A reader writes…
From the mailbag: a reader reacts to my last post on unions:
I have some feedback for you on your article,”Why Bosses Hate Unions.”
I found it just a really poor piece of journalism. It was incredibly one-sided, pandering, and missed several key issues. Yes, union workers make more money than their counterparts, but that is not the only reason bosses (or more accurately shareholders) hate unions. Unions also:
– Decrease innovation
– Increase Administration cost
– Force non-related political issues into the workplace
– Increase costs of employment – union wages
– Reduce the ability to promote, demote and fire employees based on performanceThis is one of MANY reasons why unions have fallen out of favor in our society. This is the main reason that public unions are increasing, vs private ones have shrunken – the feedback loop to results in the public sector is much smaller. (See hundreds of NY teachers being paid to do nothing)
Why didn’t you address this issues? Why didn’t you address the issues of increase competition due to globalization/technology? Why didn’t you further discuss the downsides of unionization and how many American’s perceive them to be out-of-date?
You didn’t because you are biased and a bad reporter.
Be less obtuse,
A.W.
LBO News from Doug Henwood 
This moron actually reads? And reads Left Business Observer? Consider this a coup, for getting the Nazi Jugend readership over to a site with real economic information.
I don’t know much about unions, but I ask:
1) Is there one flavor of union, or are there different approaches with different advantages/disadvantages? Does the success of a union depend on the qualities of the people involved? Historically, haven’t different unions performed differently? What role has the CIA played in union problems?
2) Are unions critiqued more then other institutions in our economy? Are the faults of unions and their alternatives compared with each other or is there a bias such that only some problems are placed on the public stage?
I would also add that A.W. seems to demand that the union post offer a detailed discussion of unions. That could be a book. The goals of that post were more modest; to present data about membership trends and wages. There was one assumption–“It’s no wonder employers hate unions so much”, but that was not the main thrust of the essay.
Let’s look at those:
1. Unions do tend to have a “lump of labor – that machine is taking my job!” attitude in the US, but that’s not inevitable. German workers and unions don’t fight against any and all automation. Would be nice if US unions didn’t oppose technology and retraining as long as said automation didn’t result in layoffs or wage reductions – none of that “keeping three redundant fireman on a train that doesn’t need them anymore” stuff.
2. Any large organization along hierarchical grounds is going to be bureaucratic. Big unions are bureaucratic – and so are the companies they’re bargaining with. If someone can figure out how to run large organizations like that without the traditional “military”-style bureaucratic hierarchy, I’m all ears – that’d be good in market terms as well as labor terms.
3. Much too late for that, since the workplace is quite political in the first place. It’s just usually management’s political views.
4. This guy doesn’t realize that the market clearing wage is a result of bargaining – it doesn’t just magically appear. Unions just do it on a bigger scale, like how big companies do it.
5. Somewhat true, although over-stated. At least hypothetically systems with broad Unfair Dismissal laws offer ways to fire someone for gross incompetence, but that tends to be rather expensive and difficult – it lets a lot of people keep limping on at work doing the bare minimum and riding off others until they can be retired to go waste away. Of course, most systems with Unfair Dismissal set-ups also have a grace period where they can fire you. I believe it’s 6 months in France, two years in Germany, and five years for most teachers in the US that are organized.
The ideal time is probably between 2-5 years – if you don’t know whether you want someone on for the long term after that, then you should probably just not hire them on.
The labor market never clears, not just because there’s frictional unemployment, but because it’s state policy to maintain a “natural rate of unemployment,” officially to “restrain inflation” (bad for investors); actually mainly to keep the working class cowed. Keynes is good on this, though his terms are a bit different.