Vanity Fair and Bloomberg put on an economic panel the other night featuring Jack Welch, Meredith Whitney, Joe Stiglitz, Oliver Sarkozy (Carlyle Group), and Austan Goolsbee. Welch stole the show.
Here’s a full transcript. We tuned in right as Welch was explaining to Joe Stiglitz why unions destroy competitiveness.
BRYAN BURROUGH, CONTRIBUTING EDITOR, VANITY FAIR: Joe.. Jack, what role do you think American labour has, if any, in the next 20, 25 years? And if so, why?
STIGLITZ: OK. I – I think it still has a very important role, because you – you said with all the protections. The fact is that many unskilled workers particularly don’t have a lot of protections, that they’re – they still are exposed to all kinds of – of risk, that there still is lack of job security.
In fact, in some ways the protections that – they have gotten worse in the last 15, 20 years. The unions have also taken on a slightly different role, which is they become a voice of – in a – in a political context – that is to say that – that what is happened in the United States in the last 30 years has not been good for workers.
You know, you look at the median wage of a 30-year-old male today and 30 years ago – it’s lower. Now, there are many forces that have contributed to that, but they haven’t seen any growth and prosperity. Things are worse.
And we could talk about – you know, parse that and the data in a variety of ways, but it’s just basically not a good picture. And we have to ask why, and I think there has to be agitation to try to correct that, because if we don’t, the kind of divide that we have in our society could get much worse.
So I – I think that they can play an important role in – in trying to balance some of the – the political debate that we’ve had.
WELCH: Joe, do you think that if we trace back things like this, they’re going to give us a more competitive America to compete in the global world? Now, do we – should be paying good wages? Should we have benefits? Should we have enlightened management to take care of workers? Absolutely.
But should we get all organised again and get all these work rules and have General Motors and U.S. Steel and the airlines and all these businesses – give me a highly successful, unionized American industry.
STIGLITZ: Well, I do think that – that workers who are treated better or more productive.
WELCH: I agree.
STIGLITZ: Now – now, one of the things that has induced a lot of companies to treat the workers well is the fear of unions coming in. So it has been an incentive device that has, I think, encouraged better treatment of the workers at by some of the non-union firms.
WHITNEY: It’s good business. It’s not unions.
WELCH: It’s good business.
STIGLITZ: It’s good business, but there’s no…
WELCH: To have a high degree of motivation, high idea to work for, to have my special pay. We had – we had a non-union workforce, and we had a union work force. We never had a union formed – in the 20 years I was there.
Every day I tried to give stock options and other things so the union work workers. The answer – and there were friends of mine that had the unions – same to everybody. It’s a deal. And the non-union workers, we stayed into some at this level, some no dental plans. If you were good, you got a lot. If you stunk, you got none.
And – and that’s the way it was differentiated. Unions don’t allow differentiation. Joe, it’s an inherent chiller of competitiveness. You’ve got to face it.
That’s the key point, which you don’t usually hear in the union debate: Unions don’t differentiate between good workers, great workers, and mediocre workers. So the company average becomes a C+ / B- instead of an A.
(Which isn’t to say management averages don’t often revert to mediocrity, but it’s certainly easier to reward greatness and cut dead wood.)
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.