The Importance of Unions and Oracle

 Executive Summary

  • South Korean workers have been trying to unionize against Oracle.
  • This gets into the broader question around labor unions and how labor unions can be viewed as a precondition for a participatory government


This article was written in response to the story about the Oracle’s workers in Korea forming a union and going on strike.

“Most of the 1,000 employees have not had a pay raise since they joined the company in 2009. A section director who joined the company in 2009 earns just W2.3 million a month, while a worker who was hired later makes W4 million a month” (US$1=W1,075).

Kim said this prompted some workers to quit and try to rejoin the company to get better pay. On top of that, Oracle has been downsizing since last year, shifting its focus from servers to the cloud, which resulted in the loss of around 200 jobs. More than 100 claim that they were shown the door against their will.

Oracle said the downsizing came at the orders of headquarters and it is “negotiating possible wage hikes” with workers.

The strike exposes the ugly underbelly of what it is like to work for a foreign company that was once praised for its modern approach and strict adherence to the nine-to-five workday. In reality, workers often find themselves anxious for their jobs and little better off than cyber-serfs.

One IT industry source said, “Most foreign IT companies have key operations like R&D based overseas and only the marketing operations are based in Korea. As a result, poor results or a shift in the main area of business results in downsizing and layoff pressures.” – Chosen

This brings up the question of whether Oracle can afford to pay higher wages. My initial comment was the following:

“The problem is I don’t know where Oracle is supposed to get the money to pay these Korean workers as a decent wage. Larry Ellison only has a net worth of $57 billion. Safra Catz has a net worth of 1/2 billion. If we look at Oracle’s margin on support, which is 93%+, there is just no money there.”

Labor Unions Lead to Communism?

Secondly, as any good US Republican will tell you, labor unions lead directly to communism. For instance, labor unions are what lead to the decline of the Soviet Union….except,

Soviet Labor Unions?

…..they weren’t. If you tried to organize in the Soviet Union, you ended up with a one-way ticket to Siberia. The Soviet Union was not only increadibly anti-union, The Soviet Union was renown for its forced labor camps, which dotted the Soviet Union.

The Soviet gulag system was mind-boggling. Each dot on this map was a Soviet Gulag. Malnutrition was an endemic part of the Gulag system. In many cases the workers died in the camps. 

Does this look like an environment that is conducive to labor unions?

“Forced labor was used extensively in the Soviet Union as a means of controlling Soviet citizens and foreigners.[1] Forced labor also provided manpower for government projects and for reconstruction after the war. It began before the Gulag and Kolkhoz systems were established, although, through these institutions, its scope and severity were increased. The conditions that accompanied forced labor were often harsh and could be deadly.” – Wikipedia

The US History with Unions

The historical time when the US economy performed the best was when the US had the highest labor participation. Higher wages drive an economy forward as it puts money into the hands of people who spend far more than they save. US workers have not seen their wages increase since 1973 in real terms (not inflation adjusted), and not coincidentally union participation has dramatically declined since 1958. There is a direct negative correlation between union participation and the percentage income going to the top 10% of the country.

See the following graphic.

People think education is the key to higher incomes. It is for one person versus another person (that is as a differentiation device) but not in the aggregate.

Real wage growth has declined in lockstep with labor unions. This is because wages are as much about leverage as about productivity. Under slavery, the slave is paid nothing. This is true even though the slave may be quite productive. It is the change in the political status of a slave (that is they may not be owned under the law of the land) that allows them to receive compensation.

This issue of stagnant wages has been true even as the percentage of the population investing in education and obtaining degrees has increased. Nearly all the gains in productivity since 1973 have gone in compensation to the top 1%.

To people like Ellison and Safra Catz.

This is the graphic that Larry Ellison and Safra Catz and the rest of the super rich do not want you to see. Unless as a worker you have leverage against employers, there will take every single bit of productivity gains, every single benefit from all scientific advancements, and place is into their bank accounts instead of paying out wages. 

And the decline is wages is why the percentage of GDP that goes the wages continues to decline: 

Notice the decline from 50% of income going to labor to 43%. Why are all the people getting educated — so that labor can receive an ever-declining percentage of national income?

Will the government report out this statistic, or will they instead focus on the unemployment rate? Ask yourself, have you ever seen this graphic before?

