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Tilting at Windmills

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November 7, 2007
By: Kevin Drum

GOOD UNIONS, BAD UNIONS....Chris Hayes says he supports unions even though unions sometimes do bad things:

In terms of how to reconcile good behavior of the unions with the bad, I don't really understand why that's an issue. How do you reconcile the good behavior of lawyers with the bad? Or the good behavior of cops with the bad? Everyone agrees there are bad lawyers, bad cops and some bad unions, but that doesn't mean we shouldn't have laywers, cops and unions, right?

Ezra Klein agrees:

For all the times someone asks if you can still support unions even though X union did Y thing, you never hear anyone ask whether corporations should, in principle, still exist even though Enron really sucked. But that's just part and parcel of the argument about the UAW, the teacher's unions, and so forth, which are much less about the unions and the systems involved than they are about the legitimacy of organized workers in the first place.

Ah, but here's the thing. It's easy to support corporations in principle because they're the building blocks of market capitalism, and there's a tremendous amount of evidence that market capitalism produces spectacular economic growth. Within the mainstream of the economics profession there are lots of arguments on the fringes about regulation and network effects and institutions and so forth, but no one denies that, fundamentally, market capitalism is the only feasible way to run a modern economy.

Unions have no such luck. Support for unions is spotty among economists, and the academic research about their benefits is mixed. So while throwing out the laissez faire baby with the Enron bathwater is, literally, unthinkable, unions have to earn their keep on a case-by-case basis, so to speak. There's really no way around that.

Kevin Drum 2:32 PM Permalink | Trackbacks | Comments (75)

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A remarkable sales job done in large part since the '50s, when the majority of blue collar workers in the US were union members. Remember the "Look for the union label" TV commercials?

As the right seeks more power for the 'market', those who actually support the market by buying manufactured goods are increasingly marginalized.

Let's face it: the goal of a "Free Market" is one thing only: profit. And as the focus of attention is increasingly in quarterly reports, long term issues like "will there be anyone to buy our goods" are pushed aside.

Posted by: SteveAudio on November 7, 2007 at 2:43 PM | PERMALINK

A question from a non-economist: Does market capitalism require corporations?

Posted by: RSA on November 7, 2007 at 2:46 PM | PERMALINK

This is a nutty comment, Kevin. Are you proposing to forbid unions, to forbid people from exercising their freedom of association to bargain for better terms and conditions of employment? All the labor laws do fundamentally is prevent companies from sending in the Pinkertons, whether private or their public equivalent, and bashing the heads of people who want to join together to bargain. That's what we had before. Is that what you want? Or are you going to have a Super Labor Board that divvies out the good-union-bad-union badges?

Posted by: urbanlegend on November 7, 2007 at 2:47 PM | PERMALINK

Ah yes, apologetics from the learned classes.

Unions are the ones who brought us work safety rules, 40 hour work weeks, and paid vacation and sick time. They were fighting for medical leave long before Clinton signed it into law. They're now fighting for universal health care.

But no, let's keep concentrating on what economists and academics tell us what unions do. Those blue-collar folks could never really understand.

Posted by: geml on November 7, 2007 at 2:50 PM | PERMALINK

RSA: Does market capitalism require corporations?

No. However the large amounts of capital required for modern economies of scale would be very hard to raise without the limited liability that incorporation gives shareholders.

Posted by: alex on November 7, 2007 at 2:52 PM | PERMALINK

So what you're saying is that because a bunch of guys who belong to a white-collar union don't feel that comfortable with the blue-collar help getting similarly organized, the concept of collective bargaining will always be at a disadvantage?

That sounds a lot like "because right-wing corporatists have been winning the propaganda war, we should just take their framing as the only way to discuss things".

By the way, your description of corporations as (presumably essential) building blocks of a market economy seems a little triumphalist. There are certainly many other functional forms of business organization, and fast-paced market economies have been around for rather longer than the limited-liability corporation. Indeed the corporation in its current incarnation (a legal person, and required by law to be a sociopath) dates only to the last decades of the 20th century, even in the US.

Posted by: paul on November 7, 2007 at 2:53 PM | PERMALINK

Who ate your brain?

Posted by: tatere on November 7, 2007 at 2:55 PM | PERMALINK

Support for unions is spotty among economists, and the academic reasearch about their benefits is mixed.

I have no idea what the academic research says but the idea that workers, particularly low skill workers, would face a better circumstance without unions and the bargaining power they bring is, to use your phrase, literally unthinkable. Even with unions, its pretty clear that large corporations have gotten the upper hand in this relationship. Right now we have multi-billion dollar movie companies playing hardball over what is really a pittance to them in their negotiations with professional writers. We're talking about pennies here in the context of a pretty specialized labor force. And you seriously want to argue that there is a question as to whether unions are helpful in this environment?

Posted by: brent on November 7, 2007 at 2:58 PM | PERMALINK

So while throwing out the laissez faire baby with the Enron bathwater is, literally, unthinkable, unions have to earn their keep on a case-by-case basis, so to speak. There's really no way around that.

Good point Kevin. This also explains why conservatives are anti-union while liberals are pro-unions. Conservatives believe we should base our economic policies on the study of economics and economists. Since economists are anti-union conservatives are also anti-union. Liberals, however, believe our economic policies should be based on feelings, pcness, and interest groups and that's why they're pro-union. That also explains why economists support Republicans and why the economy does so well under Republicans as its doing now.

Posted by: Al on November 7, 2007 at 2:58 PM | PERMALINK

Is it really true, Kevin, that one can't argue that Unions are necessary to curb the excesses of corporations in general? I think their power was one reason CEO pay was more moderate in the 50's despite incredible economic expansion, for example. And can't one argue as did somebody above that they increase the general welfare?: "Unions are the ones who brought us work safety rules, 40 hour work weeks, and paid vacation and sick time. They were fighting for medical leave long before Clinton signed it into law. They're now fighting for universal health care."

