After graduating law school, I began my practice with a firm in New Orleans in the late 1970s, and was soon sent to Puerto Rico, a hotbed of union activity. I got my first taste of fighting unions there, and learned they played for keeps when another labor lawyer was shot outside his hotel.
After leaving that firm and beginning my own in the early 80s, I found myself working in San Juan in 1986 just a few months before Escudero Aponte, a hotel worker and Teamsters’ member angry over the contract offered by management, torched a pile of furniture on the ground floor of the Dupont Plaza Hotel. Ninety-seven people died that New Year’s Eve, most burned beyond recognition, and 140 more were injured, many severely. Aponte is still in federal prison. Two of his co-conspirators were freed during the last decade.
The union, of course, denied any involvement.
Three years later, in 1989, I was back on the island working for an oil storage terminal in Ponce, when things again got out of hand. We were challenging an attempt to organize a company’s employees by an island union, one known less for its representational capabilities and more for its violence. A floating-top tank of pure distillate on the mountainside leading was torched as we sat in the offices below. It took the US Coast Guard 9 hours with firefighting helicopters to extinguish the blaze. Had the tank exploded we would have all been vaporized.
As with the Dupont Plaza, that union also denied any involvement.
During those years, the operative pressure exerted by unions in Puerto Rico wasn’t the strike. It was fire.
I still recall that night. I was sitting in the bar at the Ponce Holiday Inn swilling Wild Turkey on someone else’s tab. And I was not alone. After the Dupont Plaza burned, I never worked in Puerto Rico again without a bodyguard, and his name was Diego. I remember sitting at that bar and looking around the room. Dimly lit. Dozens of people. Motion. Laughter.
I caught Diego’s attention. He was standing at the door. He walked over and I motioned him to sit down and have a drink with me. He declined. He always declined.
“Diego, I have a question. With you standing over there and me sitting here, it would seem to me that anyone of these people,” I motioned broadly, “could walk up and blow my head off before you could do a thing.”
“Yes, sir,” he responded, no hesitation, “that is correct.”
“Then why are you here?” I asked, a bit incredulous, hoping for a different response with a surprise ending that would result in my brains not being splattered all over the mirror behind the bar.
“Mr. Karger,” he replied matter-of-factly, “no one can stop you from being killed. No one can stop anyone from being killed. What I can do is make sure anyone who kills you dies in this bar, tonight. That would act as a deterrent.”
I went from someone worth protecting to someone else’s deterrent. I have remembered that event and that conversation vividly ever since and it changed me.
The human dynamic I saw in Puerto Rico (and one that I have seen hundreds of time since) can be summed up as follows: individuals act differently than groups of individuals.
I didn’t know Escudero Aponte, but I will bet he had a family and friends and others who loved him. I would go so far to say that had I met Mr. Aponte one-on-one that we could have had a drink and chatted amiably. We might even have been able to work out whatever problem he had with his wages and benefits before he and his union buddies, stoked up on collective power and anger, decided to burn down an entire hotel full of people.
To the same end, I might have known the employee who attempted to incinerate the thousands of individuals who would have died had that distillate tank exploded. And I will bet if I had known him that I would have been shocked that he was capable of climbing that tank and torching it. And he probably wasn’t capable of doing it. Not alone. And as with Mr. Aponte, he didn’t act alone.
In both cases, individuals became a group that became a mob and the psychology changed. In both cases, it was a government-sanctioned collective, a labor union, that stoked these people to violence, perhaps not directly or intentionally, but simply as the result of being collectivized and empowered by government to do what they could not do, or would not do, as individuals.
Since the New Deal of the 1930s employers have not been free to deal with their employees as individuals, at least not when a majority of those employees want to be dealt with as a collective. The act of recognizing a union was a voluntary one until government waved the flag of democracy and legislated that every employee in any workplace, no matter how much they objected, would be governed by the will of the majority. Indeed, to this day, if a majority of employees in an appropriate bargaining unit want to be represented by a union, the minority is represented by that union, too, regardless of their individual desires to the contrary. Their wages, hours and working conditions cannot be negotiated with each as individuals, but rather, they are slotted into the collective by their job classification and their seniority, and each is treated like all the rest. The superstars are treated like the also-rans and vice-versa. And, while fire is rarely the weapon of choice in modernity, the group, the collective, the mob, still justifies their tyranny, their oppression, because they are a majority.
