GM / UAW The general maxim is, "What's good for General Motors is good for America." The accuracy of that maxim has been severely hampered over the years by General Motors' dealings with United Auto Workers.

The labor/management synergy in America is one of most important facets -- and variables -- in our nation's economy. As was illustrated in an extreme example in last summer's baseball labor relations tensions, management and labor work towards a common end, yes, but their means to that end may be entirely different.

Management often holds the upper hand in any dealings with labor, as it controls its workers' livelihood and ability to live comfortably. Labor has only one trump card: the strike. And United Auto Workers used that weapon on December 28, 1936 when it struck the Cleveland Fisher Body Plant, a key plant which supplied the tops for nearly all General Motors cars. By January 13, 1937, 112,000of the nation's 150,000 General Motors employees were on strike. (http://www.uawlocal1999.org/history.htm).

United Auto Workers had essentially taken it upon itself to reorganize General Motors. The result is well-known: The Battle of Bulls Run, the most violent labor/management episode in American history. A one-page contract eventually resulted, but without the help of President Roosevelt and other members of the government, the situation could have been much worse.

In that strike, United Auto Workers set a very important precedent: Strikes today are no longer viewed as a disruption to safety or an unfair strategic...

Rather, they are viewed simply as a tool to an end. How legitimate that end is will vary from strike to strike.
Also, United Auto Workers set the standard for unions: Management now knows that unions are not afraid to strike, and will do so if their demands are not met, or at least if some compromise is not reached. General Motors, as a result, will be more moderate in its everyday dealings with its union, as it knows -- and fears -- the fact that United Auto Workers will strike.

This power dynamic creates several pitfalls as well. Most importantly, the issue of precedent and pride itself. Unions have, over the years, lost the ability to threaten strike, and then bluff if their demands are not met: For instance, the baseball players were powerless to withdraw their strike threat if the owners hadn't agreed to an eleventh hour compromise. With every strike, unions represent all future striking workers, and they cannot back down for fear of jeopardizing future labor/management disputes.

This hard-line approach creates inefficiency problems that history poses no solution to. Even in situations where labor might want to cave on a strike, it cannot do so, so economically speaking, the equilibrium point shifts along the curve.

But regardless, the United Auto Workers / General Motors relationship over the years has established how important it is for labor and management to build a strong alliance. One cannot survive without the other, and through courts and government intervention, we have reached a point…