Why, given these results in the past, must oen keep justifying Unions anew all the time? And why, if these are not significant, are you such a strong supporter of Unions.

Cripes, your contrarianism is ridiculous at times.

Posted by: David in NY on November 7, 2007 at 2:59 PM | PERMALINK

Unions desire to get the largest amount of pay for the least amount of work. They protect the mediocre employee and stifle motivation. We would be better off without any of them.

Posted by: Dissenter on November 7, 2007 at 2:59 PM | PERMALINK

There are a lot of financial instuments, such as "futures," that reduce the effects of volatility/uncertainty in financial markets.

There are fewer such instruments that reduce uncertainty for workers. From a historical perspective, most of the instruments that reduce uncertainty for workers came about because unions.

Besides the fact that life with no certainty is miserable (i.e. how will I get my next meal, what happens to me if I am injured on the job), such safeguards are important for a working economy.

Clearly, unions have their problems, as evidenced by Western Europe. If unions lose power then the safeguards for workers will gradually erode, and I think there is a point where this becomes detrimental to the economy, because no economy can function in a state of dramatic volatility and uncertainty. We know that in financial markets, so why do we have such a hard time accepting this in labor markets?

Posted by: Bozan on November 7, 2007 at 3:02 PM | PERMALINK

Unions don't exist to produce economic growth - they exist to protect the human rights of workers from management excesses. And while they're at it, they tend to prevent corporations from diving into the 'pure capitalism' cesspool which, in the long run, produces third-world economies. Unions are good for everybody but the cutthroats at the top, who will, if we can reinvest some power in the unions, be forced to limit themselves to one, medium-sized yacht per family.

Posted by: cmac on November 7, 2007 at 3:04 PM | PERMALINK


So while throwing out the laissez faire baby with the Enron bathwater is, literally, unthinkable, unions have to earn their keep on a case-by-case basis, so to speak. There's really no way around that.

And how are corporations any different? Are you saying corporations don't "have to earn their keep" on a case by case basis? Jeesh, this argument doesn't even make any sense.

And by the way, the middle class was created by unions. The capitalists would have us all working for .25 cents an hour-still. That's just a fact.

Posted by: BobbyK on November 7, 2007 at 3:10 PM | PERMALINK

RSA poses a great question, and it deserves an answer.

Further, economists don't support or understand unions. Economists look to a mythical "most efficient allocaton of resources". The question "efficiency for what" is seldom asked. The social toll of this search for "efficiency" is not something economists deal with very well. They don't realize that economics and economies exist within social structures, not the other way around.

People largely depend on the mass media for their information on things like this, and the mass media gatekeepers do not like unions. Ergo, damn little positive about unions gets into the media discussion.

Mostly they believe the free market will solve everything. Gilded Age, here we come!

Posted by: zak822 on November 7, 2007 at 3:11 PM | PERMALINK

Kevin, you bravely defended the corporation as the foundation of our modern economy (somehow modern seems to translate into best these days, weird, huh?) but you never stood up for unions as the backbone of the labor movement and working class families in this country. (By the way, i dont mean modern working class families, that baby was flushed with the bathwater in the name of free trade years ago.)
It doesn't matter, whatever we do to keep wages fair, families fed, and industry alive, there's always a cheaper way that cripples americans and widens the wealth disparity, and for who? For the corporate stockholders enjoying limited liability with their martini's. Think of the moral hazard of that.

Posted by: bindleson on November 7, 2007 at 3:15 PM | PERMALINK

erm ...
I think Marx and Engels had a crack at analysing this imbalance some time ago.

Posted by: jr on November 7, 2007 at 3:17 PM | PERMALINK

However the large amounts of capital required for modern economies of scale would be very hard to raise without the limited liability that incorporation gives shareholders.

Thanks, alex. I wonder if there's any reasonable analogy to be made between the protections that corporations provide shareholders (and corporate officers) and the protections that unions provide workers?

Posted by: RSA on November 7, 2007 at 3:21 PM | PERMALINK

The great economic growth in the late 40's and 50's occured at the same time as the highwater mark for union membership as a percentage of the workforce. Union membership has been declining, but how much of that is worker choice and how much of that is corporations shipping union jobs overseas?

Posted by: tomeck on November 7, 2007 at 3:23 PM | PERMALINK

Kev, that Al is the only one supporting you here should tell you something.

Posted by: Disputo on November 7, 2007 at 3:25 PM | PERMALINK

You say: "no one denies that, fundamentally, market capitalism is the only feasible way to run a modern economy."

Living in a country that has single payer universal medical insurance which for most people is cost-free, complex supply management of almost all major agricultural commodities, tightly regulated utilities right down to which channels cable TV can carry, and on and on... I would certainly take issue with your contention. Its a blinkered view of the possible, a willful disregard for humaneness in a modern MIXED economy; and at its core a theological nostrum.

In fact, in daily life, the price of fuel is the only apparently market regulated piece of pricing I face routinely and even that is more apparent than real. Is the mixed economy doing me harm? Not at all; its the only way to go in my opinion.

Posted by: anon on November 7, 2007 at 3:27 PM | PERMALINK

To be fair, I think Kevin was attempting to explain why the arguments put forth by Chris and Ezra won't gain any traction. The problem is that he is looking at the Corporation vs. Union discussion through a narrow prism, i.e. what economists say about their relative value and how they affect the GNP and the DJIA. As other posters have commented, that doesn't mean shinola to someone who is trying to put food on the table and doesn't have a prayer of buying a plasma TV in the near future.

Posted by: Barringer on November 7, 2007 at 3:29 PM | PERMALINK

anon: Living in a country ...

