Collective Bargaining in the Wake of the Coal Strike

MR. HERMANT:

Ladies and gentlemen: It was a Canadian writer, Robert Fulford, who twisted the utopian aphorism to read, "I have seen the future--and it doesn't work," which is a statement that seems more and more a propos as time goes by.

Certainly our guest of honour this evening, Dr. F. Ray Marshall, must have wondered, during the long and painful negotiations between the coal producers in the United States and their work force, whether anything would ever work again. For work and the men and women who do it are the chief concerns of the Secretary of Labour.

Ray Marshall is a southerner--born in Lousiana--which is west and a little south of Georgia. He was reared in a Baptist orphanage after his mother died when he was quite young. Still in junior high school, he ran away from the orphanage and worked briefly in a dental laboratory before joining the Navy and going to sea during World War II. If he appeared a little young for a radioman, it was probably because he had been somewhat evasive about his age when he volunteered.

Following the war, Marshall went back to his education and although he had never finished secondary school, he was allowed to enter college and graduated from Millsaps College with a bachelor of arts. He followed that with graduate work on a grant from the Rockefeller Foundation and obtained his master's degree from Louisiana State University.

Determined to stay and teach in the south, despite numerous offers from northern universities, he became Assistant Professor of Economics, University of Mississippi. After all, he went to the University of Lousiana, then to a full professorship at the University of Texas, then to the University of Kentucky as Chairman of the Economics Department, and finally back to the University of Texas, from whence he was appointed Secretary of Labour by the new United States President, Jimmy Carter.

Marshall would seem to have been a most logical choice for the post. As Charles Knapp, one of Dr. Marshall's associates says of him, "I think Marshall really feels a kinship with the president. They were both raised in the rural south and they talk the same language. I think they share a bond of mutual respect and admiration."

Ray Marshall agrees. "I felt almost immediately that he was my kind of man," he told James W. Singer in The National Journal.

After his appointment, Secretary Marshall found himself almost immediately in controversy. Business Week magazine commented that, "Marshall's early propensity for landing in hot spots may be more the result of his native candor and self assurance than any radical or belligerent bent." But he has already been branded as an "extremist" by at least one conservative senator because of his views on labour.

Perhaps his greatest strength, however, is his extremely good relationship with organized labour: For example, William Winpisinger, president of the International Association of Machinists, said of him, "I give Marshall nothing but high marks. He says what he thinks while most guys in government fold up the minute the heat goes on." And Stephen Schlossberg of the United Auto Workers said, "He's the most decent man I've ever met. He's one of those guys who combines a heart, a head and an almost judicial sense of fairness in dealing with people."

Marshall has his own style. He likes free-wheeling discussion, to have ideas presented and challenged before he makes a decision. He uses a group as a sounding board. He tries to consider as many different points of view as possible. As he says, "I don't want my advisors to agree with me, to tell me what I think."

And he is conciliatory. "I don't go out of my way to pick a fight with anybody. I don't think that's a good way to operate."

As a result, he has achieved a substantial amount of success in a relatively short time which includes, of course, the eventual solution of the particularly thorny and difficult coal strike. Perhaps Ray Marshall's days as a kid football player may help explain why this quiet southerner is holding his own in Washington. "The orphanage football team never lost a game," he once told an associate. "No one is as tough as an orphan."

Ladies and gentlemen, it is a pleasure for me to introduce to you the Secretary of Labour of the United States of America, Dr. F. Ray Marshall, who will address us under the title, "Collective Bargaining in the Wake of the Coal Strike".

DR. MARSHALL

Ladies and gentlemen: It is a pleasure to be here at the Empire Club this evening. This is my first trip to Canada since I joined the Carter Administra tion, but if this dinner is any indication of Canadian hospitality I hope I become a frequent visitor.

Your main interest in having me talk probably was to hear first hand about the recent coal strike. However, now that the strike is settled, you might be more interested in the lessons we learned from that experience. I also would like to share with you some of my concerns about some international employment problems that relate to energy and coal utilization.

It's now been almost a month since the end of the long coal strike. Now that things have returned to normal in the coalfields, I think it is beginning to be possible to get a better perspective on this well-publicized strike.

The coal dispute clearly was not a model of collective bargaining. In fact, it was a strike that I think will be remembered as an almost unique event, a sui generis. Most collective bargaining situations are much more structured than these coal negotiations. The United Mine Workers was a bitterly divided union, greatly complicating the leadership problem. There were also serious, although less publicized, divisions among the coal operators.

