenged in Congress and in the courts when it gains the attention it deserves.

The “New Theory of Unions” argued in the 1980s that union labor is more efficient than non-union labor. Its higher productivity offsets higher union wages and does not raise labor costs to employers. The upshot of this new theory was that unions should be able to compete in the marketplace against non-union labor. It would not need sympathetic regulatory agencies like the NLRB to impose higher union labor costs on employers by decree.

This New Theory of Unions challenged the traditional view. According to standard textbook accounts, unions gained higher wages through restricting supply and by collective bargaining. Craft unions used licensing, barriers to entry to the profession, and the other restrictions to drive wages above competitive levels. Industrial unions used the threat of strike to impose higher wages on reluctant employers. The traditional view of unions did not allow for unions to offer employers a “bargain” in the form of a more productive work force.

The New Theory of Unions argued that unions make their members more productive than they would have been without unions. With unions, employees gain a “voice” other than the “exit voice” – that is the sound of the employee leaving. Union seniority rules raise the loyalty of employees. Union members are more willing to train junior employees. They become more interested in the long-term health of the company. The proponents of the New Theory of Unions cited empirical studies of particular industries and professions finding that union workers indeed had higher labor productivity than non-union labor. In a number of cases, the higher productivity offset the higher union wages.

The continued decline in private-sector union membership (now below 7 percent) suggests that unions are not delivering on the promises of the New Theory of Unions. If union labor could out-compete non-union labor through higher productivity, employers would not be tempted to change to non-union labor. Unions would not require NLRB decrees to force private employers to hire their members.

The best union protection would be to deliver higher productivity workers. If they cannot, private-sector unions will continue their decline. The only role left for unions will be in the public sector where wages and employment are determined by politics, not economics.


The fact that unions need activist protection from agencies like the NLRB tells us that unions do not offer productivity advantages to offset higher union wages. If the New Theory of Unions holds any water, unions might be advised to turn their attention from politics to making their members more efficient and productive. It would be interesting to look at union budgets to see how much they spend on improving and raising the skills and motivations of their members.