Which country?

Posted by: alex on November 7, 2007 at 3:30 PM | PERMALINK

Capitalism may produce spectacular economic growth, but can traditional capitalism and the financial capitalism that seems to dominate more and more survive without growth? Who would buy stocks unless they felt that they would increase in value? In the resource constrained world we face today growth must be drastically curtailed. Rather than a crisis for unions this may be the greatest crisis of capitalism ever faced.

Posted by: blog on November 7, 2007 at 3:39 PM | PERMALINK

A question from a non-economist: Does market capitalism require corporations? Posted by: RSA

No. A corporation is merely a legal entity. If your question is whether contemporary market capitalism requires large companies, that's open to interpretation, a matter of opinion.

Posted by: JeffII on November 7, 2007 at 3:44 PM | PERMALINK

Mother Jones, the tireless labor organizer, always belittled the union leadership and accused them of lining their pockets with union members's dues. She already knew what Robert Michels learned later about the iron law of oligarchy.

Posted by: Brojo on November 7, 2007 at 3:49 PM | PERMALINK

So while throwing out the laissez faire baby with the Enron bathwater is, literally, unthinkable, unions have to earn their keep on a case-by-case basis

KD, what makes you think individual corporations are different from individual unions? You pose a legal structure as "the economy" (using Enron as emblematic of market capitalism; very snarky) and then juxtapose those connotations with unions which arose to protect workers from the depredations of capitalists not capitalism.

If I extrapolate your apples to oranges comparison, how can it be that the components of the Dow today aren't the same as 30 years ago? It could be that those legal entities have had to earn their keep on a case-by-case basis.

Read "Out of This Furnace" by Thomas Bell (a favorite here in the 'burgh) for a good depiction of why unions were needed in the steel industry but took 50 years to form. GM and Ford were using Pinkertons in the 30s and 40s just as Frick did in the 1890s.

By the way,the USW is still around but of all the steel companies operating 30 years ago only US Steel survives.

Posted by: TJM on November 7, 2007 at 3:53 PM | PERMALINK

There are 2 kind of union-haters out there, the smart ones and the retards.

You're talking to a retard if he gripes that unions jack up pay beyond what firms in competitive markets can afford. That's bullshit and the smart union-haters know it.

Higher pay can co-exist with higher profits because it attracts better employees, reduces turnover and encourages firms to economize on expensive labor by investing in capital equipment, training, and efficient work methods. All three lead to productivity gains that offset higher hourly wages. (Southwest is the most highly unionized airline in the US -- it's also the only one that's consistently profitable.)

Unions, however, can also block management's power to act unilaterally. That's the one thing aobut unions that the smart union-haters really hate. If a company has market power or enjoys monopoly rents, unions will ensure that some of those gains get shared with labor. That's the only way unions could reduce profits but it's not a reduction caused by diminished competitiveness.

Posted by: Auto on November 7, 2007 at 4:07 PM | PERMALINK
It's easy to support corporations in principle because they're the building blocks of market capitalism

No, they aren't. Corporations are a state intervention into the economy and subsidy of certain participants that violate the fundamental principles of free markets. They may (obviously) be the building blocks of corporate capitalism, but they don't have much at all to do with "market" anything, the mythology of the modern Right aside. Fictition legal persons and exemptions from personal liability granted by the soveriegn are not features of free markets, they are more like the royal monopolies from which they directly evolved.

and there's a tremendous amount of evidence that market capitalism produces spectacular economic growth.

There seems to be a clear trend that nations that are already leading the world in technology and/or experiencing rapid economic growth in the last few centuries tend to adopt something generally like corporate capitalism.

I'm not as sure, though, that there is anything like "a tremendous amount of evidence" that, ceteris paribus, corporate capitalism tends to produce rapid economic growth. Then again, as much bloviating as goes on about things like this, there aren't a lot of (even with statistical controls, much less direct comparisons) good ceteris paribus comparison to ground these kind of conclusions in in the real world.

Posted by: cmdicely on November 7, 2007 at 4:30 PM | PERMALINK

market capitalism is the best method developed in history for accelerating the overuse of resources to the point of disaster.

Posted by: MarkL on November 7, 2007 at 4:34 PM | PERMALINK

"Support for unions is spotty among economists, and the academic reasearch about their benefits is mixed."

I would love to see the empirical support for either of these claims. Besides Republican economists who don't like unions, some economists don't like collective bargaining because they can't accommodate it easily in their econometeric models -- and these days it's the elegance of their models that gets them published and promoted or not. They prefer the unfettered executive, making decisions with the available resources solely on what grand visions and competitive strategy dictate. It's better for their formulas. Unions are too, well, messy.

The interesting thing, too, is that it's the anti-union people who want government to interfere in the marketplace, to use its power on the side of management to prevent people from doing what they want to do. Yes, we think it's great to organize people into a corporation granted special powers by the state, but you are not allowed to organize your fellow workers in the same or similar jobs to bargain with the corporation. We'll send the police in to stop you for those guys who can't field their own private armies. The courts will back us up with injunctions, too. After all, we play golf at the country club with the judges -- although we're sure they'll be fair to both sides.

Suddenly, laissez-faire doesn't look so great, does it? Yet there's old FDR, doing more than the anti-union people to honor the vision of Adam Smith even as he tweaks it a bit to bring "labor peace." And the freedom of choice of Milton Friedman, too.

Posted by: urbanlegend on November 7, 2007 at 4:39 PM | PERMALINK

It is up to union members to make unions relevant. Voting mobsters into the leadership and tolerating them, just like in politics and corporate shareholder meetings, will have disastrous effects for unions.

Never forget the murders of Joseph Yablonski, his wife and daughter by the UMW leader for challenging him in 1969. A heinous murder should not be the reason to reform a union's leadership.