The Answer Resides in Education….or Labor Unions?

Education increases income for the individual who attains the education that differentiates them, but education does not increase the net leverage of the population vis-a-vis the employers. Unions increase the net leverage of not only those workers in unions but also for non-union workers, as the political lobbying to change legislation to better the lives of workers (such as overtime pay, pregnancy leave, safety regulations) overflow into the non-union bucket of workers.

All of this is along the backdrop of people fawning over the Royal Wedding. Game of Thrones has tried to educate even people who have not studied history about royalty. Once can head on over to Saudi Arabia to see what actual royalty looks like (where 1500 members of the House of Saud own 70% of that nation’s wealth and 20% of the population lives in poverty).

But the general population is still not getting the memo. The British Royalty is “quaint” because they no longer hold power and are no longer able to either chop off your head or use your children as cannon fodder in some war to be fought for the glory of “King and Country.” The old British Royalty enjoyed acting as a parasite on its subjects. Mistreated in the extreme by the feudal system, and yet the offspring of these abused people now revere the modern UK royal family. This behavior generalizes. If you talk to most people, they oppose labor unions. You know, because they are for communists. But they show appreciation for Larry Ellison’s wealth and for UK Royal Family weddings.

This would be the definition of stupidity.

Lazy People Gravitate Towards Unions?

When discussing this topic on LinkedIn a person who is quite bright observed the following:

“Unions do have a dark side too. In Spain were a refuge for those who did not want to work and loved sabotaging projects.”

As a proponent of unions, you might expect I would disagree with this proposal. However, I don’t. Furthermore, I think there is an obvious mechanism at play for this claim.

Psychologically, the less capable a person is, the more they seek the protection of a larger group. This is not exclusive to unions, but to large organizations. One reason large organizations are not a good fit for me is they are filled with people who desire to parasitize my work and my effort in order to maintain their standard of living. We have a specific name for this exploitation, which is the word “management.”

I produce a large amount of research output, analysis, etc.. If I worked for Deloitte or SAP, people that talk a lot, but are unproductive would seek to ride me like a hobby horse. In fact, that happens every time I subcontract to a large multinational. It happens when people who I have not talked to for 13 years, and want free competitive intelligence on SAP, introduce themselves to me as an “old friend.” All these companies are filled with lazy, and intellectually middling people trying to take credit for my work and for the work of others. I consider that lazy. Actually more lazy than someone snoozing on the job in a factory someplace.

Lazy People All Over!

So my proposal is that lazy people are all over the place. They are in labor unions, they are in the government, they are in large companies.

Lazy people are the default and will always exist. However, it is far easier to not be lazy if you are paid well. Some people are lazy because they are paid very poorly. For example, if you look at people that work at Wal Mart and are paid $10 per hour. What is their motivation to work exactly?

If that was my pay I wouldn’t. Would I be lazy at $10 per hour? Absolutely. Does getting paid $10 per hour get you excited about going to work? I thought not.

The Hypocrisy of People on the Top Accusing People at the Bottom of Being Lazy

The problem of accusing people of laziness is that many people doing the accusing are far better paid than those that are accused of being lazy. Second, laziness is endemic even in high paid professions. However, it is covered up because those people have positions in the hierarchy where exploitation of others is part of the job description and claim the work of other people as their own.

Labor Unions as a Precondition for a Participatory Government

We don’t have a mechanism for replacing what unions bring to the table. Secondly, without labor unions feeding the political apparatus with donations, the political apparatus promptly turns to industry sources and then turns against the population. The US is currently declining in anti-trust enforcement, in environmental protection, in labor protections, in universal schooling, because as per usual companies and the super rich don’t care about any of those things. At the time I am writing this we have a new scandal where the head of the US Environmental Protection Agency buried a report about grave water pollution because industry does not like those types of things published.

  • Unions support more participatory governments (I hesitate to use the word democratic, as none of them are). Unions decrease income inequality and the concentration of power. These are critical factors and I think necessary things to have in order to have the types of societies that we want to live in. What do the worst countries to live all have in common? They have very little power exercised by labor in their political systems. Countries like the US that used to have higher labor participation are now worse in all the dimensions that apply to human well-being and happiness than we were in the past. It is time to wake up to this fact, and to the underlying factors.
  • What country has done extremely well in protecting its manufacturing competence from being taken out of the country and hence reducing wages? Germany, with powerful unions that did not allow it. See the following description of the different paths taken by US manufacturing policy versus German manufacturing policy.

