Supply-Side case for unions....

[gunfyter]

"... wages are basically determined by labor productivity."

"...when a group of workers is receiving a wage actually below its market worth. This is likely to happen ... where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization."



"... All this does not mean that unions can serve no useful or legitimate function. The central function they can serve is to improve local working conditions and to assure that all of their members get the true market value of their services. For the competition of workers for jobs, and of employers for workers, does not work perfectly. Neither individual workers nor individual employers are likely to be fully informed concerning the conditions of the labor market. An individual worker may not know the true market value of his services to an employer. And he may be in a weak bargaining position. Mistakes of judgment are far more costly to him than to an employer. If an employer mistakenly refuses to hire a man from whose services he might have profited, he merely loses the net profit he might have made from employing that one man; and he may employ a hundred or a thousand men. But if a worker mistakenly refuses a job in the belief that he can easily get another that will pay him more, the error may cost him dear. His whole means of livelihood is involved. Not only may he fail to find promptly another job offering more; he may fail for a time to find another job offering remotely as much."

Hazlitt, Henry Economics in One Lesson

"... time may be the essence of his problem, because he and his family must eat. So he may be tempted to take a wage that he believes to be below his “real worth” rather than face these risks. When an employer’s workers deal with him as a body, however, and set a known “standard wage” for a given class of work, they may help to equalize bargaining power and the risks involved in mistakes."

Hazlitt, Henry Economics in One Lesson

"... A peaceful strike is possible. To the extent that it remains peaceful, it is a legitimate labor weapon, even though it is one that should be used rarely and as a last resort. If his workers as a body withhold their labor, they may bring a stubborn employer, who has been underpaying them, to his senses."

Hazlitt, Henry Economics in One Lesson

 

[gret]

I may not fully understand the intent of the above, but it appears that old Henry wasn't too crazy about unions as reported below in 1971. I believe that Hazlitt, Henry Economics in One Lesson was written in 1946.

Henry Hazlitt on Unions
Labor Unions Reduce Total Production and Real Wages for All of Us

Henry Hazlitt wrote little on unions, but what he did write was significant. In 1971, after carefully analyzing several economic effects of unions, he summed them up in his usual forthright style:

The net overall effect of unions and of union policy has been to exclude non-union members, to drive them into less attractive and lower-paid jobs, to distort the structure and balance of production, to increase inflation, to reduce productivity, to discourage new investment, to retard capital formation, and hence to reduce the total production for all of us and the total real wages of the whole body of workers below what it would otherwise have been. It is altogether probable that even the highest real wages now received by members of strong unions are lower than such wages would have been if the unions and their historic policies had never existed.

More here-
http://www.thefreemanonline.org/columns/the-pursuit-of-happiness-henry-hazlitt-on-unions/

 

[G4dude]

I may not fully understand the intent of the above, but it appears that old Henry wasn't too crazy about unions as reported below in 1971. I believe that Hazlitt, Henry Economics in One Lesson was written in 1946.

Henry Hazlitt on Unions
Labor Unions Reduce Total Production and Real Wages for All of Us

Henry Hazlitt wrote little on unions, but what he did write was significant. In 1971, after carefully analyzing several economic effects of unions, he summed them up in his usual forthright style:

The net overall effect of unions and of union policy has been to exclude non-union members, to drive them into less attractive and lower-paid jobs, to distort the structure and balance of production, to increase inflation, to reduce productivity, to discourage new investment, to retard capital formation, and hence to reduce the total production for all of us and the total real wages of the whole body of workers below what it would otherwise have been. It is altogether probable that even the highest real wages now received by members of strong unions are lower than such wages would have been if the unions and their historic policies had never existed.

More here-
http://www.thefreemanonline.org/columns/the-pursuit-of-happiness-henry-hazlitt-on-unions/

This is pretty much what I believe.

 

[gunfyter]

You are right ... Henry was negative on Unions... Yet I quoted straight from his book. While negative he lists some of the proper functions. Some of it said also by Adam Smith when he talks about wages of labor.

I think this: "... If his workers as a body withhold their labor, they may bring a stubborn employer, who has been underpaying them, to his senses." is what we had in 2005, a stubborn employer.

and
"...when a group of workers is receiving a wage actually below its market worth. This is likely to happen ... where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization."

in aviation I think ... a free market doesn't operate as the employers have a monopoly on the jobs in this business. Unionization is necessary.

g4 ... economics in one lesson is a good book for you.

 

[gutshotdraw]

I prefer Milton Friedman's "Free to Choose."

He would have been 100 a few weeks back. Boy, could we use his lessons right now...

 

[gunfyter]

http://www.freetochoose.tv/

I like both ...

As far as unions ... wages have to be linked to Production ... but what gret is talking about is if unions impede production... less wealth is created and overall wages will be lower. Its dumb for unions to impede production... Because we would create less wealth from which wages could be drawn.

I don't want Production impeded ... I just want the union to negotiate pay and working conditions for me. I've seen what tends to happen otherwise.

 

[pilotyip]

at marginal companies, unions can not make a silk purse out of a sow's ear. They only kill the pig and get no purse.

 

[gunfyter]

at marginal companies, unions can not make a silk purse out of a sow's ear. They only kill the pig and get no purse.

True but neither can the non-union....

 

[pilotyip]

True but neither can the non-union....

But the union demands upon a marginal company that does not give productivity increases can destroy the source of one's job. That is not the case of a non-union marginal company.

 

[gunfyter]

Perhaps it wouldn't make sense to make such demands on a weak company.

It might make more sense to bail out for a better job.