Many unions' troubles could probably be resolved with better regulation, just like corporations' shareholders are better served by more regulation, too. That is a problem for union members and shareholders, since the government is in league with the corporations who wish to expoit them both, which leads me back to not voting for and tolerating mobsters in leadership positions.

Posted by: Brojo on November 7, 2007 at 4:48 PM | PERMALINK

Kevin has a blind spot when it comes to workers—or, even worse, those who want to protect them. Remember the great debate over the pendulum at the Griffith Park Observatory? No? Well don't worry, it was Kevin passing along talk radio wisdom about stupid regulations. Except it turns out that these safety measures might actually save someone from getting hurt by being hit by a heavy metal ball. It doesn't look like that debate changed Kevin's point of view much.

Unions are necessary to keep management from running roughshod over their employees, from making workers run all the risks, from keeping them in the sort of dependent servitude that makes true democracy impossible. Non-union workers in Iowa, to take an example, exposed only to employer propaganda, tend to vote their employers' interests. Unionized employees tilt Democratic—not monolithically, but enough to tell us that they are making up their own minds, not voting like serfs.

And I use the word "serf" advisedly. An employer may not be able to sell its employees. It cannot kick them out of their homes. But it can do just as much damage to them by closing their plants, laying them off, cutting off their health care benefits.

You like a truly union-free society? Try Pakistan. Or Egypt. Or Zimbabwe. You like democracy? Look to the contributions that unions made in Poland, Korea and South Africa. Giving workers power over their lives – even through imperfect vehicles – is a good thing.

Posted by: Henry on November 7, 2007 at 5:17 PM | PERMALINK

Shorter version: the economists who don't think unions are significant contributors to prosperity are the same ones who thinks that when Bill Gates walks into a bar all the other patrons temporarily become rich.

Unions are primarily about distributional effects, which most economists ignore. It turns out that distribution also has a salutary effect on growth, with really lousy economic performance being seen in countries where the average worker can't expect a decent return on incremental effort (think pretty much any kleptocracy). Economists claim to understand this principle when they talk about how taxes on the rich depress wealth-creation, but ignore it with regard to transfers from the non-rich.

Posted by: paul on November 7, 2007 at 5:23 PM | PERMALINK

How about we start waterboarding economists until they "realize" that unions are good for the great majority of workers?

Works for me; economists being the offal eaters of the "social sciences."

Alan Tomlinson

Posted by: Alan Tomlinson on November 7, 2007 at 5:25 PM | PERMALINK

Um, a clarification?

Kevin, when you say "unions have to earn their keep on a case-by-case basis" are you a) endorsing this position, or b) just saying that's how it is? If (a), then the ball-busting you're getting is probably deserved. If (b) not so much so, but an opinion on why "there's no way around that" would be interesting.

Just wondering.

Posted by: thersites on November 7, 2007 at 5:57 PM | PERMALINK

If people are free to organize corporations, others should be free to organize unions.

"...unions have to earn their keep on a case-by-case basis": don't thinks so. Read about John Kenneth Galbraith's concept of "countervailing power." That establishes the general principle.

Posted by: Bob M on November 7, 2007 at 6:02 PM | PERMALINK

Chris Hayes:Whenever people talk about bad experiences with unions I always ask if they’ve ever had a bad boss. Of course, everyone has, but no one thinks we should get rid of bosses.

Well, I think we should get rid of bosses. But Chris and Ezra both miss the point. We know that capitalism can exist apart from democracy. The comparison should be to democracy, not to corporations or bosses.

Thom Hartman makes the argument that unions bring democracy to corporations. Thus, if you believe in democracy as an organizational principle, shouldn't a bit of democracy also be good for a corporation? And, if one takes it a bit further, why don't we support democracy as an organizing mechanism for corporations? (Not just for shareholder voting, which is not very democratic in practice.)

Posted by: Miller on November 7, 2007 at 6:28 PM | PERMALINK

"Academic research about their benefits is mixed"?

Well, I guess that tells me a lot more about academia than it does about unions.

This is such an incredibly stupid post it hardly deserves a rebuttal.

Memo to Kevin- over the past 60 years corporations have spent exty billion dollars brainwashing you.

De-program yourself.

If corporations are that great, why can't they live without military-industrial Keynesianism? And if unions are that useless, why do corporations have to break the labor laws to keep unions out?

This kind of post is typical of why I've never bought or subscribed to the Washington Monthly.

Posted by: serial catowner on November 7, 2007 at 6:31 PM | PERMALINK

As Barringer said above, I think Kevin isn't clear about whose "support" for unions he is referring to...

Even if you agree with his point about laissez faire capitalism and economic research, you still can't say that THAT is the reason unions have a difficult time finding supporters: the average guy mouthing off about teachers' unions sure isn't quoting academic papers from economics journals.

"Support" among the voters, even from pundits, is "orthogonal" (statistically independent) to any evidence from economics.

Posted by: luci on November 7, 2007 at 7:16 PM | PERMALINK

While I consider myself liberal, I've always had a negative impression of unions for two reasons:

1. Years of media reports that teachers' unions oppose proposals for merit pay, educational requirements for teachers and other suggestions for improving our sad educational system.

2. An impression -- not sure where I got it -- that unions have contributed to American automakers' inability to produce anything as reliable as a Honda Accord.

Can anyone comment if these impressions are correct or not, and why?

Posted by: Rebecca on November 7, 2007 at 7:32 PM | PERMALINK

Funny. People forget where Kevin is politically. He is an oldfashioned Republican, he only seems leftist because of the times we live in.

Thats the untold story: how milk-toast moderates like Kos and Drum and Josh Marshal came to be the radical left.

