"What has four legs in the morning, two in the afternoon, and three at night?"
We live a life where we start out completely dependent, spend way too long earning our marketable skills, and then as soon as we get a skill, that skill starts to become obsolete. There are younger, stronger, more-confident people flooding the market every day.
From the organizer's of union's perspective this is a curse.
From an economist's perspective this is growth.
These two groups seem unable to reconcile, unless you are willing to assume the preferences of the union can be generalized. Most of us are producers of one thing and consumers of a great many. Because we are consumers from many other producers, we wish that they would not have a union for their workers. We don't want the higher prices that that would signal.
This means that the classic public choice issue is created. I want more favorable rules governing my particular trade and less-favorable rules over those trades which make the things I consume more expensive. Public choice expects that the squeaky wheel gets the grease. Those groups that are very effective in lobbying (homogeneous concentrated groups) are going to win. This was precisely the case in South Africa during apartied. Numerical minorities in the American south ran slavery, with a whip.
Unions are always justifiable to those whose wages they raise. No one is going to argue with higher wages for beautiful women, so to speak. Walter Williams commented once that, given many people willing to be a secretary in the 1960s, a surplus, was it any surprise that beautiful young women were more competitive for the job? Opening up competition for jobs across the spectrum to women eliminated this once dominant bias and made women better off.
Check out this article in the NYT: The struggles of Men
Unions take away the one thing that low-skilled people can use to get jobs they otherwise would not be considered for -- lower wages. Unless we assume being poor is a chronic condition that should be treated by quarantine, we should favor paying people their marginal product (even when that product is very low) and allowing them to build skills in areas that interest them. A system of open competition is consistent with skill-building, as opposed to ignoring the problem.
Instead we glorify union's attempt to deny the truth about life captured in the opening quote. In Wisconsin this argument has hit a particularly sensitive margin, the payment of teachers. In Utah, they have suggested ending tenure for all faculty at the university where I work. I see unions for teachers as unnecessary, perhaps I am more convinced for researchers who make controversial claims (as my own theory would suggest, bias). However, do we really think that getting rid of teaching unions at both levels would be equivalent to a decrease in the quality of teaching (or of research)? The argument is more about keeping unproductive people secure in their jobs. I predict it would be easier to fire bad teachers and cost much more to hire good teachers. Notice, I am claiming that the effect on spending would be ambiguous, but I guess it would increase budgets as good teachers command very high wages or transfer (assuming they could demonstrate their competence by something like, getting their students accepted into a good university on scholarship).
I predict that if something like this happened education would look more like the sports industry has in the last 20 years. College football coaches salaries have increased 25 times at the high end in the last 20 years. Coaching tenure is short, a few bad years ends the run. This might give a union rep a nightmare, however, talented teachers would love to be in such a system. Only lousy ones or the incredibly risk-adverse ones should fear such a plan. I aim to provoke, but why not create a system that would encourage excellence and punish mediocrity?
Actually, another observation:
ReplyDeleteIf unions were implemented uniformly across all jobs, then cost-push inflation would immediately erode all gains that were made. Ignoring Cantillon effects, we would live in exactly the same world as without unions in terms of wage, but with less efficiency, in terms of job mobility.
This, and the Cantillon effects suggest that the only way that a union can be successful is to be one of relatively few unions which raises their prices vis-a-vis the rest of the economy. Pure rent-seeking.