Can Union Backed Crowdfunding Rescue Hostess From Bankruptcy?

By now you’ve heard at least two opposing versions of the Tale of the Tearful Twinkies. In the first, a great American brand was driven into bankruptcy by inflexible unions despite the heroic efforts of bold, albeit foolhardy, investors. In the second, greedy vulture capitalists sucked the lifeblood out of a mainstream American company, destroying the jobs of thousands of hard-working blue collar workers as executives feasted on lavish pay and bonuses.

The “Who killed Hostess?” debate is likely to go on for some time. Since neither facts nor reason have any impact on the cherished views of tribal America these days, I suggest another approach to settling the matter.

If union supporters who think they can do a better job running companies according to the rules of social justice—eschewing the outmoded fetish of elevating considerations like profit and loss to paramount status—why don’t they band together and bid on the Hostess assets?

Thanks to the Jumpstart Our Business Startups (JOBS) Act and the new crowdfunding rules that allow small investors to pool their money to support worthy companies, every union member in America now has a chance to chip in $100 each and show us how it’s done. Union allies in academia and the press can also get in on the fun.

Think of the possibilities. Hostess, in the hands of millions of union members with a direct stake in showing how viable a heavily unionized company can be, can hire new managers and instruct them to run the company on sound union principles. Instead of having two different sets of delivery trucks for snacks and bread, how about a separate fleet of trucks for every single product! Think of all the extra jobs this would create. And, of course, a rule forbidding the drivers to touch the merchandise would guarantee even more jobs for others to do the loading and unloading.

Only the finest health care coverage, vacation policy, overtime pay, and defined benefit pension plan will do. And don’t forget lots of sick leave and time off to work on election campaigns on behalf of union-backed candidates. The new Hostess could also refuse to deliver products to nonunion supermarkets or convenience stores. That will show Wal-Mart who’s boss. No Twinkies for you!

Imagine how many companies would benefit if this approach were to catch on, revitalizing a moribund union movement badly in need of new avenues for growth. And if union members themselves are too tapped out to crowdfund all the unionized companies teetering on the brink of bankruptcy, why not use pension assets? Shouldn’t union pension funds be put to work exclusively supporting unionized businesses? Isn’t it hypocritical for pension funds to invest in companies that put profits ahead of people, funding some of the very vulture capitalists accused of bringing companies like Hostess down? Isn’t it time for union members to put their retirement money where their mouths are?

Think of how the economy would thrive with money from profits redistributed into wages. All that extra union pay would translate into more consumer spending, and since consumer spending drives economic growth, the U.S. would be back to full employment in no time. Just ask Paul Krugman, he’ll tell you how simple it is.

So ask not what your union can do for you. Ask what your union can do to remake the country. One Ho-Ho at a time.

Bill Frezza is a fellow at the Competitive Enterprise Institute and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his columns delivered to you by email, click here or follow him on Twitter @BillFrezza.