Posted by: jimmy on November 7, 2007 at 7:57 PM | PERMALINK

Rebecca--

Teachers unions have, in fact, resisted merit pay. They do so for good reasons: because of (1) their deep-seated mistrust of school administrators, who would decide who gets rewarded under a subjective system, and (2) their resistance to using standardized tests as a measure of teaching performance (or student performance, for that matter, but that is a different issue for another thread).

I speak from a biased perspective: I am a lawyer who represents teachers asnd teachers unions in California, where CTA is big and powerful and plays a major role in all discussions about education reform. I don't know enough to give a seminar on what's right, what's wrong and what needs to be done to make our schools better, but I will say, from my own limited and anecdotal experience, that letting school boards, superintendents and principals pass out thousands of dollars of one-time bonuses to some teachers and withhold them from others in the form of merit pay is just asking for trouble. There are too many administrators with agendas, too many superintendents who think that God should have chosen them to bring down the Ten Commandments, and too many principals who like to wield power for the sake of wielding it to risk letting them hand out this sort of reward.

As for standardized tests, others who have commented on this subject on earlier threads can speak more knowledgeably than I can, but I think that we can all agree that this sort of merit pay system only increases the risks of teaching to the test.

More to the point is whether this sort of competitive reward system will do much good in the long run. Teachers are not altruists and will not turn down pay increases. But is a merit pay program, which would predictably favor more experienced teachers, actually helpful in a system in which school districts are having a hard time keeping younger teachers in the profession? I claim no expertise, but it seems as if it might only accentuate the problem even if we put aside the fairness issues.

As for the UAW, let's remember that Walter Reuther proposed in the negotiations in the late 1940s that management make more affordable cars. The Big Three (and the smaller fry) told him to mind his own business and let them run theirs. It wasn't the UAW that told GM and Ford to bet everything on SUVs or to put big fins on the cars in the 50s or resist smarter design from the 70s on.

The UAW has, from time to time, sided with automakers on environmental issues, such as CAFE. But that's hardly enough to blame them for the industry's design problems, which are all the result of management's decisions.

Posted by: Henry on November 7, 2007 at 8:15 PM | PERMALINK

Jimmy is exactly right. More to the point, the only people who don't understand where we would be without the likes Walter Reuther, John L. Lewis, Sidney Hillman, David Dubinsky, and, yes, even Jimmy Hoffa, are "educated" tech/marketing/whatever workers like Kevin. Bless his heart. I come from a union family, but am now an academic of sorts. I hear this kind of crap all the time from tenured professors who, despite their fine accomplishments, have never really had to work, or live in the street, a single day in their lives. And the former union families that I feel solidarity with? Gone. No pensions, no reasonable paid vacations, no decent health care, no security, no middle-class wage. Nothing except a stake in an "Ownership Society" that they have no need of, or any place in. The real owners will see to that.

Posted by: redterror on November 7, 2007 at 8:18 PM | PERMALINK

During the late 90s, a bunch of economists did some studies of productivity versus unionization and found that lack of unions was in fact correlated with lower productivity. Anecdotal investigation showed that this was typically the result of unions being able to capture some part of productivity gains in the wages and jobs security of workers. Absent some countervailing force, the immediate short-term result of a significant increase in productivity for a company with a stable market is a significant decrease in the number of workers, and workers aren't stupid.

Since then, the playing field has continued to tilt toward companies and against workers -- consider, for example, that if a company fires someone for union activity, the sole penalty, should they be found guilty after years of investigation and litigation, is to reinstate the worker with back pay. Bank robbers would be kneeling in the street crying tears of happiness were the law to offer them half so good a deal.

Posted by: paul on November 7, 2007 at 8:26 PM | PERMALINK

"Um, a clarification?

Kevin, when you say "unions have to earn their keep on a case-by-case basis" are you a) endorsing this position, or b) just saying that's how it is?"

When I read it I thought it was pretty clear that he was saying b: corporations are getting a free pass on being sometimes good and sometimes bad because the academics have their backs.

I think there is a reasonable amount of truth to that.

Posted by: jefff on November 7, 2007 at 8:29 PM | PERMALINK

there's a tremendous amount of evidence that market capitalism produces spectacular economic growth.

fundamentally, market capitalism is the only feasible way to run a modern economy.

These are two separate issues.

The question you need to start with, but fail to address, is, has the "spectacular economic growth" we have had in the past 5 decades delivered the society we want?

After you decide that, then you can move on to say that, yes, there are other feasible ways to run an economy.

Posted by: billy on November 7, 2007 at 9:26 PM | PERMALINK

Speaking as an economist, I have to let you in on a little secret of the profession--the mainstream of the field is completely worthless on questions like this one.

Posted by: rufustfyrfly on November 7, 2007 at 9:42 PM | PERMALINK

Kevin,

I see from your union comment you couldn't possibly have read economist Paul Krugman's Conscience of a Liberal. Go do so.

Unions are a necessity for the existence of a middle class in a capitalist society.

Posted by: smacfarl on November 7, 2007 at 9:51 PM | PERMALINK

I see you're getting knocked around a bit, Mr. Drum, so I'm here to back you up. I don't personally know any union members (I'm a student) but I've never heard good things about them from non-unionized workers. At the same time, if they can be a check against the ridiculousness of CEO pay, I want them there. I do think that it is inappropriate for them to use part of union dues on non-union related political lobbying, but all and all I'm in favor of them. But only because they're better than the alternative.

Posted by: Steve W. on November 7, 2007 at 10:31 PM | PERMALINK

Al, it should be noted that you are, as usual, wrong when you claim "economists support Republicans and why the economy does so well under Republicans as its doing now." Most economists surveyed in the last election overwhelmingly supported Kerry's policies.