Labor Unions Helping Influence Manufacturing Policy

“But it’s worth noting that one high-wage advanced manufacturing nation has seen its workers thrive in the past 40 years: Germany. Like American multinationals, all the iconic German manufacturers—Daimler, Siemens, BASF, and others—have factories scattered across the globe. Unlike the American multinationals, however, they have kept their most remunerative and highest-value-added production jobs at home. Nineteen percent of the German workforce is employed in manufacturing, well above the 8 percent of the American workforce. German industrial workers’ wages and benefits are about one-third higher than Americans’. While the U.S. runs the world’s largest trade deficit, Germany runs a surplus second only to China’s and occasionally surpasses it.

To be sure, Germany’s identity is more wrapped up in manufacturing than America’s is, but that’s because of national arrangements that not just bolster manufacturing through such policies as excellent vocational education but also give workers more power. By law, all German companies with more than 1,000 employees must have equal numbers of worker and management representatives on their corporate boards. For the most part, German companies don’t get their funding from issuing stocks and bonds but rather by generating investment either internally or by borrowing from banks; the role of the shareholder is insignificant. By practicing a brand of capitalism in which employees and communities still matter, Germany has been able to subject itself to the same forces of globalization that the United States has without substantially diminishing its workers’ power and income.”

So the comment about lazy people being attracted to unions can be true, without being necessarily incompatible with my analysis of the benefits of unions to the overall population.

The Role of Labor Unions in Maintaining Civil Societies

Unions decrease income inequality and the concentration of power. These are critical factors and I think necessary things to have in order to have the types of societies that we want to live in.

What do most of the worst countries to live all have in common? They have very little power exercised by labor in their political systems. What country has done extremely well in protecting its manufacturing competence from being taken out of the country and hence reducing wages? Germany, with powerful unions that did not allow it.

So I think what you say can be true, without being necessarily incompatible with my analysis of the benefits of unions to the overall population.

Think Tanks Funded by the Super Rich

Furthermore, if one looks at most of the arguments against unions (and I am not proposing yours) but they are normally developed by the super-rich to get normal working people to vote against their interests. There is a network of think tanks in the US. They include the Hoover Institute, the Heritage Foundation, the Manhattan Institute. They produce fake research on command and are funded by big money donors. A primary objective they have is to create constructs that degrade unions. The reason for this? To stop unions so they can pay lower wages.

Red Scares and Anti-Communism as a Weapon Against Improved Wages and Working Conditions

If you look back at the red scare in the US in the 1950s and 1960s a major component of all of it, was very simply to paint people who wanted better working conditions as being in collusion with the Soviet Union. It was all fake. None of those actors were threats to national security. Furthermore, the entire narrative was inconsistent with communist countries. This is because as I said, no unions were tolerated in the Soviet Union. This was a fiction created by the super wealthy in the US. An accurate parallel would have been with the socialist European countries. But that would not have worked as the socialist European countries beat the world in virtually every human health index that one can think of.

Why the con job?

Well, labor activists needed to be painted as “unAmerican” and so the link with the Soviets was created out of whole cloth. If you demand better working conditions you must be a communist….or perhaps even worse (at that time) a homosexual. The worst being a communist homosexual…which is very unAmerican. The congressional group charged with investigating the “Red Menace” was called the…House Un-American Activities Committee

The committee was a literal witch hunt that ruined the careers and reputations of those that aligned with labor, and did so at the behest of corporate executives and corporate power.

The movie Trumbo and Guilt by Suspicion illuminates this disgusting period in US history.

Actually, Walt Disney was an informant for the FBI. Whenever Walt Disney faced a difficult employee who demanded better wages for Disney employees, Walt Disney would report that person as “subversive” and potential communist, and they would be investigated by the FBI.

I have a nice quote from Walt Disney.

“I don’t care what you do, there will always be some son of a bitch on top and some son of a bitch on the bottom.”

And of course, Walt Disney planned to be that “son of a bitch” on top.


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