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Comment by ETH_start | Hacker News Reader

Unions are simply a rent-seeking mechanism to extract more wealth from the shareholders by restricting their contract rights.

Detroit was the wealthiest city in the US in 1950, with the highest per capita GDP in the country. Over the course of the 1950s, 60s and 70s, the UAW union took over, with membership eventually peaking in 1978.

What followed was industrial collapse, and eventually, Detroit becoming a ghost town.

Unions are not good for labor at large, just the labor that is on the winning side of the zero sum rent extraction scheme.

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Note for anyone reading this:

There are anti-union folk who try to blame the unions for Detroit dying. This is ignoring the fact that GM took money that was meant for pensioners, and started spending it on non-pension related stuff.

Their pension savings dropped, and the companies couldn't meet the obligations they promised to. Those obligations were put in place because of the unions.

So yes, you could argue if it wasn't for the unions those pensions would've never been promised to. However, that's victim blaming the folks since the company decided to spend money that effectively wasn't theirs and was put away, and then cry for help after it got caught. Short term profits over long term longevity is what killed Detroit.

There were a lot of other things happening at the same time:

- NAFTA fucked over US industry. - White flight, caused by a multitude of reasons including xenophobia cut down the taxable population of the city. - Lack of oversight and regulations and mismanagement of the city of Detroit.

Blaming Unions for what happened is wild. Without the Unions, detroit would've never seen the boom that it did, and without the unions, the workers would've ended up in a worse situation considering what NAFTA did to US manufacturing.

What nonsense. You do know there were other things going on in Detroit that caused the white flight of the 60s and 70s? Your oversimplification of the collapse of Detroit because of the ebil unions would seem to ignore the unrest of the 60s. I was there. Do a little reading into the civil rights and anti-war movements of the 60s and 70s before betraying your ignorance.

Won’t anyone think of the *checks notes*… poor shareholders?

With increasing retail ownership of US company shares, why on earth wouldn't we think of the poor shareholders?

Is this fair?

Retail ownership may now make up a greater population but for the lower 50% of Americans, stock ownership has been declining. And for all but the top 10% of Americans, the amount of stock owned (as a fraction of all stock in circulation or even inflation adjusted value held) has been declining.

So in a very real sense, the stock market has an increasingly negligible direct impact on the lives of a significant chunk (if not a majority) of Americans (however it still may have an indirect effect via exposure from their employers).

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...

Rolling back protections, or implicitly suggesting that shareholders don't deserve much protection (by virtue of them being wealthy), serves to reinforce this though. If owning shares is made more risky, only those who can afford to take more risks will be able to capture the benefit.

I think the context of the GP that

> Unions are simply a rent-seeking mechanism to extract more wealth from the shareholders by restricting their contract rights.

and the choice between that money going to the workers creating that value vs the shareholders matters.

If ownership of stocks is concentrating and fewer working class Americans are owning stocks, then shifting wealth distribution from the shareholder towards the worker should generally be regarded as good for the working class. And regardless, maybe if more of the money went directly to the workers, they'd me more willing to put money into the market than they currently are.

Wages have stagnated, cost of living has continued to rise, and corporate profits have soared. It's really not a surprise why working class Americans don't invest in the market, they just don't have the money to "waste" or "risk" on it.

If you make the US inhospitable to business, corporations will not site manufacturing plants in the US, or conversely, will be forced to site them in the US and then will pass the costs onto consumers. The end result is Americans having less purchasing power, i.e. lower inflation adjusted wages.

Capitalism is the only model that can maximize economic growth and social development. No amount of ideological wishful thinking will change that.

Shareholders being rewarded for investing is how you get more investment, which is how you get productivity growth, which in turn is the only way to increases wages that is not zero sum, i.e. is sustainable.

Did you just connect two entirely different things together and create a causative relationship?

Wild. Even ChatGPT would yell at you for this hot take lol.

OR it is racism as whites fled Detroit and it became unsustainable big

The Big Three automakers massively contracted as the pension obligations the UAW forced them to agree to made their financial positions untenable.

> forced them to agree to made their financial positions untenable.

They were tenable. The execs literally spent money that wasn't theirs and then said oh no we don't have money left.

They took short term profits, over long term goals and commitments.

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