Posted by: mcdruid on November 7, 2007 at 10:40 PM | PERMALINK

kevin,

i've read you for years on and off and never commented before. but on this one, i need to. i generally enjoy your stuff, but your take on unions is simply off-base. i've seen other people make some of the main arguments why this is so in the comments, but i'm writing this post to ask you to publicly reconsider your views. this is for the following reasons:

1. the building blocks of modern capitalism involve a lot more than limited liability corporations. in china, they don't even involve that. but even on our home turf, the usa, capitalism, as any serious history reveals, developed through a lot of conflict and cooperation across different institutions - whether formal, such as businesses, government, and yes, unions - or informally, e.g. social movements, religious groups, etc.

2. your characterization of the universe of "economists" and "academic research" is far too narrow. instead of using milton friedman and gary becker as your paradigms of the nobel-prize-winning economist, try looking toward amartya sen, or even bob solow. they understand that the market needs to be buttressed by other kinds of institutions, and free exchange needs to be balanced by other principles.

3. this isn't really another argument, but looking back at your post, i am just struck by how glib you were. if you want more evidence, i suggest you read some sociology, read some karl polanyi, read some economic history (even certain works of institutional economics a la another nobel prize winner, douglass north), read some kiren chaudhry (from berkeley), some david woodruff, some patrick heller, some joe stiglitz (especially his lecture on democracy as the fruits of labor)...any of that stuff. even the world bank's update to its original east asia report gives some ideas as to why free markets are not maintained by companies alone, but many other kinds of actors as well in a kind of balancing act (even though those stories did not involve unions specifically so much). i won't even go into the specifics of all of the fundamental aspects of prosperity in american life for which unions are at least partially responsible, as that was covered the most in the posts i saw that were trying to correct you.

in conclusion: kevin, you owe unions an apology.

Posted by: sman on November 7, 2007 at 11:15 PM | PERMALINK

While everyone's piling on, I might note that a lot of people around 1750 or so would have asserted that "no one denies that fundamentally, absolute monarchy is the only way to run a modern state." That's not quite the same as a full-throated endorsement; it's just a lack of imagination.

Posted by: rabbit on November 7, 2007 at 11:24 PM | PERMALINK

This post is close to embarrassing. Where do you get that corporations are the 'building blocks of market capitalism'? They're actually quite anathema to the classic championing of markets, a point classical liberals like Adam Smith made repeatedly. Corporations are probably most notable for their ability to leech off public expenditures, turning them into private profits. They have very little to do with explaining why we have such miraculous 'growth.'

As for the claim that 'market capitalism is the only feasible way to run a modern economy,' could you please pick up at least one non-neoclassical book before spouting such claptrap? (Marxists & even some 'heterodoxists' don't smell that much.) That neoclassical economics, which assumes that markets are king, produces reams of information 'proving' markets are indeed king shouldn't surprise.

Also, growth is important, but it's far from the be all and end all of economic activity. We've got decent growth going on right now, but as you should know: the big problem with the economy is distribution. That's a topic, coincidentally, that you probably won't find featured prominently in your economics textbook.

Further, it's funny how growth in the last ~35 years of neoliberalism -- when the market has allegedly been freed up to do its goodness -- pales in comparison with growth rates from the postwar interregnum to '73, a period when the market was far less 'free' and decidedly more 'mixed.' Explain that one, please, if more 'free market' = more growth.

Posted by: Chris on November 7, 2007 at 11:31 PM | PERMALINK

market capitalism produces spectacular economic growth

That statement is only partly true. Capital is an input to economic growth, spectacular or not, but it can not add value to any good or service without another input: labor. Attributing all of the spectacular economic growth to a collective of capital, belittles the other component that capital requires to be able to add value and grow economies. This framing of how economies work is why I call it the dictatorship of capital. Capitalists think they add all the value to an economy and have gamed the political economy to perpetuate and increase their control of the return on their only input. Until a more equitable accounting of the value of labor inputs is enforced on the capitalist controlled markets, labor is always going to wage a difficult battle for some of the surplus value it adds to capital. That is why we need better government exerting greater control over capitalist collectives.

Posted by: Brojo on November 7, 2007 at 11:37 PM | PERMALINK

jefff on November 7, 2007 at 8:29 PM:

On reflection, I came to the same conclusion. Sometimes Mr. Drum is very dry and it takes me a while.

Posted by: thersites on November 7, 2007 at 11:50 PM | PERMALINK

Way back a long time ago, someone posted here one of hte more innovative thoughts I'd seen about unions. The idea was that each company should have its own union, so that unions would NOT span across companies.No UAW, for example. There would be a Ford AW, GMAW, etc. I believe he said this was the Japanese model. The author felt/gave proof (can't remember which) that in this setting the company-specific unions did a better job of acting in the interests of the stockholders than did boards of directors.

Never saw it discussed again.

Posted by: SJRSM on November 8, 2007 at 12:02 AM | PERMALINK

What's that? 3 of 4 members of the American Economics Association are Democrats? You don't say!

Posted by: mcdruid on November 8, 2007 at 12:03 AM | PERMALINK

market capitalism produces spectacular economic growth

Off the top of my head, I'd guess the three most spectacular economic growth stories of the last century are Japan, China, and Indonesia. I think it is debatable how capitalistic any of those are.

Posted by: mcdruid on November 8, 2007 at 12:05 AM | PERMALINK

Rebecca,

I would like to add a couple more points to Henry's excellent response regarding teacher's unions. This comment is not really about unions, but more as to why several people are against merit pay. My Father and Brother are both teachers, both work extremely long hours, both teacher's union members, and my Father was teacher of the year in his district recently. So I am a bit familiar with the subject. Oh, and both are against merit pay for teachers.

