Opining about Elon Musk’s trade union conflict in Sweden, a Financial Times editorial declares (“Tesla Meets the European Social Model,” December 6, 2023:
Foreign investors need to respect the legal and social rules and the business cultures of the countries where they seek to do business.
Really? A foreign investor in the Jim Crow South should have respected the social rules and laws promoting and enforcing racism? A pre-WW2 foreign investor in Nazi Germany should not have employed Jews at senior levels? A foreign investor in Russia should respect its corrupt business culture? A foreign investor in Islamist countries should respect the legal and social rules mandating the way women may dress or behave? Strange morals!
Or perhaps what the Financial Times’s editorial board meant by “need to” is not normative but merely descriptive: the foreign investors cannot avoid submitting to the power that wields the most force and to the most powerful mobs. That the editorialists immediately added to the sentence quoted above “doing otherwise can harm their brands” may suggest this interpretation. They should still have been clearer in distinguishing between what they think Tesla should do from a moral viewpoint and what the company might need to do in a hostile political environment. We would then be better placed to evaluate their conclusion:
It should be for Musk and his company to adapt to a Swedish model that has a record of working well, rather than for the Swedish model to adapt to Musk.
In this passage, we discern that like all fashionable intellectuals, the Financial Times’s editorialists have a sweet tooth for the Swedish corporatist model in which corporations and trade unions make decisions over the heads of individuals. This model is criticizable from both an economic and an ethical viewpoint.
Let’s carefully distinguish the normative issue (what a foreign investor or, for that matter, a domestic one should do) from what it must submit to. Of course, a corporation must adapt to what its customers want and to the customs of individuals with whom it directly interacts in a foreign country. The more authoritarian a national state is, including with its own subjects, the more an investor must expect to submit to that state if it wants to do business there. But, as I suggested, there are obviously moral limits—the should—to such submission.
Note that in a more or less free country, a foreign or domestic corporation is not doing business with “the country” but with specific individuals: its customers, employees, and investors. If the corporation deals with the government, it is to smooth over the obstacles that, typically, the same government (or another level in the same government) raises or can raise against its voluntary contractual arrangements. As usual, the introduction of individuals in the analysis changes the perspective. The Swedish government should respect Tesla for the simple reason that individual Swedes voluntarily work for the company or buy its cars, and nobody is forced to.
From a moral and political-philosophical point of view consistent with the maintenance and promotion of a free society, I would argue the opposite of the Financial Times’s claim. It is the Swedish government and the unions to which it has outsourced some of its coercive power who should respect the “culture” of a foreign investor who finds individual Swedes willing to exchange with him—provided only that basic rules of honesty are followed.
READER COMMENTS
steve
Dec 11 2023 at 5:40pm
I read through this and it specifically said the government does not interfere with union and employer negotiations. Also, the article notes that many smaller businesses are not unionized which reinforces that unions are not required by the government. It seems like you want the Swedish govt to intervene and tell the unions to be nice to Musk. I think I would prefer that Musk fight it out with the unions there and govt stay out of it.
Steve
Pierre Lemieux
Dec 11 2023 at 10:22pm
Steve: Just like it is usually the case in the US, the Swedish government does not directly interfere in negotiations (except to mediate, with a bias for employees). But like in the US, the law is strongly biased in favor of forcing employers to negotiate once employees have formed, or want to form, a trade union. And once a “collective agreement” has been signed, often at the industry level, employers are forced into lots of things. Just two sections of the main Swedish law governing collective negotiations may help understand why Tesla does not want to get into this rabbit hole:
Let me add what a law firm writes:
It is also important to know what is the corporatist model, as the Swedish system is often described (for example, in the recent book by Acemoglu and Johnson, Power and Progress, which I review in the forthcoming issue of Regulation–somebody called it a demolition). “Negotiating” wages and working conditions above the heads of most Swedish workers is part of that “ideal.”
steve
Dec 12 2023 at 11:40am
Swedish unions are not like US unions. The Swedes base it a strong belief in freedom of association. If people want to associate and form a union they may. Note that workers dont have to join a union if one is formed. An employer does not need to hire someone who is a member of the union. The employer doesnt even have to let employers have meetings on-site even during off hours and can legally spy on union forming attempts and try to stop them. They can even be the ones to form the union if they want. Note that freedom of association also holds for employers. They can form groups too.
Most importantly there is no government action requiring Tesla to recognize a union. All of the difficulties Musk is facing are because other individuals and/or their unions have decided to not work with Tesla. I am honestly surprised that you seem to want government to get involved. Let Tesla decide if they do or dont want to have a union. Let other unions decide what they want to do in response and keep government out of it.
Steve
Mactoul
Dec 11 2023 at 7:21pm
As Sweden is economically one of the freest countries in the entire world, one could do worse than respect Swedish customs.
