The economic downturn, and the bailouts that have followed in it’s footsteps, is leading to an assault on contracts of all types:
Contracts everywhere are under assault.
The depth of the recession and the use of taxpayer dollars to bail out companies have made it politically acceptable for overseers to tinker with employment agreements.
So federal and local governments are looking for ways to pare payouts, endangering the promises made before the financial storm to people like Wall Street traders, automobile workers and garbage collectors.
“We run roughshod over some contracts and not over others,” said David A. Skeel, a law professor at the University of Pennsylvania, about economic downturns. “Right now, employment contracts seem to be the type of contract that is viewed as eminently rewritable.”
The Treasury Department is seeking broad powers to seize troubled companies and rewrite contracts like the ones promising bonuses at the American International Group. Some A.I.G. employees, meanwhile, have been pressured by officials into repaying their bonuses to the giant insurance company rescued by the government.
Across the country, Vallejo, Calif., just got permission in bankruptcy court to tear up its contracts with firefighters and other workers. In Stockton, the city manager is studying whether to follow Vallejo’s lead.
In Michigan, Gov. Jennifer M. Granholm just ordered the city of Pontiac put under emergency financial management, after it failed, among other things, to rein in the cost of police, fire and trash collection services.
And President Obama’s auto task force, after replacing the top management at General Motors, is looking for ways to overhaul the contracts that G.M. and Chrysler have signed with unionized workers.
At its root, a contract is a promise, a promise by both sides that they will do something that each finds to be of value. When it becomes easy to break those promises without consequence, either by operation of law or by government fiat, it becomes an attack on the very roots of the free market system, and it doesn’t happen without consequence.
While I tend to agree with your conclusion, remember this: the entire notion of a “union contract” is a perversion under the scheme of monopoly bargaining. All employees in a bargaining unit are subject to its provisions, and their right to contract individually is extinguished.
Abrogating a contract in derogation of the free market is hardly an assault on the free market.
[...] inherent to going after contracts (and the effects of that action on the free market system). Read the post for yourself, it raises a few good points and is worth the time. However, in the comments, there is [...]
Since I suspect the cowardly “Angry Potato” won’t have the guts to post my rejoinder, I’m also posting it here:
“Moron”!?!? I’ll stack up my credentials against yours any day. That is, if you had the courage to crawl out from under your rock of anonymity.
If you had any respectable credentials, you might have noticed that I didn’t “call[] unions perverted.” I called “the entire notion of a ‘union contract’ … a perversion under the scheme of monopoly bargaining.” There is a difference, but I guess you are incapable of discerning it.
However, since you are offended by my use of the word “perversion” — which Democrats apparently don’t believe exists any more — I’ll refer you to this quotation: “it would be perverse to read it as allowing the union to charge to objecting nonmembers part of the costs of attempting to convince them to become members.” Ellis v. Railway Clerks, 466 U.S. 435, 452 n.13 (1984) (White, J.).
“Moron,” indeed!
In the interests of credit where credit is due, he/she did approve it.
I see big, big lawsuits in the near future.