1. One additional reason that merit pay really does not work is because there are a lot of teachers for other subjects besides the ones that are tested. How are you going to do merit pay for Art teachers, or P.E. teachers, or teachers for other classes that are not tested, but necessary to develop well rounded children?

2. A reason that I believe is important, but is rarely mentioned, is that competition does not really work well for teachers. Teacher's are not law students. Teaching is supposed to be a supportive environment where teachers help each other, rather than a cut throat environment with everone for themselves. And by helping each other, I mean sharing methods that help other teachers teach better. Teachers, and by extension students, benefit from sharing methods and cooperation, rather than competition.

For example, let's say that we are both teachers, and you figure out a great way that helps your students how to read better, or do math better, or whatever. If there is merit pay, and we are both competing for a finite number resources (money), what incentive do you have of sharing your new teaching method with me? What incentive does your school have of sharing information with other schools if that means less money for your school? Keep in mind that we are both competing for the same resources, and if my scores improve, you get less money. You probably have no incentive at all.

Merit pay is one of those things brought up by people who think that market forces/competition can solve everything. Now, market forces work very well in the business world and several other fields. But for a lot of public goods (education, police, fire, parks, etc.) market forces do not work well and are even conterproductive.

Posted by: adlsad on November 8, 2007 at 12:36 AM | PERMALINK

Kevin,

A some one with a Master's Degree in Labor Economics from Cornell University I can say that two of the arguments you made in this post are just plain wrong.

First, most mainstream economists are democrats not republicans, as shown by polls conducted by the American Economics Association, the leading academic association in field.

Also as some one who wrote and co-authored articles on union wage differentials. I can tell you that most mainstream academics who study this issue will tell you that collective bargaining does tend to increase the compensation of workers in most industries. However, the way in which this occures differs from industry to industry.

Posted by: phayes2424 on November 8, 2007 at 3:39 AM | PERMALINK

"Kevin has a blind spot when it comes to workers—or, even worse, those who want to protect them. Remember the great debate over the pendulum at the Griffith Park Observatory? No? Well don't worry, it was Kevin passing along talk radio wisdom about stupid regulations. Except it turns out that these safety measures might actually save someone from getting hurt by being hit by a heavy metal ball."

There was a heavy metal ball at Griffith Park Observatory? Why was I not invited?!?

Posted by: Ronnie James CEO on November 8, 2007 at 8:23 AM | PERMALINK

The author felt/gave proof (can't remember which)

Ah, the Bush Cultist mindset in a nutshell.

Posted by: Gregory on November 8, 2007 at 8:32 AM | PERMALINK

Henry and adlsad - Thank you for your detailed responses explaining the arguments against merit pay -- it's appreciated.

Rebecca

Posted by: Rebecca on November 8, 2007 at 9:22 AM | PERMALINK

Capitalism contains two components, money and labor. Unions merely help shift the relative distribution of profits between these two components of the equation. As an example, Bill Gates did not create $40 billion in equity. After his initial successes due in no small part to luck of having IBM pick DOS, he leveraged the talent of his employees and engineers who created the products from which much of that wealth is derived, and as the capital component, he took his cut.

Unions are about giving labor a better negotiating stance in how the equity is distributed from the value added by the labor component of any "capitalistic" enterprise. In my opinion, the increase in the distribution of profits to labor during this century propelled capitalism into its current dynamic and out of its centuries old feudalistic past.

Unions as conceived in the United States probably saved us from flirting with the Socialism and Communism that wracked Europe throughout the 20th century, and indeed, the modified regulated capitalism with modest redistributive and social safety net policies is light years ahead of the pure free market nonsense espoused by the Ron Paul's of this country.

Posted by: BobPM on November 8, 2007 at 10:08 AM | PERMALINK

The author felt/gave proof (can't remember which) that in this setting the company-specific unions did a better job of acting in the interests of the stockholders than did boards of directors.

A union is not supposed to act in the interests of the stockholders, it's supposed to act in the interest of the employees. Sometimes those two sets of interests are aligned (in the macro sense, as both want a strong and profitable company) but sometimes they're not (i.e., it's in the interest of the stockholders to make the employees work as much as possible for as little as possible).

Posted by: Stefan on November 8, 2007 at 10:09 AM | PERMALINK

It's easy to support corporations in principle because they're the building blocks of market capitalism, and there's a tremendous amount of evidence that market capitalism produces spectacular economic growth. ...

Yeah, why worry about "trivial" stuff like social justice or a decent standard of living, when you can just revel in (largely theoretical) "spectacular economic growth", even though it never seems to "trickle down" to those directly RESPONSIBLE for it?

Hitler abolished the German trade unions, and Mussolini "made the trains run on time". And the capitalist machines purred like kittens! Now, weren't THOSE the days? [sarcasm]

Drum, I think you're absolutely full of it even proposing such a lame, "apples and oranges" comparison! Obviously, that's quite a lavish "ivory tower" you personally occupy.
__________

The Pakistani Accident
By Mario Roy [La Presse]

... Washington finds itself face to face with Islamabad in an untenable situation. In fact, the United States may: either continue to support a dictatorship engaged in crude and outright dictatorship, which is political suicide; or it must drop the dictator, which strategically is just as suicidal!

All that without even mentioning some troubling subsidiary questions:

One: How has the $11 billion the American Treasury has cabled to Musharraf's palace since 2001 been spent? With what degree of loyalty and conviction have the Pakistani Army and secret services pursued that good old "war against terrorism" to which their government committed itself for that $11 billion remuneration? And where is Osama bin Ladin, again?

Two: Now that the president and head of the Pakistani military has lent himself to what one might consider the most extreme of the coercive measures he may impose, what will happen if they now fail to maintain order - even a relative as well as an (of course) immoral order? And that, in a poor, divided, churning country, hammered by al-Qaeda (420 victims of attacks in four months) sharing borders with Afghanistan and with Iran, and, on top of all that, armed with nuclear weapons? ...
.

