From Sweden to Obama – The Peculiarity of Union Influence (Part 1)

On Tuesday, Nov 13, newly re-elected President Obama met with organized labor: AFL-CIO President Richard Trumka, SEIU President Mary Kay Henry, AFSCME President Lee Saunders, and (oddly) Executive Director of Justin Ruben. The meeting included top Obama economic advisors like Gene Sperling and White House chief of staff Jack Lew, and came a day before the president was to hold similar talks with CEOs from major US companies. A few days later, on Friday, Nov 16, the president met with top republican and democratic leaders. First unions, then companies, then legislators.

Why am I concerned with this fawning on organized crime, ahem, labor?

Together with my family, I took my flu shot this past Saturday – the day after Hostess announced that it would liquidate rather than continue to deal with the unions bleeding them dry. Then, like Agent Smith in the movie the Matrix, I had a revelation about labor unions. They can be looked at as a virus.

"I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You're a plague and we are the cure." - Agent Smith

Before jumping on me for making this claim, here's a little bit of background might help put things in context. My childhood and early adult years were spent in Sweden – a socialist country with a peculiar approach to how to run its economy. Even by European standards, it's a bit off the charts. From a US perspective, it is hard to comprehend how thoroughly (what little remains of) the private sector is laced with union politics.

Labor unions sit on all corporate boards, and have tremendous influence over corporate decisions. Labor unions are even represented on the boards of universities – all of which are public (of course). The head of the janitors or other blue-collar positions frequently sits on the university board! Well over 70% of the Swedish workforce is unionized, whereas in the US, the unionized portion comprises a tad over 10% nationwide. The Swedish equivalent of AFL-CIO (called LO) is practically joined at the hip with the Swedish Socialist party, and they also own a substantial stake in one of the largest daily newspapers. The list goes on, but I'll stop there. I just want to illustrate that it is a different reality.

The results? The Swedish unions have forced a stagnant, statist way of business on the country, with so many hoops to jump through that firing a teacher in a Chicago public school would look easy by comparison. The results are that companies in Sweden are now quite careful when they hire anyone – since it is so hard to get rid of bad hires – which in turn keeps people unemployed much longer than in the US. The irony of unions keeping people unemployed while singing The Internationale (the socialist international anthem) is unfortunately lost on them.

Stay tuned for Part 2, next week.

- Thomas Kase

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Voices (11)

  1. Thomas Kase:


    The splitting of this piece into two sections appears to have confused the readership – the story isn’t about Sweden at all.

    BTW, the success of the firms you portray (many of them Wallenberg firms that go back 100 years) have been built more outside Sweden than anything – I think Atlas Copco has something like 97% of revenue outside Sweden (with little to no union influence). ABB chose to have their headquarter in Switzerland and not Sweden – maybe there was a reason for that… ABB’s superstar CEO – who took the firm through the merger and headed up the entity for 17 years, during which he increased (on average) the stock price 30% over each of the 17 years. An amazing guy – he received a lifetime bonus of around $100M when he retired in 1996 – something which clearly was deserved but not accepted by the "lagom" mentality folks, so a few years later, back in Sweden, this turns into an envy fest and this superstar is kicked out of his chairman position with the Wallenberg holding company and to surrender a good deal of his bonus. Nice.

    Anyway, still off topic – wait for Part 2.

  2. Toby Thorsen:

    Well, isn’t this an interesting debate – the Anglo-Saxons discussing the union influence on the Swedish economy. As a citizen of the aforementioned country I have to say that it isn’t as bad as Thomas wants to portray it, nor is it as rosy as Peters views on the matter.

    Fact is that Sweden owes much of its industrial heritage to the very Swedish idea of "lagom" – a sort of middle-of-the-road mentality deeply rooted in Swedish society. True that the unions have positioned themselves as powerbrokers in both private and public organizations, but they are also deeply respected due to their willingness to work with – not against – the goals and targets of the organizations they serve. This common understanding and mutual trust between unions and management has seen Sweden through most of the 20th century. Lest not forget that this union of union and corporation has seen the likes of Nobel, Sandvik, Atlas Copco, ABB, Volvo, Ericsson, Spotify, H&M, IKEA and more grow, prosper, sell-out and even scale back without too much celebration nor rioting in the streets.

    And we outsource quite well to boot.

    Procurement could do more here though, just like in most places.

