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Momma said wonk you out

UNIONS AND RECESSIONS.

This is a nice point from The New York Times:

The argument against unions — that they unduly burden employers with unreasonable demands — is one that corporate America makes in good times and bad, so the recession by itself is not an excuse to avoid pushing the bill next year. The real issue is whether enhanced unionizing would worsen the recession, and there is no evidence that it would.

There is a strong argument that the slack labor market of a recession actually makes unions all the more important. Without a united front, workers will have even less bargaining power in the recession than they had during the growth years of this decade, when they largely failed to get raises even as productivity and profits soared. If pay continues to lag, it will only prolong the downturn by inhibiting spending.

I'd only add that the last great leap forward for unions was during World War II, and the last great expansion of the American middle class followed in its aftermath. In contrast, the most recent expansions -- which have largely occurred in the absence of unions -- have benefited America's rich.

Unions do not change economic growth, or at least there's little convincing evidence that they do. The countries with the world's highest growth rates -- the Nordic economies -- also have some of the world's highest rates of unionization. Denmark, Sweden, and Finland all approach 80 percent. Rather, unions change the distribution of economic growth. They direct more of it to the middle class and less of it to the executive class. The past few years have been an economy driven by the executive class. The question is whether that's what we want the next expansion to look like, also.



COMMENTS

If you're serious about this, why aren't you unionizing with fellow journalists or bloggers?

On balance, unions should exist and thrive because there is no counter-balance to the power of the corporations and their hired lackies in lobbies and elected office.

Recognizing that some unions in some circumstances overreach is just to recognize the nature of human organizations. Perfection isn't possible.

I think the unions have lost the PR battle in the minds of the US public and most of their potential adherents, in spite of frail efforts at revival and with the determined opposition of governments at all levels.

Somehow the power of corporatons must be balanced, but the proferred vehicles for this are currently limited to unions and regulation.

Is employee ownership and participation in policy/executive control by workers a move that could help? If the answer is possibly or yes, then unions may have a future. But as a non-participant in policy and economic antagonist in allocation of resources, unions are dead.

What should be the labor/management 3.0 be for the US business entity?

"Unions do not change economic growth...unions change the distribution of economic growth."

I beg to disagree here. Henry Ford saw it instinctively. Regardless of what Krugman would have you believe, you really do get better growth when it is more equally distributed.

With the exception of Norway and its oil, why the hell are Nordic countries whipping the pants of everyone else? They have ZIP in terms of natural advantages--hell, they're covered in snow and in darkness half the year! Sweden should be more underdeveloped than Alaska--yet it's not! It's this center of bustling growth!

Fairness is good for growth. Unions help us get fairness.

Government is one mechanism to do that--they can run many kinds of programs (clean water, roads, healthcare) that are inefficient when the private sector delivers them.

But when it comes to the all-important challenge of getting cash into people's pockets, unions are MUCH better at that. They're also MUCH better at advocating for workers at the intersection between workforce and family life than government is. And they're not dumb--they know their success depends on the company's success, so unlike the CEO of WaMu, they're not going to run a company into the ground for their own gain.

It's kind of ridiculous we don't believe a fair distribution of gains has something to do with these gains being made. And yet the argument you're making is that Sweden has exceptional growth in SPITE of its unions, instead of because of them.

I really fear for the way our generation's minds have been twisted against unions. It's not reality-based.

Economic growth is not a purely or even a mostly financial phenomenon, as Republicans simplistically would have us believe (so we will funnel as much income as possible to their investing buddies) Growth is mostly a technological phenomenon. Wouldn't have much growth to go around if we were still riding horses -- or cross country trains.

American management 3.0 should be some form of around-the-world management 2.0: sector wide labor agreements -- the only answer to the race to the bottom which can otherwise ensnare even the most powerful unions (e.g., supermarket workers).

Used in different economies in different highly workable versions (e.g., French Canada's "lite" version, where nonunion firms simply work under contracts negotiated with union firms -- an ideal place for America to start). Just don't ever expect to ever hear it discussed here -- not by boys.

