While America Aged: San Diego Crisis

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Table of Contents

Introduction
Main body
Conclusion
Bibliography

Introduction

The first implicit issue is the greed and ambition of the management. This occurs especially when the management stands to gain in some personal means when the workers are quiet and content. The paradox of management has been how to efficiently manage employees and keep them remunerated to the deserved extent while still maintaining the profitability and success of the organization. In recent times, employees have been empowered, rightly so, to push for their rights and privileges. This has also been coupled with the recent labor studies that have found that the employee functions better and more efficiently when job and future security issues are addressed. So what happens when the employee is so powerful, they can hire or fire the employer in intervals?

Main body

The truth of the severity of this is evident in the case of both the New York transport union and the San Diego crisis. The underlying reasons for the problems in the pensioning system were politically motivated. The union power was high enough to ouster the mayor since it had evolved into a large political outfit. The implicit reason for the dishing out of benefits was that the people in power were okay with pleasing the masses during their tenure in order to benefit their approval ratings. This left subsequent generations of politicians to pay for the political points earned during the era they were in power. Unfortunately this was not beneficial in the long run. In the case of San Diego, bankruptcy is what followed. In the case of New York, Toussaint, the then sitting mayor, was prudent enough not to let it sit through for longer. He was brave enough to put his political popularity on the line in order to streamline the pension system in danger of heavily burdening the citys resources.

In such a case of political influence, the politicians management rationale is suspended and the populist policies take effect. This leads to unreasonable and unsustainable decisions and even malpractices such as bribing. The city is driven into debt and heavy financial obligations to a class of people who are not contributing adequately to what they are being supported. This is not right. However, once contracted they cannot be once again revoked and the liability that is pension is perpetual. This is not to suggest that the scheme is overall wrong. It should though be carried out with other expenses and costs in mind. It is from the same purse pensions are paid that citys daily expenses are deducted from.

Another issue is the short sightedness of management. This can be discussed in relation to the public and private sectors. In the public sector, we have spelled out above that the managers of the pay system are politicians whose focus is skewed politically. They see their decisions in the focal point of their terms in office. This produces irresponsible long-term decisions such as exorbitant pension schemes, in this case. The bearers of the consequence come in later. The costs incurred are passed on to the public who they are meant to serve e.g. the rise in ticket prices. Ultimately, the taxpayer is hurt more since the final intervention is federal in form of bailouts and federal handouts.

The short sightedness of management is also evident in the private sector. The General Motors dwindle from being a world authority in cars to where it is today is the fuel for this problem. The management of the company through the years has believed in their market share invincibility. This has been as a result of the humongous profits and upward dictating market indicators. Unfortunately, this led them to ignore the presence of foreign competition, particularly Toyota. During this period, the companys management gave away handsome send off package deals to its staff then due to the noise from its worker union. This was not painful at the time since the financial prospects of the company looked well. However, this proved short sighted in the future. The fact that they ignored competition made them lose out on their market share even at home. This caused dwindling revenues and still they had a large staff on health and pension benefits both home and abroad. As the profits tumble, they had to deal with the large amount of pensioners both home and abroad. They took too much for granted and reaped with a heavy pension burden.

The problem is that the current pensioners benefit at the expense of the future pensioners and even present workers. The lay offs and redundancy exercises as a result of the pension problem are evidence that the past has finally caught up with them. Put this in light of the current economic meltdown and we have a time bomb blowing up as we watch. The price of health care has gone up and the large numbers of old and ailing pensioners are by nature heavily dependent on medical services. The company also has JOB bank schemes that it keeps at the expense of present operations. It would be unfair to rescind the benefits at this age or stage of employment but it is also unfair to get benefits of this magnitude in light of the companys financial position. This is the dilemma. It would be wise if the management could both revise and innovate other more economy friendly methods to support redundant and retired employees. This dilemma also has implications for the US economy at large in that since General Motors is such a large company and those relying on it both directly and indirectly are many. This could be used to solicit federal support.

The other issue is the strength of the worker unions. This is a controversial but real issue that has the favor of the employer but disapproval of the employee. It is true that the employee must be able to have adequate bargaining power but the extent must not be to the proportions of abuse. In the case of New York, the paralyzing power of the MTA was the weapon that the unions used to bite into the citys coffers and draw out more than adequate wage. This was despite the fact that the reasons put forward by the mayor were totally legitimate, the city just could not afford. The power of the unions was also demonstrated in the General Motors case where past chiefs, under the pressure of the massive financial implications of the strike, agreed to the demands of the union of workers so as to get peace. This is still exploitative, as the scheme has proved to be a financial burden for the company. These two cases demonstrate that the unions have the power to turn from being forums of pushing for the rights of the members to being fronts of bargaining for more than they deserve. Their massive power is backed by the political and legal protection they enjoy making it very hard for concessions to be ignored by the management.

The power they wield has stopped becoming a tool and become a weapon. The pressure they exert can make the administration overlook the long-term difficulties as opposed to short-term profit ratings.

An indirect form of power granted to the unions is shown in the San Diego illustration where the top officials were given pecuniary benefits to turn a blind eye. This is arguably a form power where the risk of being exposed is cushioned by using benefits as a bribe for co-operation thereby causing the officials to cede their power to expose. This only made the whole situation worse later on for the city since it gave large concessions, which it could not honor. The result is that it would only sink further into the myriad of pension financing debt. This power wielded is irregular and illegal, though it however exists to hurriedly cover up management policy that is faulty, as was in this case.

Conclusion

In conclusion, the management has a thin line to walk on in this thorny problem of pension and benefits. They have to make policies that are not popular but are sustainable and end up being good for everyone. The intervention of the government is not without tax implications. Also, the role of the union should be revised so as to cater for the crisis to be effectively handled.

Bibliography

Lowenstein Roger While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. Penguin Group, 2008.

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While America Aged: San Diego Crisis

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