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America's Counter-Revolution
The Constitution Revisited

From the back cover:

This book challenges the assumption that the Constitution was a landmark in the struggle for liberty. Instead, Sheldon Richman argues, it was the product of a counter-revolution, a setback for the radicalism represented by America’s break with the British empire. Drawing on careful, credible historical scholarship and contemporary political analysis, Richman suggests that this counter-revolution was the work of conservatives who sought a nation of “power, consequence, and grandeur.” America’s Counter-Revolution makes a persuasive case that the Constitution was a victory not for liberty but for the agendas and interests of a militaristic, aristocratic, privilege-seeking ruling class.

Friday, April 27, 2007

Labor's "Right to a Free Market"

No issue is more contentious in labor relations than the Employee Free Choice Act. This bill, now pending in Congress, would require the National Labor Relations Board (NLRB) to recognize a union when "a majority of the employees in a unit appropriate for bargaining has signed valid authorizations." Under current federal law, an NLRB-supervised election must be held and a majority must vote by secret ballot for the union before it becomes government-certified. The union-backed EFCA would presumably make it easier to establish a union in a company, but opponents say worker intimidation would be encouraged with an open card-signing process versus a secret-ballot election. What should free-market advocates say about this controversy?
The rest of this week's TGIF column, "Labor's 'Right to a Free Market,'" is at the website of the Foundation for Economic Education.

Cross-posted at Liberty & Power.

9 comments:

Miguel Madeira said...

From your article:

»The certified union becomes the exclusive bargaining agent, and the employer has no choice but to deal with it in "good faith." All affected employees have to join, or at least have to pay dues.»

From this link:

http://clear.uhwo.hawaii.edu/CB-FAQ.html#Q13

"In Hawai'i, management and labor can negotiate a contract which requires that when a worker is hired into a job covered by the contract, he or she must join the union within a short period of time. This is called a union shop. It should be noted that this is an area where the National Labor Relations Act allows state control. A state may enact a so-called "right to work" law and declare union security clauses illegal. Hawai'i is one of 29 states that has no such law."
"A contract may also provide for a weaker form of union security. Under an agency shop, for example, no employee is required to join the union. However, any worker who does not join must pay a "service fee" or "fair share" to cover the expense the union incurs by representing all members of the bargaining unit, as it is legally required to do."
"These clauses vary greatly from contract to contract and industry to industry. Often they do not exist at all."

From the Wagner Act:

"By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this Act as an unfair labor practice) to require as a condition of employment membership therein, if such labor organization is the representative of the employees in the appropriate collec tive bargaining unit covered by such agreement when made."

My question (I am an European and Idon't know the american reality, only what I read at second-hand):

If (in a state without a right-to-work law), the majority of workers in a workplace vote for an union, this means that all workers have to join the union, or only means that the union and the employer can negotiate (or not) a clause forcing the workers to join the union?

Sheldon Richman said...

As I understand Wagner and subsequent law, once a union is certified in a non-right-to-work state, all employees in the unit must pay dues, even those who do not want to join. In that case, the dues may be called "fees." They can't force people to join, only to pay. It's called a union-security clause. Nice law.

See Charles Baird's articles here: http://www.fee.org/publications/the-freeman/article.asp?aid=3318, and here (pdf): http://www.fee.org/pdf/the-freeman/0601Baird.pdf.

Miguel Madeira said...

From the first article:

"In the 29 other states—California, for example—union security clauses are permitted, and they are usually worded like the Weyerhaeuser clause"

The "permitted" and "usually" gives me the idea that the "union security clause" is not automatical, but instead is a thing that can be established or not.

Sheldon Richman said...

Do you mean the anti-compulsory-unionism movement has been going on for decades without a real cause? Shouldn't somebody tell them?

Miguel Madeira said...

"Do you mean the anti-compulsory-unionism movement has been going on for decades without a real cause?"

I don't have doubts that unionization (or, at least,paying union dues) is compulsory in the perspective of employes of unionized workplaces.

My doubt is if there is compulsory in the perspective of employers, there is, if the employers are forced to accept the "security clauses" in labor agreements, or if is a thing that can be negotiated betewen the employer and the union.

[I expect that you understand my confuse English]

Sheldon Richman said...

I would be surprised to learn that union security is a negotiable item. Charles Baird, a labor economist, would be surprised. Union security is allegedly intended to stop the free-rider problem. It it were negotiable, it wouldn't be compulsory.

tim said...

sheldon

i posted this comment on the HNN blog. have i misunderstood cartel theory?

"....One of the interesting aspects of labour market economics and debates among economists about the impact of trade unions is the reluctance to folow the mainstream economic theory of cartel behaviour through the whole argument.

Free market economists, who are often the first to point out that "trade unionism is not socialism but the capitalism of the proletariat", do note that unions are cartels but they ignore the long term consequences.

I'm not an economist but have been a sideline observer of economics for many decades. My understanding of the "life history of cartels" is this. Producers combine into cartels and the short term impact is to drive prices (and presumably revenue) higher for the immediate term. Then over time consumers manage to adjust their demand for the product. Demand curves that are inelastic in the short run tend to be more elastic in the long term. At the same time chiselling amongst cartel members leads to the cartel being undermined from within. I think that is a reasonable summary of mainstream neoclassical economic theory of cartels.

What's all this mean for unions? Well it helps explain the short run gains of unions for workers and hence the enthusiasm many workers have for unions does have an economically rational basis. We tend to think of the introduction of pro-trade union legislation, "coercive unionism" in some parlance, as cementing those "greater than market" wage rates and conditions into a semi-permanent state.

There is a linguistic problem here. "Markets" are where ever buyes and sellers meet to make deals. Whether a wage is determined in an "atomistic" market or by arm twisting over a negotiation table it is still a "market wage".

Back to my thread of cartels. If cartel theory applies to unions, then over time their benefits to members, in terms of delivering higher wages and benefits, is likely to decline. Whether or not the union cartel is undermined by chiselling from within, the adaption from their consumers from without would seem to deliver this. The use of state enforced legislation to keep an existing union organisation in place is not going to the change this. Indeed state legislation tends to defend and protect an existing union versus a new union within the same 'marketplace'. It's protectionism for existing unions at the expense of new unions. If cartel theory is correct it is new unions that are the most likely to be effective at raising wages.

Government mandated monopoly unionism is not just a cartel but a monopoly too. Unions are suppliers of cartelisation services, they are cartelisation entrepreneurs. If they are "monopolists" they no longer have a competitive pressure to deliver results to their actual or prospective members...."

tim sydney said...

IT software guru Paul Graham has just posted an essay called "an alternative theory of unions" here.

Anonymous said...

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سنده خوکهای آمریکائی تو کس ننه افغانستانیهای مقیم ایران.
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