Why Jim Cramer aganist the Employee Free Choice Act and Why He is Wrong
Jim Cramer has gotten himself in a lot of hot water recently. For me, Jim Cramer use to represent a person that I went for advice for personal finance and retirement savings. Since the stock market is fairly cheap and I am investing on the long horizon, I would check out his advice on stock to purchase.
However, when I clicked on a link to the article to the website, I did not like what I saw. Instead of providing stock advice, he decided to use the article to rant aganist the Employee Free Choice act. From the Mr. Cramer's article
"What happens if the pro-union plans of President Obama go through Congress? What happens if secret ballots and quick elections occur?
I think that Wal-Mart (WMT Quote - Cramer on WMT - Stock Picks) would get unionized, eliminating its competitive advantage. More important, I think that we could see major unionization efforts at large banks, chiefly by underpaid tellers at Citigroup (C Quote - Cramer on C - Stock Picks) and Bank of America (BAC Quote - Cramer on BAC - Stock Picks), something that could be a big setback to attempts to rein in costs. We all know that if banks are going to keep costs down, the last thing they need is to be unionized. I worry that this drive could really hinder the next leg up of the banks, if there is to be one.
I am surprised that no one is talking about this as a risk factor to stocks. I think, regardless of how you feel about unions, a teller drive and a Wal-Mart union drive are NOT in the numbers.
I put it out there to keep on your radar screen because the return of union problems away from the auto companies is something that's been so long ignored that it will probably really take people by surprise"
Mr. Cramer, you have been discredit and now you use your article to go aganist the unions. Mr. Cramer, let me teach you a lesson. For people to invest in the market, they need a steady income. And for workers to get paid a fair wage and have health benefits, they need a union to negotiate a fair and reasonable wage from the employer.
And what about this "ownership society" that you and your ilk tout comes into being? For people to have capital to invest in the market does not come from the low wages that your CEO heros pay for so they can have huge profits. Mr. Cramer, the wealth of the middle class comes from the unions. If you want the "ownership society", pay people fair and reasonable wages.
In addition, a lot of corporations negate their fiduciary duty to the shareholders by not properly investing their shareholders funds into providing the proper long-term return of investment. Look at the recent examples of AIG and Citigroup that focus on short-term gains at the expense of long-term stable growth. Instead of experiencing modest gains and providing a steady rate of return for their shareholders, AIG and Citibank were like the problem gambler that keep going to the local casino. The problem gambler gets his high from throwing the dice. In this case, the problem gambler did not affect himself. He affected the rest of society and society is now paying dearly for his reckless gambling. In addition, they get a nice special comment , that documents their deeds.
Unlike the problem gambler, the healthy company invests in their human capital. They pay a fair wage and offer decent health insurance to their employees. They put a significant value into training their employees and also have a bottoms-up method of leadership. Leadership comes from grassroots rather a top-down approach that the junkie CEOs does. And yes, there is a name for this company. It is called Google.
However, we have too many CEOs that are like the problem gamblers and like to gamble money at the expense of long-term interest of their shareholders. That is why we need unions to put these problems in check and also working with managment to negotiate a bottom-ups and holistic vision of corporate governance. That is why I support the Employee's Free Choice Act and Kramer is a moron for attacking it