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Racing to the bottom

What can we say for a governor who puts class warfare ahead of economic development in her state by wanting to keep out companies with unionized workforces?

That is the bizarre mindset displayed by South Carolina Gov. Nikki Haley, a Republican, when she said, “We discourage any companies that have unions from wanting to come to South Carolina because we don’t want to taint the water.”

This extremist statement occurred in the aftermath of a narrow United Auto Workers (UAW) defeat in a February representation election at a Volkswagen (VW) plant in Chattanooga. Haley’s targets included Detroit’s automotive Big Three. Ford’s enlightened response was, “We are proud of our strong relationships with our stakeholders, including our UAW partners.”

Haley’s narrow idea of economic development is to follow the Third World pattern of racing to the bottom to attract companies that treat employees like cheap pieces of machinery, to be used and thrown away at will, with low wages, no benefits or job security, and dangerous working conditions. In her short-sightedness, Haley ignores the fact that unionized companies pay higher wages that enable employees to live middle class lifestyles, spending much more than their non-union counterparts, and thereby serving as the key to sustainable economic growth, for it is demand that moves the economy.

As it is, South Carolina, a “Right to Work” state, has the third lowest level of unionization in the country, at 4.7 percent, compared to 16.3 percent in Michigan, which ranks seventh in unionization. South Carolina has the 10th lowest tax burden and has been rated 22nd in “business climate.” It also ranks among the 10 poorest states. Despite a decade-long depression from 2000 to 2010, Michigan residents enjoy higher incomes and a lower poverty rate.

Haley’s preference for cheap labor and distaste for bringing its people out of poverty fits right into South Carolina’s historical context. This was a state built on slave labor during the colonial and antebellum periods, similar to the West Indies, with its politics dominated by a planter elite opposed to any restriction on slavery. It was such a slavocracy that in 1860, on the eve of the Civil War, its population was 59 percent black.

And it was South Carolina’s hotheaded pro-slavery fanatics who responded to the election of Abraham Lincoln, who wanted to stop the spread of slavery, as president, by seceding before he had even taken office, and then began the Civil War by firing on a Union garrison at Fort Sumter in Charleston harbor.

Tennessee, where the VW plant is located, isn’t as quite as bad, gaining 31,000 union members in 2013. VW, whose employees at its German base are unionized, was neutral towards the UAW unionization attempt.

But Republican politicians, such as Sen. Bob Corker, who was the fiercest opponent of the successful General Motors and Chrysler bailouts, and Gov. Bill Haslam, engaged in intimidation tactics, with Republican legislators threatening to deny VW tax incentives for a job-creating Chattanooga plant expansion if it unionized. These efforts were supplemented by the dishonestly named Center for Worker Freedom, a branch of Grover Norquist’s Americans for Tax Reform, which ran anti-UAW billboards.

The result was a UAW defeat by a vote of 712 (53 percent) to 626 (47 percent). The UAW has appealed to the National Labor Relations Board and asked for a new election, claiming that Republican politicians and outside groups such as Norquist’s improperly interfered in the election. The National Right to Work Foundation responded by suing the UAW and VW, alleging collusion. UAW President Bob King called the lawsuit frivolous.

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