I have come to the conclusion that discussion of any BIG, NEW topic about which a consensus cannot form for many months (or even years!) is endlessly blocked by male hunter instinct -- which makes geek boys (not girls) DESPERATE to seek some limited consensus (piece of meat) today -- terrified of starving to death if they cannot go at topics one digestible piece at a time -- which automatically eliminates from their ever interlinked brains from ever interlinking up to a giant change of subject with who knows how many starting points and nobody knows how many ends.

It is just our dumb (pea sized) midbrain (A.K.A., limbic system, A.K.A., seat of human emotions) not at work, not calculating, not making equivalents. Classic dual-gender example of "not at work" is when a million lawyers rise for the judge and never make the equivalent: I don't have to salute the flag. Mid-brain imperative at work: monkey-see, monkey do (all forebrain rationales automatically generated to cover same -- ask any judge). No further thinking required.

[Warning: don't be a First Amendment pioneer unless you are capable of quick constitutional footwork -- gray hair and bifocals and extra safety factor.]

Amongst the developed world, the Nordic countries do not have the highest growth rates. South Korea and Taiwan both have faster rates of growth.

Just saying

That assumes that you list Taiwan and South Korea among developed countries, which is subject to debate.

While the Nordic countries certainly have a very high standard of living, they're not among the world's fastest-growing economies. Note that Ezra didn't limit his observaton to the developed world, but even if he had, the Nordic countries aren't even the fastest growing in Europe, and none of them is in the top 100 world-wide. (Not that I'm suggesting high rates of unionization are bad.)

There's a couple of responses to this, though I don't want to bash too hard on unions because I do think that in many industries where workers have comparably few rights they make a lot of sense and are indeed probably the only way to bid wages up and improve working conditions.

That said:

1. The real problem with unions is in competitive industries, where union work rules can make it impossible to compete with more flexible enterprises. A heavily unionized society may be economically healthier overall, but it will also lose plenty of industries to places that are less unionized because of the need for flexibility that work rules kill.

2. Mickey Kaus makes a legitimate point today about the distributional effects of unions-- essentially the effectiveness of a union depends on its ability to credibly carry out a strike, and that depends on lots of factors such as whether production is concentrated or diffuse, the ability of the enterprise to proceed in other locales or with other workers, how labor-intensive the business is, etc.

In other words, severe distributional inequities among unionized industries will still exist.

I don't believe, as Kaus does, that this discredits unionization. But it's different from the picture Ezra paints as well. And I suspect that the societies he points to achieve a lot of their distributional equity through legislation and regulation, not unionization.

Economy of South Korea
GDP growth 5.1% (2007)
GDP per capita $25,000 (2007)
Unemployment 3.2% (2007)
Inflation: 2.5%
Below Poverty Line: 2%
Gini Coefficient: 35.1 (2005)

Economy of Taiwan
GDP Growth: 5.75
GDP Per Capita: $16.590
Unemployment: 4.27
Inflation: 1.8%
Below Poverty Line: 0.95
Gini Coefficient: 33 (2002)

You can debate Taiwan but S. Korea is clearly a developed economy unless you are completely euro-centric.

One of the most interesting things I've read about recently is the history of labor unions in Korea. Unlike Japan, they're not infested with Communists, which have made them pretty damn effective. Though my understanding is that they're limited to manufacturing and not services.

Back in the 80s, they along with student protests toppled the authoritarian regime in place. In 1986 the average number of hours worked for a Korean was between 55 and 60, and the average worker got paid around 2/3 what the government thought was necessary to have a decent standard of living (at the worst point, due to spiraling real estate and cost of living increases due to the economic boom coupled with stagnant wages). Labor unions got a bunch of clout, and coupled with student protests, led to the movement which moved South Korea into the ranks of developed, service based economies.

Something to keep in mind.

There's more to economic policymaking than Kaldor-Hicks efficiency, equity is as legitimate a matter of policymaking as efficiency.

Republicans' views are primarily based on equity (as they see it), not efficiency.

If unions mean that the distribution of income becomes more unjust -- and Republicans generally think that is the case -- then saying that it is overall as or more efficient won't necessarily be persuasive, if your willing to sacrifice some economic efficiency for the sake of economic/social justice and greater inequality.

Some above have suggested that the degree of growth is the measure of the quality of an economic system.

First, GDP is a strange beast. It measures some things that reflect little about anything.

