Tuesday, August 01, 2006

Another airline fighting its union.

Canadians know all too well the dissension between Air Canada and its unions, and the consequent destruction of the merest semblance of decent customer service. So, it's saddening to see it happening again, this time with Northwest Airlines.

The whole concept of using bankruptcy protection to force concessions on a union is bizarre. Bankruptcy is supposed to protect a company from its creditors, not its employees. Indeed, companies are supposed to be obligated to fulfill their contracts with their employees, not look for a quick way out. I wonder if Northwest really understands the nuclear effect this will have on employee morale and loyalty? Think about it: would you be loyal to your employer if he/she/it suddenly cut your compensation by 40% -- and didn't care what you had to say about it?

Moreover, the idea that the only way to keep the airline afloat is to slash employee compensation is bizarre. For example, Sega President Isao Okawa gave shares worth almost $1 billion to the company in order to keep it running. While this is clearly an extreme case, I don't see why the Northwest Airlines execs can't give some of their millions back to the company before hacking into the wages and benefits of ordinary working people.

The rejoinder at this point is usually that losing 40% of one's compensation is better than losing 100% if the company closes. This is true, but it misses the point. First, the executives, I am sure, are not at risk of losing anything -- even if the company goes under, I'm reasonably confident that they will still be paid some significant portion of their contracts. Second, one could use this kind of argument to justify nearly anything. It's better to lose 90% of one's compensation than 100%. It's better to be poked in the eye with a stick than to be poked in both eyes with two sticks. It's better to be a paraplegic than a quadraplegic. The issue, in short, is that you can't draw conclusions about what is good from an argument that only considers what is better. Goodness is (prima facie, at least) non-relative; betterness is relative. So, it's consistent to say that it's better to take the compensation cut than lose one's job, and also to say that it's bad to take the compensation cut. The latter clause is the point I'm defending.

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