Unions and Capitalism

Right now, the Obama Administration is Hell-bent on advantaging the already advantaged unions by, among other acts, bailing out the UAW and pressing the EFCA.

"Why is helping unions a bad thing? Unions help the little guy, 'Puter.", you query. 'Puter replies that unions are destroying companies and jobs in the private sector and are driving unchecked costs in the public sector.

Private sector unions had their time and their place. Workplace safety was of critical importance 100 years ago. See, e.g., the Triangle Shirtwaist Fire. Unions proudly (and rightly so) point to their history of driving safety and workplace improvements for all workers. Today, however, that rationale is mostly gone. Government has so thoroughly occupied the field of workplace safety, this rationale for special treatment of unions has been voided. A veritable alphabet soup of government workplace health, safety and wage regulators (see, e.g., OSHA, USDA, ADA, FLSA, etc.) cost manufacturers $1,700 per employee in 2000. What major safety improvements have unions brought of late?

The second, less important, rationale for the existence of unions is wage negotiations. In the private sector, under normal conditions, 'Puter doesn't care that unions drive wages up beyond the work's market value. For example, GM pays a worker $35/hour plus benefits to put a windshield in a car over and over and over again, even though there's a worker right outside the plant willing to do the same job for $15/hour plus benefits. There's no skill in windshield installation that can't be learned by Mr. $15/hour in a few months. The wages are skewed solely on the basis of a union imposed seniority system. 'Puter doesn't care about this disparity because the market has a way of sorting it out. That is, businesses beset by inflated wage demands of unions either fail (hello, Chrysler and GM!) or reduce wages to stay competitive.

However, 'Puter's laissez faire "the market will sort out uncompetitive union driven wages" position is under assault by the Obama Administration. President Obama has chosen to prop up GM and Chrysler (and not coincidentally the UAW) with a taxpayer subsidy of billions of dollars. This has allowed two zombie car makers to survive in the short term, while negatively impacting those automakers who would prevail under normal conditions (Ford, Honda, Toyota, et al.). How long can an unsubsidized business compete in the same industry with a government subsidized business? 'Puter thinks not very long at all.

President Obama's subversion of the market on behalf of the UAW (and GM and Chrysler) illustrates perfectly the problem with public sector unions: employers without meaningful competition.

Public sector unions are not just a bad idea, but outright evil. With the aid of complict public employers, these unions steal from the taxpayer. The government (as we have seen with our recent $1.8 trillion (and rising) deficit) has no incentive to treat taxpayer money with care. Taxpayers are required to pay taxes at the point of a gun, no matter how high politicians raise them. And politicians have no incentive to say no to the unions in wage negotiations, lest the politicians lose the significant public union political backing (see, e.g., every stinking New York pol). Politicians can always increase the revenue stream to keep pace with astronomical union wage demands by raising taxes or "fees," if you prefer to keep up with the current nomenclature, transferring wealth directly from the taxpayers to the unions.

See, governments believe they cannot fail as private sector businesses can, and public sector unions count on this. Further, there is no market in government whereby competing service providers can offer a better product at a lower end cost, thereby bankrupting the current government providers or forcing the government providers to lower costs in order to compete. So, we get unrealistically high wages government worker wages, public sector unions flush with taxpayer cash and substandard government service with no incentive for improvement. All of this is protected by a maze of federal and state laws purchased, maintained and jealously guarded with union political contributions.

Thanks to the Obama Administration, America now has the worst of both worlds: private and public unions unconstrained by competition.

Nice work, boys.