Pierre Lemieux
Dec 11 2023 at 10:35pm
Mactoul: It depends on what one means by “freedom.” If somebody espouses the ideal of ancient liberty as opposed to the liberty of the moderns, I grant that this is pretty free! For a classical liberal, it would be among the least unfree. In Cato’s index of economic freedom, Sweden ranks 17th among 165 countries. True, that is pretty “free” compared to, say, India, which is 87th.
Mactoul
Dec 12 2023 at 1:11am
If Sweden be unfree than the argument that it is the freedom that brings prosperity is undermined. Swedes is one of the most prosperous countries of the world and has significant immigration, perhaps exceeding US on a per capita basis.
Also, the ranking alone may not convey full information. Perhaps all Western countries are more or less free. So the difference in freedom between the 1st and 17th may be slight.
It is easy to find instances of unfreedom anywhere, not the least in US or even Singapore with its public housing.
Craig
Dec 12 2023 at 7:37pm
Also of note is that irrespective of the degree of freedom or government coercion, one thing that should never be overlooked and underestimated is the importance of being in a state of peace.
Mactoul
Dec 12 2023 at 10:10am
In Sweden one’s children can be seized by the state if one incurs the state’s displeasure. Not in India.
In America you need state license to engage in petty trade such as beautician. Not in India.
In Japan if you want to open a restaurant, you need to get the menu approved by the state. Not in India.
robc
Dec 12 2023 at 11:16am
In Sweden, America, and Japan, you can have cash in large bills. Not in India.
Djibril
Dec 13 2023 at 10:59am
So what you are saying is that in India parents can be abusive and not take reasonable care of their kids and the society wouldn’t react regardless of what happens ?
As a Swede I can confirm that kids won’t just be grabbed because of a generic disagreement. We are talking considerable abuse or neglect here. So the comparisson is silly in this context.
Craig
Dec 11 2023 at 10:52pm
I know that people actually do say this and to a certain extent I sense that it is in response to the Bernie Sanders’ of the world proclaiming they want ‘democratic socialism’ along the lines of Sweden or Denmark. And then a right wing response to that is, “Well, they’re much freer than you might think they are.” At which point I tend to see something along the lines of the income tax rate or corporate income tax rate is X% where X% sounds reasonable to an American’s ears. But then no note is made of VAT and honestly? The combo punch is straight up confiscatory. But that’s Europe.
Jose Pablo
Dec 11 2023 at 10:41pm
In this passage, we discern that like all fashionable intellectuals, the Financial Times’s editorialists have a sweet tooth for the Swedish corporatist model in which corporations and trade unions make decisions over the heads of individuals.
You should have hit the nail on the head since the very same FT, not a long time ago, was advising companies to leave Russia due to the moral concern of doing business there.
https://www.ft.com/content/7ec7731d-194a-4615-994a-b1dde6060122
So, the Swedish legal and social rules and business culture need to be respected but the Russian legal and social rules and business culture should not be respected.
Maybe is up to the FT to decide which social rules and business cultures deserve respect and which don’t. Just not clear to me why the FT has been endowed with such impressive ability to discern.
Mactoul
Dec 12 2023 at 1:17am
All states are illegitimate from a radical libertarian perspective and all customs are stifling, So, there is no difference between Sweden and Russia and both should be equally respected or disrespected,.
I suppose FT is operating with a non-radical perspective and can actually discern that Swedish political culture is superior to Russia’s.
steve
Dec 12 2023 at 10:36am
Why not let the businesses decide? It looks like companies decide which cultures they want to work within. I think it is perfectly fine for them to try to change the culture to meet their needs/wants but it’s also perfectly fine for the countries to refuse.
Steve
Jose Pablo
Dec 12 2023 at 11:13am
But the discussion is not about what culture Tesla / the Swedish government deem superior. These are opinions and opinions are like buttocks, everybody has one but only some of them are interesting.
And there are some much more interesting “positive” discussions to have here:
* Should obedience to norms and culture be “content dependent” or “absolute”? The FT thinks they are “content dependent” (see their position on Russia) but here they say they are “absolute”, so they contradict themselves.
* Are Swedish social rules and business culture superior or inferior to the ones Pierre / Tesla are defending? The FT fails to have this discussion since the argument that “Swedish rules seem to be working well” fails to discuss the very real possibility that Tesla rules and culture would work even better (and, of course, to discuss what “better” means in this context)
Jose Pablo
Dec 12 2023 at 10:54am
can actually discern that Swedish political culture is superior to Russia’s.
Yes, maybe. But then they fail to discern that Swedish political culture is inferior to the political culture that Pierre is defending here. One in which individuals and corporations are free to enter into any set of voluntary contractual agreements they deem appropiate.
The FT is not trying to engage in a positive discussion on what “political culture” is “superior”. They, instead, offer a extremely poor argument, hiding the real reason behind their rational: that they “prefer” the Swedish political culture over the superior (politically, morally and economically) contractual individual freedom.
They, themselves, don’t believe in the argument they make instead, that investors need to respect the legal and social rules and the business cultures of the countries where they seek to do business.