This unstructured situation limited our ability to mediate this conflict. It was not enough to follow the usual mediation process of bringing the parties together to agree on a tentative contract. Indeed, we had no shortage of settlements; we had three tentative agreements before we got one that was acceptable to the UMW's rank-and-file.

Despite these problems, I believe that the Carter Administration handled a difficult situation as well as possible. We had two major objectives: (1) to minimize damage to the public, and (2) to facilitate a collectively bargained settlement. These objectives were realized. We helped the parties achieve a collective bargaining agreement and the strike did little damage to the economy or to public safety and health. Despite persistent threats of violence, no one was seriously hurt during the strike. The strike ended without permanent damage to the economy, significant layoffs, or power cutbacks in the Midwestern states.

I think we can draw three important lessons from this protracted coal strike. First, the government should avoid intervening in collective bargaining disputes unless absolutely necessary.

The Carter Administration has followed a general non-interventionist policy in collective bargaining. The only consistent exception to this rule is the work of the Federal Mediation and Conciliation Service in trying to facilitate collective bargaining through mediation.

This non-interventionist policy is based on an appreciation for collective bargaining and a fear that intervention will jeopardize the integrity of the bargaining process. During negotiations, there is a danger that one side will believe that it has more to gain from government intervention than from bargaining. Sometimes it is labour that expects to be rescued by the government, other times it is management. But, in either case, one side will have a strong disincentive to bargain in good faith if government intervention is expected.

Consistent government intervention will undermine the collective bargaining process. I have always felt that the strength of the collective bargaining system is that the parties who have a problem, and who understand it best, have the main responsibility for solving it. There is a basic "do something" attitude that prompts many to expect the central government to solve all of society's problems. In the United States, this notion, in the past, has given rise to what has been called "the Imperial Presidency". In a free enterprise economic system, I believe this is a dangerous and unrealistic attitude.

In the coal strike, the Carter Administration followed a non-interventionist policy as long as there was a realistic hope of a negotiated settlement. We intervened when we did, in mid-February, because there was a stalemate in collective bargaining and we feared that the strike would have serious spill over effects on our economic recovery. When we intervened, the ratio of coal supplies to utilization in eleven East Central states was 11.5 per cent; when the agreement was finally ratified, that ratio had risen dramatically to 73 per cent.

Looking back on it, I remain convinced that non-intervention is a good policy in most collective bargaining disputes. When the federal government must intervene, it should do so with the goal of helping the collective bargaining process produce a workable agreement while protecting the public interest. That is the course we followed in the coal strike and I believe it was a policy that yielded important dividends for all concerned.

The second lesson of the coal strike is that there are some problems that cannot be resolved by the normal collective bargaining process.

At the beginning of the coal negotiations, the operators were not merely trying to produce a contract. They were also trying to solve longstanding institutional and cultural problems. Deeply entrenched attitudes and behaviour patterns had produced serious problems relating to wild-cat strikes, mine safety, productivity, and pension and health benefits. This was far too ambitious an agenda for one round of contract negotiations.

In saying this, I am not trying to minimize the importance of these issues for the coal industry. Problems of this nature have prevented the United States from taking full advantage of its abundant coal resources. But many of these problems go beyond the purview of normal collective bargaining.

This is why President Carter had decided to appoint a Presidential Commission on the Coal Industry. Many of the problems in this troubled industry do not merely involve labour and management. They also involve the government. For example, mine safety is regulated by the Labour Department and we are responsible for training programs that could help the industry with its labour relations, manpower, and productivity problems. You cannot discuss issues like these apart from the federal government. As a result, we believe that this tripartite commission, consisting of representatives of labour, management, and the federal government, can provide the proper framework to resolve these long-term issues.

The third lesson of the coal strike is the broadest, and to my mind, the most important. That lesson is that we should not ignore the impact of institutional arrangements on economic policy.

The United States has recognized that coal should be a very important element in our long-term energy policy. It is easy to develop economic projections to justify this conviction. But, as the recent strike illustrates, the future of the American coal industry depends heavily on labour relations. If the institutional structure of collective bargaining is weak, coal production will never meet our expectations. If we ignore these institutional problems in the coal industry, our economic projections will be very unrealistic.

This leads me into the second part of my talk this evening in which I would like to discuss some issues involving the international implications of the energy crisis. Institutional arrangements are as important in international as they are in domestic economics.

Let me stress that I am only speaking for myself on these issues and not reflecting the policies of the Carter Administration or the United States government. Some of the issues that I will discuss have been raised during internal deliberation within the Carter Administration. But presented in this manner, they do not represent an agreed-upon policy, but merely my own personal perspectives on some issues that affect all of us in North America.