Second, Very high growth is inherently unstabilizing and ecologically a disaster in making.

Some modest growth is needed to provide for growing population and increase the living standards such that each generation sees a better life for them and their children. But growth itself at any price is an unworthy and false god.

Its hard to see how Norway, Sweden and Denmark can be beat on the overall quality of life and general happiness of its citizens. They've almost mastered 'balance'. Germany and other EU countries come close too. In Germany, by law, every company has union representatives on the board of directors.

I don't understand how folks can look back at our last 35 years (the last 8 in particular) and conclude that pursuing growth and management dictation is something to admire and continue to advocate.

If you're serious about this, why aren't you unionizing with fellow journalists or bloggers?

Ezra is a writer, and writes about personal issues. Yet he never tells us why, as a pro-union writer, he has chosen not to unionize.
He could be really interesting and interview his pro-union publisher about his thoughts about their non-union workplace. How would things be different if they unionized? How would they respond to an attempt at organization? Would a union give them a better workplace?

Surely Ezra understands why some places are not unionized and don't want to be unionized, but he consistently writes *against* (not from) his own experience on this issue.

i don't see any hope for workers o long as Politicos in DC allow this:

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What's wrong with training H1-B's to replace higher paid American workers?

What are you a commie?

I didn't know they could be so obvious though.

The countries with the world's highest growth rates -- the Nordic economies -- also have some of the world's highest rates of unionization. Denmark, Sweden, and Finland all approach 80 percent. Rather, unions change the distribution of economic growth.

I'd be curious to know if the Nordic unions have anything akin to the work rules which hamper productivity improvements, or if they are essentially a way to more effectively negotiate for an increased slice of the economic output of a company.

I would be vastly more supportive of unionization if I thought the primary effect of them was that workers made more money. I my experience, however, it's that when I set up my booth at a trade show, I can't plug anything into outlets, that incompetent workers are never fired, and that shoddy work passes muster.

I beg to disagree here. Henry Ford saw it instinctively. Regardless of what Krugman would have you believe, you really do get better growth when it is more equally distributed.

The lesson of Henry Ford is often misinterperted. He may have paid lip service to paying his workers so they could afford his products, but the reality is a little more complex.

What he did was systematically replace high paid skilled labor with automation and lower paid unskilled or semiskilled labor and earned greater profits from the higher overall productivity. Yeah, the workers were making a lot more than they could in other industries. But they were making a lot less than the people that used to do the same work.

Now I for one, think this was fine, but's it's hardly the stuff of a progressive hero

I'd be curious to know if the Nordic unions have anything akin to the work rules which hamper productivity improvements, or if they are essentially a way to more effectively negotiate for an increased slice of the economic output of a company.

Right. Might be interesting for someone with advanced knowledge of labor economics and the Nordic countries to chime in. My impression was that the heavy lifting on guaranteeing living standards in the Nordic countries is done by voters -- who quite sensibly demand a robust safety net and redistributive economic policies from the government. What exactly is there left for the unions to fret about? Also, these countries are also known for their flexicurity system -- which stresses very open markets, and maximum flexibility for employers (you can be laid off easily, it appears, it's just that it doesn't quite suck so much to be without work for bit in the Nordic countries).

The countries with the world's highest growth rates -- the Nordic economies -- also have some of the world's highest rates of unionization. Denmark, Sweden, and Finland all approach 80 percent.

Where does Ezra get the idea that Denmark, Sweden, and Finland have the world's highest growth rates? In 2007 they were, respectively, the 190th, 153rd, and 138th fastest growing countries in the world. See here:

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_growth_rate

Note on my comment above: Even if you use per capital growth numbers (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_growth_rate_per_capita) the picture doesn't look any better.

kaybeel,
Re: Ezra not going union

You see the purpose of a union is to reset labor's bargaining power from that of desperate "fire sale" seller to that of indispensable "last lot" seller -- to match "last lot" ownership's bargaining position.

But, Ezra being uniquely talented like CEO's and pro ballplayers is already in at the "last lot" bargaining position -- which is why he can command a wage 25 times what progressive bloggers would have commanded 25-35 years ago -- if there had been blogs back then. :-)

"The argument against unions — that they unduly burden employers with unreasonable demands [...]"