The statement, to be valid, should then had been:
“Investors need to respect the legal and social rules and the business cultures of the countries where they seek to do business, provided that these rules and cultures are deemed superior by our outstanding ability to discern and even if this rules and cultures are inferior to the ones the investors want to adopt”
But this totally valid normative statement is not what the FT is really saying / making us believe they are really saying.
Jim Glass
Dec 16 2023 at 1:43am
Hmmm … I’m trying to think of a reason why the FT would draw a distinction between Russia and Sweden, would could their “moral concern” be, hmmm, I wonder, puzzling … oh, I think I’ve got it:
WAR
Revanchist, predatory war explicitly fought to conquer a free and independent country with a developing democracy and fold it back into the old imperial authoritarian state. While denying they population of the prey state even “exists”. And using the express strategy of attacking civilian populations to make them freeze in winter and so on, while committing atrocities and war crimes across the land.
Humph. I thought libertarians were really against all this kind of thing. I’d think you’d at least NOTICE it in a comparison. Guess not.
“Really? A foreign investor in the Jim Crow South should have respected the social rules and laws promoting and enforcing racism? A pre-WW2 foreign investor in Nazi Germany should not have employed Jews at senior levels? A foreign investor in Russia should respect its corrupt business culture? A foreign investor in Islamist countries should respect the legal and social rules mandating the way women may dress or behave? Strange morals!”
What morals? We’re libertarians! Why would we even look? Nothing to see in any of these places folks, just invest our money!
Anders
Dec 12 2023 at 10:59am
Sweden is at once one of the most unionized and liberal economies in the world. This rests on a tradition of compromise with unions to enable the latter. This is true, despite the high profile cases, especially in the 70s, when economic liberalism was started to be crowded out, top tax tiers were at 90% or so (which very few actually paid; there was very low income inequality and the thin layer of the rich could easily evade taxes, including simply, as Bjorn Borg and many others, moving abroad), and union forced entry into heavy handed into industrial policy to sustain the dying shipyard industry.
Overall, Swedish unions have traded countercyclical wage restraint in exchange for wage and some job security (Sweden has one of the least regulated labour markets in the world). Labour confrontation is rare, and when it does flare up, it tends to be in the public sector with some justification – teachers, for instance, received wages below the median and still could only dream of American salaries. Which themselves are far too low for the best of them for reasons of judicious resource allocation alone.
There is no legal mandate forcing Tesla to comply. But the cost Musk will face, including a pr desaster and abandoning Sweden altogether, is huge compared to simply tapping into a compromise culture that will include concessions, but also a sustainable model for expanding his presence in both production and consumption.
UAW workers, Swedish media noted with astonishment, make over 150 k usd a year. Apart from ceos, entrepreneurs, and wholesale finance, few would make that kind of money in Sweden: a physician starts at less than a third. If the Tesla union did anything that brash, trust the Swedish yellow press to scour their publicly available income records and shame them with the same verve they shame Tesla for blocking unions in the first place.
Legislation leaves Musk free to decide what the Hayekian law says. As a fervent liberal himself, he should heed it for that reason financially, reputationally, and morally.
Pierre Lemieux
Dec 13 2023 at 11:24am
Anders: Among other things I don’t understand in your comment is your last paragraph. What do you mean by “what the Hayekian law says”? In which sense is Musk “a fervent liberal”? And he should heed what?
Anders
Dec 13 2023 at 2:23pm
It was a reference to law versus legislation
Jim Glass
Dec 16 2023 at 2:26am
Ha. I was just listening to the notable anarchist, Noam Chomsky, talking about the future world freed from government, and being asked about “libertarianism”. Of course he said he is a libertarian, in the true meaning expressed by the real Adam Smith and Thomas Jefferson.
“BUT the USA sense of the word is now the opposite! The American libertarian is the Extreme Advocate of Total Tyranny. [Applause!] It means power given into the hands of private unaccountable tyrannies. Worse than state tyrannies. The corporate system is pure tyranny … the extreme opposite of the meaning of ‘libertarian’ in the rest of the world…”
Noam Chomsky on Right-wing Libertarianism
The corporate boot on the neck of the working man.
I thought, anarchist vs anarchist, always fun.
Then I saw this story about Sweden, among the most free of nations, with a people with a strong social preference (individual-by-individual, of course) for unionized work forces. And I hear of the good people and organizations of Sweden peacefully asking Telsa to agree to a union contract — with the government staying out of the dispute.
And then I read you here saying, in the name of libertarian principles, that the government should intervene using the power of the state to crush the union movement — so Elon can squeeze a few more bucks out of the working class to top off his deca-billions partnership with the CCP.
Maybe Noam has a point?? I mean, we can see how he gets that applause. 🙂
Pierre Lemieux
Dec 16 2023 at 12:16pm
Jim: What do you mean by “with a people with a strong social preference (individual-by-individual, of course)”? How do you aggregate the different preferences and values of different individuals to get “a social preference”?
See a summary of the problem in my “The Impossibility of Populism.” For a radical and more detailed criticism of social choice, see Anthony de Jasay, Against Politics (Routledge, 1997).
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