Economics Primer 19: Unions

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Paul Kurgman
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Economics Primer 19: Unions

by Paul Kurgman » 11/22/2005, 9:00 pm

Unions have brought unparalleled affluence, fairness, and equality to our society. And yet, because of the complexity of the issue, I will explain the topic by way reaching into my mailbag and answering questions.

Q: I am under the impression that affluence can only be created by abundance of goods and services; i.e., the perfect world would have unlimited supplies of everything. Do unions create an abundance of anything?

A: This is the sort of "education" that too often postures as correct economics. The fact is that even if you could obtain anything by merely wishing for it, you still need money in your pocket -- and unions, through negotiations and determination, put money in people's pockets.

Q: Doesn't union-bound money just come from other investments? In other words, if it weren't for unions, wouldn't management invest their money somewhere else -- like increasing production, or hiring more workers?

A: The extra money that unions get for their members would have otherwise have gone into profits. And, as we all know, profits are rarely spent elsewhere; management will often burn the money for kicks. Sometimes, though, they will buy things like yachts -- which is why Congress passed a special yacht tax a few years ago. However, greedy yacht builders preposterously claimed that "business is down" and that they had to "fire workers" -- so the tax was repealed.

Q: When unions strike, wouldn't it be fair to allow poor Mexicans to work for a lower wage?

A: One man's poor Mexican is another's scab; one must wonder about the scruples of anyone who would take work from a union man who isn't working. Let's ask your question a different way: Is it fair for an employer and a Mexican to come to an employment agreement when a union man ought to have the job instead? Your very question smacks of racism.

Q: I thought that owners owned the company. How is it that hired employees have a claim to a job?

A: This is one of the biggest myths -- that owners "own" things. In fact, in the world of labor, it is the worker who owns the work. You see, this is where contract law is superceded by moral law. For example, I have a maid --  and because she spent many years cleaning my house, she is therefore entitled to my house. And if she demanded $500 per hour to clean it, I would not even think of hiring a scab to do the work at so-called "market" wages. And, yes, she would have the right to clobber anyone who had the audacity to apply for her job.

Q: If unions force wages up, won't that cause firms to invest less in the affected industries?

A: Union members are good Americans because they often sport American flags on their bumper stickers. Therefore, any firm that would disinvest from a unionized industry is harming their country. But most businesses realize that by investing in unionized industries, they are helping union members, and therefore helping America.

Q: Some people blame unions for the shift of jobs to states and countries with few unions, like Alabama and China. And they claim that obsolete union rules hinder entrepreneurial innovation. And that unions have been infiltrated by organized crime gangs who use violence to halt competition. And that principles of personal liberty are violated when an individual is compelled by law to join, and pay dues to, a union. And that unions influence the government to transfer wealth from everyone else to them by way of depression-era Davis-Bacon “prevailing wage” laws. Is there any truth to these claims?

A: I am an economist -- and not a sociologist, a moralist, or an historian. Your question falls outside the realm of what I am obliged to answer, and I therefore refuse to answer. You’ll need to hire someone from a different specialty to address those issues.