anonymous
2011-12-24 08:56:18 UTC
http://www.naturalnews.com/021911.html
Myth of Union Corruption
By Nathan Newman - March 8, 2007, 5:18AM
Inevitably, when you mention unions, comments start flying about "corruption" and the "mafia", another corporate talking point. Now, when I say "myth", I don't mean that there aren't individually corrupt union leaders or even whole unions that have had serious corruption problems at points in time, just that it's a myth that corruption is systematic throughout the union movement or that it's a serious issue in terms of overall union finances, even in the handful of unions with some corruption problems.
A refresher on the facts from some old posts:
But my favorite example is from the most notorious example of union corruption cited by anti-labor folks-- the Teamsters pension fund:
There is little question that organized crime had their hands in the Teamsters Central States Pension Fund for a number of decades. But here's the kicker, there's little evidence that union members were ripped off due to the mob helping themselves to loans that they couldn't have secured from more legitimate banking sources. As the New York Times detailed in 2004:
In the 1970's, the fund's assets grew by as much as 10 percent a year, according to some media reports from that period...Thus, the fund made better returns on its unorthodox real estate portfolio than it would have on a conventional mix of investments...
By the time Hoffa disappeared in 1975, the Central States pension fund had loaned an estimated $600 million to people connected with organized crime, according to Mr. Stier, who resigned his union appointment in April after questioning the union's ongoing commitment to rooting out corruption. But many of the loans did serve their intended purpose, making money to pay for Teamsters' retirement benefits. The hotels, casinos and other real estate projects, not all of which were connected to organized crime, were generally profitable, according to Mr. Stier, and before his disappearance Hoffa saw to it that his loans were repaid.
Now, this misuse of Teamsters pension fund money was the largest example in the history of the union movement-- and it still pales in comparison to the trillions of dollars honestly invested over the years on behalf of union members.
Not only did Teamsters do well even under Jimmy Hoffa's "corrupt" leadership, but here's the kicker. In 1982, the federal government forced the Teamsters to turn management of the Central States Pension Fund over to professional Wall Street firms. The result:
[I]n these expert hands, the aging fund has fallen into greater financial peril than when James R. Hoffa, who built the Teamsters into a national power, used it as a slush fund...the kinds of investments that make sense for [a pension] fund - like long-term bonds that will mature as members enter retirement - are not attractive to most money managers, because they generate few fees...
Money managers promised pension funds big returns, and to get the big returns they began to add riskier assets to pension portfolios than pension funds had used before. Sleepy bond portfolios were livened up with stocks. Venture capital, junk bonds, securities of companies in developing countries and other exotica began to appear in pension funds...When the stock market crashed in 2000, the Central States pension fund had big bets on technology and telecommunication stocks, energy trading companies and foreign stocks. Some of these stocks became nearly worthless.
So who was more corrupt? Jimmy Hoffa getting good returns for his members investing in real estate and profitable casinos or the Wall Street managers collecting big fat fees admidst the insider-deals of the dotcom boom and bust?
Conversely, another pension fund left in the hands of the Teamsters union itself, the Western Conference of Teamsters pension fund, took a far more conservative approach and survived the dotcom bust and actually made money when Wall Street was losing massive amounts.
The point is not that you can't find examples of individual union corruption, but with tens of thousands of union officials overseeing trillions of dollars in assets, it would be a shocking validation of the goodness of human nature if a few folks didn't steal money somewhere.
What is shocking is how small that union corruption is compared to a corporate culture, where insider deals, back-dated options, and Enron-style ripoffs that have cost employees, shareholders and the public hundreds of billions of dollars at the lowest estimate.
The bottom line is that when critics of "union corruption" made those noises, ask them for documentation of how much the money involved is compared to assets that unions oversee. And the reality is that they won't be able to cite exa