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The Wisconsin Labor Dispute, More for Me Does Not Mean Better for Us

Politics / Employment Mar 08, 2011 - 12:57 PM GMT



Best Financial Markets Analysis ArticleIn the Wisconsin labor dispute, now increasingly spreading nationwide, I have lost count of the times union defenders have justified their position based on little more than the assertion that some union benefitted them or some member of their family — followed by the conclusion that all Americans must therefore gain. Unfortunately, that "logic" is invalid. A policy that gives me more does not mean the result is better for us. And the primary effect of unions and union-backed policies is to harm the vast majority of Americans.

Unions succeed by leveraging special government-granted powers to eliminate competition from other workers who are willing to do the same work for less. (This is a form of collusion that would be legally prosecuted if done by anyone else.) Those displaced workers either become unemployed or must go elsewhere to find jobs, increasing the supply of labor services in nonunion employment, pushing down wages for all workers in those jobs. The resulting wage premium does not come from employers, as union rhetoric implies, but primarily from other workers' pockets. Because only about 7 percent of our private-sector workforce remains unionized, more than nine in ten private-sector workers are injured by such union power.

The vivid history of union violence and threats against "uncooperative" employers and employees, including thousands of recorded attacks, also clearly harms union members rather than advancing their interests. But leaders are insulated from accountability by the 1973 Emmons ruling, which former Attorney General Ed Meese testified, "permits union officials — alone among corporate or associational officers in the United States — to use violence and threats of violence to life and property to achieve their goals."

Aware that their special grant of government power stops at the border, unions have been the primary movers behind government protectionism of all stripes undermining the well-being of workers who would have gained from expanded exports as well as those who, as consumers, would gain from lower cost and/or higher quality imports.

Unions' sellout of workers' interests has included conducting campaigns to harass and regulate nonunion apprenticeship programs out of existence, thus keeping other workers from acquiring skills to earn more and compete with the unions in the future. They have also used environmental challenges to stop construction projects until labor agreements guaranteeing that the jobs go to union workers could be extorted.

Their support for the Davis-Bacon (prevailing wage) Act has ballooned government construction costs for decades, raising tax burdens on everyone else. They have also managed to hamstring the Supreme Court's 1988 Beck decision that union workers can withhold support for political activism they disagree with.

Unions have also been major supporters of innumerable schemes to impose higher taxes and regulatory burdens, thus reducing others' employment prospects. Further, because those burdens reduce saving and investment, they reduce the accumulation of productivity-enhancing capital, and with it, the growth of workers' earnings over time. And all this has occurred, even though more than a third of members routinely vote against the positions their union leaders force them to fund with their dues.

What changes when we focus on government-union workers, now more than half of total union membership? They have more power to impose harm on others.

In comparison to private-sector workers, government unions don't face the discipline of foreign competition. It is also harder to substitute capital equipment for overpaid workers in such "service" industries. Government agencies are monopolies, which need not compete with alternative providers. Government unions donate hundreds of millions of dollars each election cycle, often with forced dues (unions spent more than $100 million to defeat a California initiative that would have taken away that power to harm many of their own members) to control who they will negotiate with. (This power is enhanced by gerrymandered "safe" districts, which turn union control over Democratic primaries into control over general election results.) Beyond their financial clout, union members also directly influence the design and implementation of legislation and regulations.

Government unions also leverage temporary political majorities into permanent and expanding gains, due to court rulings that once government has promised its workers something (as with sweetheart pension and healthcare deals), it can never be taken away, regardless of the adverse effects on taxpayers. This is particularly important, because government unions deal with politicians whose short-run time horizons and largely ignorant "customers" enable them to make special deals whose effects are only ultimately revealed after they are beyond any accountability.

Perhaps most important, unlike private employers, who must find willing customers to pay the cost of richer labor deals, government unions can use the coercive power of government to force even unwilling "customers" to pay the costs through their taxes (and increasingly, through the crowding out of spending on other government programs, as labor deals' adverse impacts on budgets grow over time).

Unions claim to advance the interests of all working men and women. But they actually injure the vast majority of Americans, both as workers and consumers, to advance their own interests. Government-union members, despite self-congratulatory claims like "we do it for the kids" (although their forcing overpayment for providing those services and sacrificing those they "serve" whenever it conflicts with their compensation demands makes "we do it to the kids" more accurate), gain even more for their members by imposing even greater harm on others. And groups who use their power for their own benefit at others' expense (which would also include those involved in robbery, fraud and organized crime), undermine Americans' shared interests rather than contributing to them.

Gary M. Galles is a professor of economics at Pepperdine University. Send him mail. See Gary Galles's article archives.

© 2011 Copyright Ludwig von Mises - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Mike Buchanan
08 Mar 11, 19:00
The Very Wealthy Are A Bigger Problem

"More for me does not mean better for us." Does this apply to millionaires and billionaires too?

08 Mar 11, 20:32

The primary driver for economic growth and innovation is competition driven capitalism, where the successful will become wealthy.

Shelby Moore
09 Mar 11, 16:19
re: competition ("silveraction")

The problem is when the wealthy use their wealth to prevent competition, i.e. read Wikileaks about how the US govt conspired with Monsanto to force GMO seeds on Europe via trade war threats. Or Bill Gates and Warren Buffet's activities in Africa to spread GMO there.

The best way to fight back is for the common people to buy silver and bankrupt the fiat system that these globalists are using to destroy the world. Silver is their achilles heel. Gold is good, but silver is a metaphorical bullet. I do not advocate violence. If only 1% of the middle class sold their houses, rent, and buy silver, the globalists would be impotent and destroyed. Come on people, what are you waiting for? Instead you want to waste your time in the black hole of politics. Actions speak lounder than words. Silveraction.

P.S. be prepared for silver fiat price correction this year.

Lucas Felts
10 Mar 11, 10:30
Unions Make us Strong

This is a somewhat ridiculous claim that people who are supporting unions are only doing it based on the idea that it might help that individual. Let's look at the converse, pure competition. What justification could one provide for pure competition besides that it is best for the worker willing to work for the least(the person with the least need). I think you might need a brief lesson in political economy, my friend. When we have pure competition the idea of profit, or surplus value is derived from surplus labor in which the capitalist(he/she who owns the means of production) exploits the laborer to work beyond his/her value thus creating labor surplus and therefore profit. This exploitation comes from the ability of those with money to force labor upon those with any type of need. Unions help alleviate this exploitation. Look where we were before people like Eugene V. Debs rallied behind people to help unionize workers throughout the midwest and the rest of the nation.

This country was run by the robber barons. The likes of John D. Rockefeller, Cornelius Vanderbilt, JP Morgan, and Andrew Carnegie alone controlled such a massive portion of the wealth in the United States. Unions put the power back in the hands of the working class so that this exploitation could be at the very least limited. Remember your history, follow good logic, busting up unions is not the answer. The working class is the largest class in the United States. Destroying them only helps the 10% that already control the 90% of the wealth.

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