  3. Thomas Kase:

    Bitter and tvisted – you’re going so far off topic that there’s not much to say – and I don’t know which article you’ve read, certainly not the one I wrote.

    What you call a "want to debate" was a polite suggestion to steer you back on topic – obviously a failure.

    Wait for the rest of the series, until then, sharpen your arguments.

  4. bitter and twisted:

    You started a rant and want a debate? Yes, US unions are shit. But Viruses? Communist hellhole Sweden? – You come across like a Texan-Norwegian lunatic.

  5. Thomas Kase:

    Bitter and twisted – sure, look at the union success story at Hostess, those former employees must really enjoy Thanksgiving knowing that unions helped them. Although I think all the folks working in recently established auto plants here in the South are far more appreciative of UAW success in shutting down the automotive sector in Detroit.

    The following search gets over 5 million hits:

    Much as I would like to think that Spend Matters readers in the US post on our site past midnight on Thanksgiving, you are more likely in Europe. That said, if you are willing to stay on topic, can you share some examples of where unions are still needed? Is there anything of substance to negotiate over that isn’t already addressed by preemptive legislation? Haven’t unions outlived their usefulness?

  6. bitter and twisted:

    Good, the unions will protect me when They come for the procurement department.

  7. Thomas Kase:

    "bitter and twisted" indeed – so why did you change the the topic away from the detrimental influence that unions have on corporations? If union activities can outright kill off companies, and prior to that, cripple internal flexibility on a daily basis – that tends to impact procurement as well. E.g. want to outsource your P2P function? Want to decouple media production from creative work? Nope, no can do, says the union.

    Stayed tuned for the rest of the series – and it is a rant btw – and those are supposed to behave like their label, a hint. 🙂

  8. bitter and twisted:

    So why drag sweden into your obama critique? Suggest this site sticks to procurement, its forays into politics and history are usually ignorant rightwing drivel.

    I suggest this site sticks to procurement. Its forays into politics

  9. Thomas Kase:

    You’re going OT here – wasn’t the labor union focus clear enough?

    There are so many ethnic and demographic differences btw Sweden and the US that any attempt to compare the two falls flat on its face. Although, if you were to isolate for those factors, you will not see any difference in life expectation, health and crime – look it up, these studies have been done.

    BTW, it is difficult to attempt a discussion of any substance with someone who claims that taxpayer-funded services are "free" – sorry. As they say in Japan: "tada yori takai mono wa nai" or "there is nothing more expensive than free"

    Also, the "vouchers" referred to aren’t actual vouchers as understood in the real world – that’s either a mistranslation from Swedish or outright disingenuity – there are NO private schools in Sweden. This is lost on the Swedes as well – they suffer under the misconception that their "friskolor" are actually private schools – no free enterprise involved; these are charter schools. In Sweden they have to follow the Ministry of Education playbook to a tee, can’t charge additional fees, can’t be selective about who they accept. Outsourced production under tight SLA essentially. This is food for another story however, and you need to bulk up on your facts before you enter the ring with me on this topic.

    To summarize – for those who enjoyed their time in kindergarten – Sweden’s a place to consider – there’s always someone ready to make those hard life decisions for you. For those who aspire to attain adulthood, it is not so pleasant nor productive.

    Now, can we get back on topic?

    Happy Thanksgiving BTW!

  10. Peter Smith:

    Yes, Sweden’s unemployment rate is lower (just) than the US rate.
    Life expectancy is 3 years longer and infant mortality rate is lower. There is free nursery education from 1 year old and free schooling through to University – with an innovative voucher system that has encouraged free enterprise schools. Healthcare is basically free. The murder rate is a quarter that in the US, and there is less poverty, and (arguably) more social cohesion. Whilst the per Capita GDP is lower than the US, by the time you take health and education costs into account for US folk, I suspect there isn’t much difference. Alcohol is VERY expensive however, and if you’re not tall, blond and gorgeous you can feel a bit inferior…. Sweden has problems like any other country – immigration, slow growth – but I would be hard pressed to decide where I’d rather live, much as I love the USA. If you love the spirit of dog eat dog free enterprise Thomas I can see why you prefer the US, but your picture of Sweden doesn’t seem to fit the facts!
    That doesn’t mean you’re wrong to highlight Obama’s apparent priorities however…

  11. bitter and twisted:

    Isnt Swedens unemplpyment rate lower than the USAs?

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