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Two for the Price of One Czar

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You’re right if you feel that union leaders are overpaid and do a poor job representing their membership. In fact, union membership is down to 12.4% of the American workforce-a third of the level in the 1950s. A recent Gallup poll shows that fewer than half of Americans-48%, an all-time low-approve of labor unions. Any wonder why?

Union leaders organize to keep out competition and support a system based on seniority. They force good businesses to move their manufacturing base to more affordable countries like China and Mexico. And they force members to pay dues while running deficits.

Meanwhile, 14.9 million Americans are unemployed-26.3 million if you include the underutilized labor force, those who are working part time who actually want to work full-time. And what is our “jobs” president doing?

President Obama has assigned Ron Bloom, a union leader, as his manufacturing and car czar. As President Obama’s senior counselor for manufacturing and policy, he will work with the National Economic Council in the West Wing of the White House to lead policy development and planning for the president’s work to revitalize U.S. manufacturing. This, of course, adds another layer of government that never existed. Where’s the public vetting?

As part of the president’s auto task force, Bloom was instrumental in the bullying of creditors during the GM and Chrysler Chapter 11 reorganizations. Not to be confused with Chapter 7, Chapter 11 just reshuffles the ownership structure. The bond market recognized the risks of dealing with a political class favored by the Obama administration. Reuters reported that Christopher Garman compared bond yields for companies with collective bargaining agreements with those without them. The yields had been similar since 2003, but diverged when it was clear the Obama administration was offering most of the recovery value to a favored political class, in this case the United Auto Workers. At one point, the yield for bonds with organized labor was nearly 11% higher than the market as a whole-the higher the yield, the higher the perceived risk.

According to the Jewish Telegraphic Agency (JTA), “Bloom’s parents met at Habonim summer camp in the 1940s.” Habonim, now known as Habonim Dror, is “a progressive Labor Zionist youth movement that emphasizes cultural Judaism, socialism and social justice.” Habonim was an integral part of Bloom’s life. He attended a Habonim summer camp, Camp Galil, for several years as a child and eventually became a counselor.

JTA reports, “The Labor Zionist movement prides itself in its direct connection with union work and its ability to inspire leadership, said Kenneth Bob, the president of Ameinu, the Labor Zionist organization that provides funding to the Habonim Dror movement … Bob was actually Bloom’s counselor at Camp Tel Ari, Habonim’s leadership training institute. He recalled Bloom as being ‘a very serious, engaged person, there for the right reasons, to drink in the experience and learn as much as he could.'”

After graduating from college, Bloom worked for John Sweeney, head of the Service Employees International Union (SEIU). From there he went to Harvard Business School, then to Wall Street, where he worked as an investment banker for 10 years, as a vice president for Lazard Freres, and at his own boutique, where he says he was “very fortunate and privileged to be able to make a very nice living.” He often worked on deals related to unions, and when he left Wall Street, he became special assistant to Leo Gerard, then president of the United Steelworkers (USW), in 1996. Both have been accused of being too close to the money men on Wall Street, according to The WSJ.

The U.S. House has said it’s ready to approve EFCA (the Employee Free Choice Act), and the Obama administration counts this near the top of its list of initiatives. EFCA allows a workforce to unionize with 50% workforce approval through an open ballot, encouraging the bullying of co-workers who don’t go along with the vote. Sound familiar?

E.J. Smith is Managing Director of Richard C. Young & Co., Ltd. an investment advisory firm managing portfolios for investors with over $1,000,000 in investable assets.

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E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.