Who is John Galt?

I was very tempted to leave it at that for this month’s insight article. But for those readers who aren’t Atlas Shrugged fans (the first feature film of a trilogy was released last week and you should read the book if you haven’t – it is a slog but well worth it) I thought I would elaborate a bit.

This week the NLRB issued a complaint against the Boeing corporation alleging that they committed an unfair labor practice by moving part of its assembly operation to South Carolina. It is a perfect example of the worst kind of bureaucratic over-reach and exactly the kind of thing Rand wrote about in Atlas Shrugged.

The basic premise of the complaint against Boeing is that the company, by opening up a second operation in South Carolina, effectively neutered the “right to strike” among employees at the plant in Washington State. Because of that the General Counsel wants to force Boeing to bring its assembly line back to Washington, where they can remain hostage to the same group of knuckleheads who made this happen in the first place.
I guess you have to give the IAM credit. You have to be a pretty big pain in the ass to make it seem like a good idea to invest tens of millions of dollars to open up a new assembly line across the country and then spend tens of millions more to train a workforce to operate that new assembly line. Why on earth Boeing decided to invest those millions of dollars in the US is anyone’s guess. I bet they’re wondering the same thing now.

But like any good band of collectivists, the IAM wasn’t going to take this unanticipated (albeit completely understandable) economic action lying down. Once Boeing announced that the assembly line would move to South Carolina – removing the stranglehold the IAM once held and helping to ensure that Boeing could continue to operate its business during a strike – the IAM realized that since striking hadn’t accomplished their goals they needed a bigger stick. Enter the NLRB.

The IAM argued that Boeing’s move destroyed their members’ right to strike. But here’s the thing about the “right to strike.” While employees have the protected right to withhold their labor, the company has an equal right to continue to operate its business, including completely and permanently replacing a workforce out on strike for economic reasons.

Strikes are not supposed to be a one-way street for unions. Which is what makes the General Counsel’s complaint so curious. Boeing has the legal right to completely replace its workforce to counter the economic consequences of a strike. Apparently they made the error of being too big and complex of a company that has to plan its moves years in advance. They chose to prepare now for anticipated labor issues in the future instead of waiting for the next strike to happen.

A friend of mine likes to say that “capital is a coward” and it is true. Most employers are not like Boeing. Unfortunately most of them would respond to Boeing’s predicament by moving out of the US completely where they are not at the mercy of either the IAM or the NLRB.

This isn’t just some academic legal discussion. As our economy tepidly tries to recover from the recession our government should be doing everything they can think of to encourage investment. It should be trying to reduce the fear that those investments will be impaired by some bureaucrat in Washington. Right now we are headed in exactly the opposite direction.

If you were a unionized company and thinking about building a new plant somewhere else would you sit on the sidelines a bit to see how this case goes before investing? Would you be more or less likely to invest in the US if you thought the NLRB could hop in and make that investment worthless just because some union didn’t get their way? Who is John Galt?

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