Barack's big fake-out

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Healthier unions mean a weaker economy

The Democratic Party Convention in Denver has been called political theater, but it was really a masquerade ball. Again and again, speakers invoked the language of Margaret Thatcher and Ronald Reagan -- stressing the value of hard work and responsibility for self and family -- while advancing a set of pro-union and collectivist economic policies. If today's Democrats had their way, they would put the United States in the same approximate position as pre-Thatcher Britain, when the streets of London were choked with garbage because of a strike by sanitation workers and Britain was known around the world as "the sick man of Europe."

The most overworked word at the Democratic Convention was "work" itself. Barack Obama used the word 35 times in his address. Joe Biden mentioned it 22 times. Both told stories of parents and grandparents who worked their fingers to the bone in realizing the American dream of building a better life. Mr. Biden's speech included a touching vignette about his father, who told him, "Champ, when you get knocked down, get up. Get up."

But the real thrust of the message that Mr. Obama and he gave to the cheering multitudes in Denver was: You are entitled to your job. If you are hit by a foreign competitor who is leaner and hungrier and less coddled than you, get down and stay down, and expect the government to put you back on your feet.

When Mrs. Thatcher became Britain's prime minister in 1979, she assumed leadership of a country that had been devastated by several decades of ruinous economic and social policies. This was due to the same aversion to competition and international trade, and the same misplaced faith in the ability of government to act as the engine of progress and the guarantor of jobs.

In her speech to the Conservative Party in 1981, Mrs. Thatcher said: "We have to earn a living in a world that can choose between the goods that we produce and those of other countries. . . . And here let me say plainly to the trade union leaders: You are often your own worst enemies. Why isn't there more? Because too often restrictive practices rob you of the one thing you have to sell -- your productivity. . . . When two men insist on doing the work of one, there is only half as much for each."

In his speech to the Democratic convention, Mr. Obama said: "I'll help our auto companies re-tool, so that the fuel-efficient cars of the future are built right here in America. I'll make it easier for the American people to afford these new cars. And I'll invest $150 billion over the next decade in affordable, renewable sources of energy -- wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and five million new jobs that pay well and can't ever be outsourced."

One has to wonder who Mr. Obama thinks he is to suppose he'd be able to make so many correct calls in directing investment flows in one industry after the next while sitting in the White House. But his presumptuousness is not unprecedented. The Labour Party politicians in Britain who came to power at the end of World War II shared the same enthusiasm for government direction and micromanagement of the economy.

Like the Democratic Party of today, the Labour Party of yesteryear was obsessed with the issue of job security and fearful of competition from abroad. However, by the mid 1970s, having seen the country's fortunes decline for three consecutive decades, even the Labour Party could see the futility of its centralized, interventionist approach. Labour's Jim Callaghan, the last prime minister before Mrs. Thatcher, admitted in Parliament: "Let me say that of course there has been a fall in peoples' standard of life. It has fallen this year and will fall again next year."

In revitalizing the British economy, Mrs. Thatcher lightened regulation, reduced trade barriers, privatized a raft of publicly owned companies, lowered taxes (especially for the most highly taxed, which is to say those at higher income levels), and went to battle against the powerful trade-union bosses in order to establish greater democracy within the unions. She outlawed the closed shop and required ballots before strikes and ballots in the election of trade-union leaders.

One thing she did not do was to set a goal of full employment -- insisting that "jobs (in a free society) depend not on government but upon satisfying customers." Contra Mr. Obama, she also stated: "The fact is that in a market economy government does not -- and cannot -- know where jobs will come from: If it did know, all those interventionist policies for 'picking winners' and 'backing success' would not have picked losers and compounded failure."

Due to the success of the United Auto Workers in making unreasonable demands over an extended period of time, what the Iron Lady might drily refer to as "an increase in wages and benefits out of proportion to any increase in output or productivity" has clearly crippled today's domestic U.S. auto makers. An Obama presidency would give a huge and unwarranted boost to union power and privileges.

The misnamed and undemocratic Employee Free Choice Act -- co-sponsored by Mr. Obama and almost certain to pass into law if he becomes president -- would go a long way in extending union power over a far greater number of private-sector companies by taking away the right to a secret ballot in union elections. It would give union organizers the time and opportunity to badger and intimidate workers who refused to sign union cards.

If, under an Obama presidency, the unions succeed in organizing Wal-Mart -- now the biggest target in their sights -- it will have one entirely predictable result: not the protection of jobs but the destruction of jobs by slowing or stopping Wal-Mart's growth. Nor will it help U.S. consumers if Wal-Mart is forced to hang out new signs saying "Everyday High Prices."

- Andrew Wilson, an independent speechwriter based in St. Louis, was Business Week's London bureau chief from 1981 to 1985.


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