The fundamental assumption of democracy, that the majority should by right control the minority, is so rarely questioned that the organized violence behind the empowerment of a group is glorified, even while the same actions, if taken individually, would result in the seizure of one’s property, imprisonment, even death.
Hans Hermann Hoppe observed that “democracy has nothing to do with freedom. Democracy is a soft variant of communism, and rarely in the history of ideas has it been taken to be anything else.” He was right in substance, but in the history of ideas the tyranny of the majority is no longer questioned seriously outside a relatively small circle of anarchists.
Today, instead of fire, the government-sponsored labor collective is empowered in its refusal to work, i.e., the strike. Yet, in today’s economy where most strikes have little effect (since hiring new employees, temporarily or even permanently, is not difficult), unions have given up on that, too. Now, the corporate campaign, which devolves into a war of public relations agencies, the boycott, and even trespassing, are the sanctioned methods labor collectives use to bring economic pressure on employers to give a group of individuals the same wages and benefits regardless of individual merit.
Unions today strike and trespass rather than burn and beat, but they are not different than those of 30 years ago. It is the same pig, different lipstick. There is a quantitative, but not qualitative, difference. Today, as union leaders work behind the scenes to consolidate their own power at the tops of these organizations, they pander to corporate America using promises like “working together,” and “labor-management partnerships,” all of which are nonsense, a disingenuous elevation of language over substance.
Unions cater to the lowest common denominator of employees, those who need to be protected from the results of substandard work and misconduct, and they can and will take as much as possible today from an employer, even if it means the ultimate death of the host. Remember the Twinkie?
A handful of industries seem to be impervious to market forces, mostly industries that have government-sanctioned carve-outs within the economy that allow them to live with market-defying wage and productivity disparities. For now. But, as Detroit learned when the Japanese showed up in the 70s, these protected industries are one step away from extinction, or like Detroit, one step away from being owned and controlled by government, their benefactor turned master. Their high-sounding desire to “work together” with organized labor is another phrase for surrender.
In reality, the workplace is a zero-sum game. The pie doesn’t expand just because it is split differently. The capitalist wants to pay the minimum required to get the labor he needs. The worker wants the most possible. There is nothing wrong with that, and left alone the employers that provide the most will attract the best and as soon as they are not competitive they will lose the best to other employers who have their fingers on the pulse of the market.
Now, as it has been for many years, government has assumed the role of arbiter of outcomes in the workplace, just as it has in banking and certain industries. It establishes minimum wages without respect to market forces. It mandates certain levels of benefits. It decides the standards that can be used for hiring and firing. It enables collectives that not only permit, but encourage, the tyranny of the majority, and the oppression of those individuals who would rather negotiate compensation and benefits based on merit, talent and performance. Government substitutes its judgment for that of the market. And its fat finger on the scale of the labor market has resulted in uncompetitive practices, increased costs, unemployment, recession, malinvestment, strikes, boycotts, trespass, and lest I forget, fire.
[Editor’s Note: When mega rich hedge fund manager John Paulsen flirted with the idea of moving to Puerto Rico because of favorable changes in the tax laws (he’s since changed his mind in light of media attention), Jim Karger told us that he’d never move to Puerto Rico under any circumstances. Given his experience there, we understand why. Jim himself resides in beautiful San Miguel de Allende, Mexico (and helps interested TDV subscribers relocate there). And TDV offers citizenship programs in other wonderful Caribbean and Latin American countries, the kind of places that would make great, even permanent, escape hatches as things get worse in the US. Learn more here.]
Jim Karger is a lawyer, and frequent contributor to The Dollar Vigilante, who has represented American businesses against incursions by government and labor unions for 30 years. In 2001, he left Dallas and moved to San Miguel de Allende in the high desert of central Mexico where he sought and found a freer and simpler life for him and his wife, Kelly, and their 10 dogs. He is TDV’s San Miguel de Allende concierge and his website is found at www.crediblyconnect.com.
- Billionaires should beware of Puerto Rico (finance.fortune.cnn.com)
- Puerto Rican Tax Advantages (theconsultantsherald.wordpress.com)