Labor unions are monopolies, too, and other economic insights

I don’t write about economics very often any more, but I could not be more tired of reading the most hyperbolic nonsense about collective bargaining and Wisconsin. Some apparently believe that ending compulsory state recognition of a labor monopoly’s representation of workers is equivalent to what the Nazis did with labor unions, or some other off-the-wall analogy to fascism. Others might find this kind of comparison disturbing for other reasons, but I do because it is fact-free and if anything, backwards in its assertion of authoritarianism.

(The actual history of National Socialism and unions is at some variance with the claim of analogy but that’s another topic. Let’s stay off Hitler and talk about compulsion.)

Monopolies are products of compulsion, and mandated unions are exactly that, monopolies granted over labor. There are no alternatives to monopolies, by definition. They are forced options with no choice possible. Collective bargaining “rights” are not individual rights, they are restraints upon individual rights to be represented in labor agreements as one sees fit—i.e. to have a choice. Collective labor unions are no more deserving of rights than the fictive personhood of corporations, yet anti-corporate protestors are conditioned toward sympathy for the political mobilization of labor, though powerful union interests are no more “little-people” than corporations are.

In fact, unions shut out competition from other workers who do not wish to become members of their guild, and drive up costs to the consumers of their labor services—including the taxpayer for public employees—while they drive down impetus for quality. In other words, (forced) monopolies in labor have similar effects as (forced) monopolies in anything else. Historically, frequently-corrupt private-industry unions have declined and hamstrung those industries in which they have survived, while government-employee labor unions have benefited from additional legal status, and become powerful political tools for entitlement.

Competition is good for an economy, and good for service and costs, a fact that I expect becomes more clear to the public in my home city of Philadelphia when SEPTA’s union renegotiates its contract than at any other time. Currently, many of the same people who are so irked by this union’s ability to “hold the city hostage” (as hyperbole puts it) by striking have recently been enthralled by the Wisconsin protests, just as if this noble fight were that of Egyptians against Mubarak. I imagine that similarly, it has been more likely to occur to those who live in Wisconsin and incur public costs there that unless they are public employees, it is not in their interests at all for these unions to have an easy time extracting more from the public at large.

That the Republicans act against public-sector unions for political gain, and because unions are pushed to vote Democratic, is obvious enough. That Democrats are equally self-interested is just as obvious. The self-interest of state employees who have reason to believe they will no longer be able to extract such high pay and benefits in the future is also quite transparent. This is all irrelevant to the good of the public at large, and their economic welfare, however.

Proper economics does not follow special interests of select groups, nor does it explicate only the present state of affairs; economics must lay bare the impact of policies on all the various interests of people over the course of time.

In economic terms, a freer market in labor is a broad net gain, as is a less consolidated political lobby of beholden public employees who will always support greater public expenditure, and always be a reliable vote for establishment policies (except those that curtail their own gain).

This particularly becomes clear when observed in the long run, and the impact falls on more than simple costs to the taxpayer. Contracts which might be more flexible become albatrosses driving enormous costs in many cities due to the clout of public employees, in changing economic times, while the politicians who negotiated them may be long gone. In the long run, just as industries no longer seasoned by competition can be expected to fail in both efficiency and quality, so will public organizations employing union labor whose jobs are practically guaranteed fail to serve the public as energetically, at a higher cost of operation due to inefficiency. Government is already composed of monopolies; monopolies on the labor employed intensify the problem.


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