Posted by: Poiliu on November 8, 2007 at 10:22 AM | PERMALINK

All capital is the result of a surplus from the value added by labor. W. Bush thinks people are born with capital or borrow it from a bank. Markets can not utilize capital until a surplus is created by labor.

Once I was making an argument for slave reparations, saying the early slaves of the American South provided all of the surplus value that was used to build the fortunes of men like Thomas Jefferson and George Washington, but were never properly compensated for it. The rebuttal to my argument was that the slave owners' skill at organizing slave labor to clear forests and plant tobacco was so great that they deserved all of the surplus value added by the noncompensated slave labor. This attitude is generally how people still think about the value added by any labor in America, which should not be surprising since our nation was built on the backs of slaves.

Posted by: Brojo on November 8, 2007 at 10:33 AM | PERMALINK

Like Luci, I'm a liberal but have very negative opinions about many unions. I DO agree that unions are important. To deny that is foolish. But unions have simply overstepped their bounds in too many ways. The primary complaints I have are:

* Insisting on a certain number of workers to do a given job ("you need 34 musicians for this theatre")

* Insisting that only union workers can do a certain job (move a ladder, carry a box). I've worked at many conferences where an exhibitor is given a choice to pay $500 to have some union guy move a couple of boxes 100 feet or do without the boxes.

* Making it hard to fire a union worker (even one who is asleep at the wheel)

In my opinion, unions exploit as much as companies do. The idea that a school administrator can't fire a teacher that is burned out and is doing a lousy job because the union will make a fuss makes me angry. The idea that a union tells companies to pay people who aren't even doing work makes me angry. Sure, workers need to be protected, but not by dragging down the system.

Posted by: David on November 8, 2007 at 11:36 AM | PERMALINK

... Unions as conceived in the United States probably saved us from flirting with the Socialism and Communism that wracked Europe throughout the 20th century, ...

Ah, yes. The inherent "evils" of Socialism are SO manifestly evident. Thank God we live under a moral, "God-fearing", Capitalist dictatorship, eh? (Too bad it actually had to be dragged kicking and screaming, with blood on its hands, into a bitterly reluctant acceptance of the utterly democratic notion of collective bargaining rights.):

Cuba's Sin
By William Blum

"Each day in the world 200 million children sleep in the streets. Not one of them is Cuban."
--- Carlos Lege, Cuban vice president.

Since the early days of the Cuban Revolution assorted anti-communists and capitalist true-believers around the world have been relentless in publicizing the failures, real and alleged, of life in Cuba; each perceived shortcoming is attributed to the perceived shortcomings of socialism. It's simply a system that can't work, we are told, given the nature of human beings, particularly in this modern, competitive, globalized, consumer-oriented world. ...

Cuba's sin, which the United States of America can not forgive, is to have created a society that can serve as a successful example of an alternative to the capitalist model, and, moreover, to have done so under the very nose of the United States. And despite all the hardships imposed on it by Washington, Cuba has indeed inspired countless peoples and governments all over the world. ...

[Don't bother whining about it unless you've actually read it. It's completely, demonstrably factual.]
.

Posted by: Poilu on November 8, 2007 at 12:04 PM | PERMALINK
A union is not supposed to act in the interests of the stockholders, it's supposed to act in the interest of the employees.

Actually, its supposed to act in the interests of the union members, who are a proper subset of employees. Even in a equally-owned labor cooperative, the interests of a (even firm-specific) union and the interests of the shareholders (who are precisely equivalent to the employees) are not necessarily aligned, though they are likely to be far more often and far more closely aligned than in a typical publicly traded corporation.

Posted by: cmdicely on November 8, 2007 at 12:15 PM | PERMALINK

A union is not supposed to act in the interests of the stockholders, it's supposed to act in the interest of the employees.

No argument there (or with cmdicely) but I found it interesting that, for whatever the underlying motivation, the single company union's actions were better for the owners of the company than the board of directors. Perhaps a closer alignment of long term interests. Whatever, if true, it pays looking into further.

Posted by: SJRSM on November 8, 2007 at 6:17 PM | PERMALINK

Kevin, every once in awhile you say something so gloriously inane that I wonder how you managed make it out of high school This is one of those times.

Posted by: Kija on November 8, 2007 at 6:18 PM | PERMALINK

I could say a lot to this issue. Or I could just recommend without reservation that people read left-libertarian Kevin Carson on this issue.

And people positing the "essential" role of the limited liability corporation should at least flip through some of the alternatives which have been proven to also work - indeed, in that example, to beat the pants off of corporations, within the same geographic and political area. Hands down.

Posted by: Eric Finley on November 8, 2007 at 6:23 PM | PERMALINK

"Support for unions is spotty among economists, and the academic research about their benefits is mixed."

As a former union organizer, I must say that on no issue is the upper-middle class cultural bias of the liberal vanguard so apparent than when it comes to unions.

Any union organizer worth his salt will tell you that a winning campaign requires an environment in which workers have been deprived of their dignity. If it's all about a bigger paycheck, you can forget about it. The reason middle class office workers don't organize in any appreciable numbers is that labor relations have come far enough (and even farther in many cases) so that many, many people don't feel habitually crapped on by the boss, whether or not they believe they should be making more, getting more vacation time, etc.

And that's why middle class people largely have no sympathy for unions--because they have no empathy for/understanding of the cronyism, physical and mental abuse, and indignity that many lower class workers are forced to deal with. This is one of the proverbial negative consequences of the success of our movement (better treatment for all workers, regardless of union status), combined with the dynamism and adaptive capabilities of American capitalism.

Posted by: jeff on November 9, 2007 at 12:44 PM | PERMALINK




 

 

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