Typical strawman from the New York Times (with Ezra Klein broomin' it along.) A more valid argument against unions is that they are inherently coercive, that unions are accorded special dispensations in law that no other entity or individual enjoys, that they abridge both employer's and employee's right to freedom of association. Via political patronage, unions are granted the legality of forcing themselves into an association with employers beyond that which good old freedom (and the employment contract they signed when hired) would entitle them. The NLRB should be dissolved, and all relevant legislation set to burn.

You do realize, Mike, that thinking that unions are "inherently coercive" and presumably bad is a very perverse view, among free societies?

You might want to re-evaluate what your "freedom" is when you're finding yourself on the side of the PRC, USSR, and Nazi Germany. Just saying.

"thinking that unions are 'inherently coercive' and presumably bad"

Yer kiddin' me, right? Modern unions exist mainly by dint of political action, i.e., by force of arbitrary law.

Do you even understand that "coercion" might be antithetical to "freedom"?

I use quotes "" because I think you need to get a dictionary and compare definitions.

And while you've got the books out, providing you can muster that much, go look up "fallacies". Look for an example of this:

You don't like unions Nazis don't like unions You are a Nazi

Short of success, look up "fallacy" and ask someone not named Klein for assistance.

Some commenters assume unions=inflexible work rule. Work rules are negotiated between management and labor. If workers trust management to treat them fairly they will not demand complex work rules. - The work rules argument against unions is largely a red herring

Unions are just another group of corrupt organizations that are dedicated to their selfpropagation. If you are unhappy with your job, QUIT. Get a different one. Quit your damn whining. If you want the wages of workers to increase, have them become more skilled and more educated. That requires schooling in subjects that are useful to industry (eg., mechanical engineering, NOT psychology)
and putting down the damn video games, stop partying and get your head out. To that end, I believe that all student loans and scholarships should be contingent on good grades, clean urines and a useful profession. Don't like those ideas? Then don't be asking for tax dollars to pay for a bloated, overpriced (and unionized) education bureaucracy.

So, Mike. You think it's just a pure coincidence that every free democracy allows free unionization and has rules to protect that right of workers, while there's not a single totalitarian state that allows independent unions?

Unions are necessary for a just society. Capital is highly fluid and relatively concentrated. Labor is the opposite. This puts Capital in a superior position while bargaining, allowing it to take advantage of asymmetries in information and fluidity. Unions help counteract that.

Article 23 of the Universal Declaration of Human Rights

(1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

(2) Everyone, without any discrimination, has the right to equal pay for equal work.

(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

(4) Everyone has the right to form and to join trade unions for the protection of his interests.

Zephyrus - well said. The law allows investors to form corporations which are backed by the power of the state. The fact that human organizations can be corrupt isn't a good argument against allowing workers to act cooperatively as well.

If workers trust management to treat them fairly they will not demand complex work rules.

Complex work rules are created to protect as many jobs as possible and to demand the most money for the least work possible.
They too often have the effect of not allowing a company to move forward with more productive and efficient methods. That is problematic, and certainly not a red herring, when more productive and efficient competition comes around.

I'd only add that the last great leap forward for unions was during World War II, and the last great expansion of the American middle class followed in its aftermath.

Classic case of correlation vs. causation. It's possible unionization contributed middle class growth, but you can't say how much unless you account for the remaining factors.

kaybeel - Complex work rules in today's environment are not good thing. The red herring is the argument complex work rules are bad, unions=complex work rules, therefore union are bad.
Do you seek the least work for the most money possible? I think likely not. Likely you want a work environment where you are not subject to arbitrary discipline or firing. You probably want to receive a days pay for a days work. You probaly seek work that pays well and is rewarding. Union workers are no different.

The red herring is the argument complex work rules are bad, unions=complex work rules, therefore union are bad.

Yes, that argument is a red herring. One real argument is that unions with complex work rules are bad. They do exist. The UAW is one of them.

On balance, unions should exist and thrive because there is no counter-balance to the power of the corporations and their hired lackies in lobbies and elected office

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Ezra Klein is an associate editor at The American Prospect. An archive of his articles for The American Prospect can be found here.

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