Unions Threaten India's Economic 'Miracle'

Imagine a town that has been starving. And then one day a family arrives, starts up a farm and, slowly but surely, they start to produce food to feed the people.


But then imagine that certain people in the town contend that the farm is not producing enough food fast enough, and so they kill the farmers.


This sounds preposterous but this is exactly the way that organized union labor on the political left has operated throughout the 20th century, and is operating in the nation of India today. And if you look at the way that socialism/communism always has acted, you understand that their methods are always counterproductive to the common good.


Just consider that Soviet communist tyrant Joseph Stalin killed millions of productive Ukrainian farmers simply because they would not join his ineffective collectivization process. Because the farmers knew better, that collectivism would result in failure and starvation. Because those farmers had figured out on their own, over centuries of trial and error, how to cultivate food in the relatively limited technological regime of the day.


Today in the nation of India we are seeing the roots of this type of story acting itself out. In the rural town of Coimbatore, a subcontractor to Toyota was prospering making instrument panels for the worldwide auto industry. In late September a group of radical left-wing labor activists angry about a wage freeze broke into the office of the Pricol Ltd. human resources manager Roy George and killed him.


This is part of a movement across the globe in which leftists have gone into companies and demanded that the wealth of those companies be spread according to union ideas, not according to market forces.


And increasing government  pressure and union violence against increasing numbers of Indian companies to refrain from making adjustments in wages and hiring practices to accommodate world markets may make India uncompetitive just as that nation is getting a foothold in the global economy and relieving its widespread poverty.


America has faced the same types of problems from the unionized left. In the postwar prosperity of the 1940s and 1950s, American union activists, not content with a growing and stable steel industry, called six major strikes, requiring the government to step in twice to prevent the whole American economy from collapsing from its dependence on the embargoed steel.


Ultimately inflexible labor demands pushed the American steel industry into ruin, just as constant strikes and labor actions doomed many railroads and other industries. The automobile industry is under assault today, while many American states are being drained of wealth by their public-employee labor unions with exorbitant wage, benefit and pension demands.


The death of Mr. George and threats against other Indian auto industry officials is having a chilling effect on the Indian economy as it emerges from decades of stagnant, bureaucratic socialism after the nation’s independence in 1947. During its first 44 years of independence from Britain, India relied on a Soviet ‘command economy’ model. This doomed the nation to poverty and a huge government bureaucracy, which was notorious and widespread.


India today has a growing middle class of 300 million that has emerged from poverty thanks to capitalist reforms put into place beginning in 1991 by reform-minded finance minister Manmohan Singh who, since, has become prime minister and recently was feted at the White House.


India has grown rapidly since, with an average 8% growth in the last 5 years. But in 2009 that has fallen to 2.4% because of the worldwide economic downturn, but also because violent union activists have organized and are methodically assaulting the goose that is laying the golden eggs.


Despite reforms, Indian manufacturers still have to deal with two labor laws from the socialist years, one that requires that a company get government permission to fire workers, and the second that prohibits employers from using temporary workers. This hamstrings the growing Indian manufacturing sector because it can take years just to dismiss a single permanent employee, while restrictions on hiring temp workers cripples the flexibility that often is necessary to incubate fragile growth. “We can’t be a capitalist country that has socialist labor laws,” said Jayant Davar who is president of the Automotive Component Manufacturers Association of India.


The actions in India are having a global ripple effect just as American steel strikes in 1952 and 1959 had the effect of adversely affecting the entire American economy. A strike at India’s Rico Auto Industries parts plant stopped production at Ford factories in Canada, Michigan and Illinois. And violence is becoming more common. In 2008 the CEO of Graziano Transmissioni India Pvt. Ltd. was killed by a mob of workers suspended from the plant.


Indian labor activists are publicly condemning the violence, but typically that is just talk because many of these attacks are planned in advance, often out of earshot of the accusing leaders in order to clear them of complicity. These activists are claiming that the companies are committing “economic violence”. But the simple hiring flexibility that these companies are requesting is necessary to growth, while outdated labor laws always lead to unemployment and stasis which capitalism is currently vanquishing in India.


Remember last summer when the health-care debate was going on? And remember how conservative protesters opposed Obama’s plan? So Obama asked his allies to show their support for health-care reform, and then do you remember what happened?


In less than 24 hours from Obama’s call, SEIU union thugs were literally beating conservatives up in the streets of America.


Do you see a pattern here of union violence? And can you imagine where this all could be headed were we not a nation of laws but of mob rule like some parts of India?


Indeed there is a pattern. Because leftist socialism is an ideology of anger, violence and poverty while capitalism is based on growth, optimism and prosperity. And once those factory owners decide that India is too dangerous for their workers and for their managers, they will leave India behind, poor as it was in its socialist years, and less and less likely to see a return of prosperity unless and until the violent forces of the left are reigned in by laws protecting liberty.


Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.