Hostess will shut down 36 factories on Monday and fire
18,000 employees. Republicans and Democrats blame each other for the demise of
an American icon:
People on the right are blaming demands by organized labor, while people on the left are blaming corporate greed and mismanagement.
From whichever side you view this issue, Hostess seems to be
the victim of the deadweight loss from rent-seeking. The Hostess labor union,
which comprises almost a third of the total employees, has been on strike for
months seeking additional concessions from management. The costs that Hostess
has incurred from denying the strikers has not only eliminated the potential
rent that the strikers are seeking but seems to have also destroyed a lot of
the producer surplus. While many are defending the union strike, it is
undeniable that the costs of the strike have ruined Hostess and now require a
white night buyer to save the jobs before the expected fire sale begins this
week.
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