The problem we face is world-wide economic stagnation; which, in some ways, is similar in a generic sense to the problems industralized market economies faced in the 1930's. At that time, there was a terribly serious imbalance between savings and investment within individual countries. Today, there is a similar imbalance between countries.

The economic problem today is accentuated by attitudes within the world's industrialized democracies. If investors were confident and central banks were willing to expand the money supply sufficiently to lower interest rates, private investment might rise by enough to provide full employment. But neither investors nor central banks are willing to take these risks.

Similarly, if governments were willing to offset the OPEC surpluses with full employment budget deficits, they could replace the purchasing power lost through oil imports. However, most governments are unwilling to take these risks. Instead, the industrial world's leaders are uncomfortably balancing the political costs of budget deficits against those of high unemployment. And their constituencies are unhappy with both sides of the bargain.

Although this uncomfortable balance may persist, the situation could easily deteriorate. Nations could resort to protectionism in an effort to cut imports, or they could seek to subsidize exports. But individual attempts to export unemployment will only lead to reciprocal actions. The outcome could be political instability and a repeat of the beggar-thy-neighbour policies of the 1930s. Another possibility is heightened economic and political unrest within countries until domestic stability is undermined, again reminiscent of the 1930s.

Neither the current uneasy balance nor further economic and political instability is inevitable. Industrial nations like Canada, the United States, Western Europe and Japan, working together, can take steps to head off this dismal prospect. There are policies we can follow to this end--including fighting inflation, following sensible trade policies, reducing dependence on foreign oil and substantial public and private capital transfers to developing countries. Such transfers will promote balanced growth.

Four years after the increase in oil prices, most industrial countries are desperately trying to earn the foreign exchange necessary to pay for imported oil. This attempt has generated considerable pressure to promote exports in both rich and poor countries.

But, while some countries can eliminate their trade deficit some of the time, all of the oil-importing countries cannot do so simultaneously as long as the oil-exporters remain in surplus. In the last few years, the trade deficit has moved from one group of countries to another as different nations accept an extraordinary share of the trade deficit. But since no country can sustain this extraordinary burden for long, there is a tendency to try to shift the hot potato to someone else.

In 1974 and 1975, developing nations bore most of the deficit caused by the rise in oil prices. This could not continue for long since there were limits to how much debt these countries could finance without creating concern that they might default on their loans.

Recently, the United States picked up the burden of a large trade deficit. In large measure, this deficit occurred because our imports grew while our exports diminished. The decline in the dollar caused by the trade deficit has triggered further problems. Finally, the combination of high unemployment and a trade deficit has greatly strengthened the forces in the United States calling for protectionism. What is to be done?

The stagnation problem cannot be solved by the United States or any single country acting unilaterally. The solution involves a wide variety of concerted actions by many industrial countries, a package to which each country can make a contribution and from which all can draw benefit. Stimulating balanced development in the less-developed countries is an important part of this package.

The problem is that many investors in the OPEC and industrialized countries are reluctant to increase their investments in the less-developed nations. This produces a fundamental imbalance between the needs of these less-developed countries and the capital that is likely to be invested there.

It is a familiar, yet sad pattern. Much of the productive capacity of the developed world is lying idle, yet there are millions of people living in squalor. The abundance we take for granted is beyond the reach of most people on this globe. Changing this imbalance on a global scale is not an easy trick to pull off.

What is needed is to greatly expand the lending capacity of an international financial institution which would make development loans to the less developed countries. Loans of the magnitude needed are beyond the capacity of central bankers or individual nations. They can only be made through an unprecedented degree of co-operation between the industrialized nations and the OPEC countries.

To be most effective, these development loans should emphasize agriculture, water and energy production. In/creased agricultural productivity and rural non-farm development in the less developed world would slow migration from rural to urban areas, pave the way for an increasing standard of living and avoid serious food shortages. These loans should not try to impose western norms on the less developed world. Rather, they should be designed to help each country choose its own formula for balanced growth.

The World Bank, its soft loan window (IDA) and regional development banks are the main financial institutions that can be used to make those loans. It is important that the industrial world and the OPEC nations recognize their common interest in expanding total world demand.

This has been a long speech. But my message is basically simple. Almost all major economic problems are interdependent and must be viewed in an international context. One country cannot be the engine that drives the world. The time for international co-operation-based on self-interest, as well as altruism-has arrived. The problem of securing that co-operation must be faced. It cannot be wished away.

The appreciation of the audience was expressed by Mr. John D. Herrick, a Director of The Empire Club of Canada.