The Right Coast

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Monday, January 19, 2009

Unions
Mike Rappaport

Through much of American history, people -- especially on the left -- have loved unions.  Sorry, I just can't understand that.  It seems to me that the principal effect of unions is to confer monopoly wages on their workers, through a mechanism, the strike, which imposes high costs on innocent third parties, including nonunion workers. 

My wife recently had one of the pictures I inherited from my parents reframed, and we discovered some newspapers from 1953 that had been in the back of the picture.  The headline from the New York Daily Mirror read, "Milk Starts to Flow in Shops, Price Rise Due."  The explanation was that a strike by the AFL dairy workers had just ended, with a wage increase.  No milk for the little children -- just great.

It is also ironic that the story ran in the New York Daily Mirror, which would be out of business in less than a decade.  It published for nearly 40 years, but it was killed by the 114 day New York newspaper strike in 1962.  Wow, 114 days!   

Most classical liberals assume that unions should be allowed, but the argument is quite a bit harder than people realize.  If we prohibit horizontal price agreements by firms, then it is hard to understand why workers get to do the same thing.  It is true that unions could provide some benefits, but if so employers would have an incentive to use them without the need for strikes.  If unions are allowed under classical liberal principles, that would have to be under quite different legal regulations than the law now employs for unions.

Happily, for some time unions have only been powerful in the public sector.  That, of course, does not mean they are harmless.  When I was growing up in New York City, in 1968 the city teachers -- illegally -- went on strike for more than 7 weeks!  I don't think we started going to school until November!  (Those were the days of John Lindsey, not Ronald Reagan, and the teachers, unlike the air traffic controllers, were not fired.)  In San Diego, the government employee union has essentially bankrupted the city with a corrupt pension deal.  And now, of course, California looks to be moving in the same direction, in part due to government employee unions. 

Still, restricting unions to the public sector is helpful.  But sadly if our President has his way, that won't be the case.   

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Comments

To see just how malign unions are it helps to have lived in pre-Thatcher Britain. Her reforms proved pretty effective and had two thrusts. (i) Make unions subject to the law, like everyone else. (ii) Move power within the unions from the officers to the members.

Posted by: dearieme | Jan 19, 2009 7:00:00 AM

Financial mismanagement by union officials of their members' pension funds is a huge problem that everyone treats as business-as-usual. Google "Diplomat Hotel Hollywood Florida financial scandal" for a good recent example.

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Posted by: Antivirus_man | Dec 5, 2010 8:07:17 AM

It is true that unions could provide some benefits, but if so employers would have an incentive to use them without the need for strikes.

Posted by: quail hill | Jul 28, 2011 9:21:01 PM