Thursday, January 4, 2007

Ranting about unions, free markets and such

I may have mentioned previously that I consider myself a Libertarian, who has voted for far more Democrats than anything else. It irks me very much when I hear someone discuss ideas like the "free market" or "capitalism" as though the Republican Party advocates for those ideas.I just may make this a series of diaries, but for now, I'm just going to cover one misconception: unions.

Anytime anyone implies that a union is, in any sense, anti-free market, the best way to respond is with confusion and befuddlement. Why? Because unions are excellent examples of a free market at work.In a free market, individuals are free to conduct their own transactions. They can band together as individuals and obligate themselves to a group, or they can doggedly pursue their own individual self-interest. In an effective free market, each individual will always pursue his or her self interest - sometimes, one's interest is served by participating in a group, and sometimes not. In either case, it is up to each individual to make this determination.A union is nothing more than a group of individuals who voluntarily form an association that seeks to exploit their collective market position to increase their bargaining power to further their own self interest at the expense of everyone else in the market. This is not substantially different than a corporation or trade association.

Workers jostling for the betterment of their own situations is an integral and necessary part of a free market. Without that, inefficiency will creep into the system - if employers can get away with paying labor less, they will (indeed, in a free market, employers are required to pay their employees as little as possible). And if consumers can get away with buying labor's products more cheaply, they will (indeed, should, and should do so more unapologetically).

Are unions effective at bettering the conditions of their members? Well, in a free market, that's not relevant (but yes, anyway). Do unions exclude non-members? Of course. Does that inhibit free trade? Of course not - unions are an association of workers who naturally benefit more by excluding others, just like corporations benefit more by excluding competitors from their markets. It is no more anti-free market than exclusive cell phone contracts, or corporate synergy (such as NBC promoting Time's Person of the Year because both are owned by the same corporation). Do unions advocate for a less free market? Yes, of course. So do corporations and consumers. In a free market, each person seeks to minimize individual risk and maximize individual gain - free markets maximize individual risk and minimize individual gain. It is only natural for all parties to better their own individual situation, even if it is better for everyone in the long run to keep the market free.

Does the state intervene to lessen the bargaining power of unions? Absolutely. If you don't believe me, start acting like a corporation in your workplace. Take everything that's not bolted down - why defecate on your own time, for example, when it's in your best interest to get paid for it on work time? Why pay your bills on your own time when your employer pays for an Internet connection? Is this stealing? Debateably, yes. Is it stealing when your cell phone company accidentally overcharges you, and then pays you back only that exact amount, without interest or opportunity cost? Is it stealing when a corporation decides to lower the standards of quality in manufacturing so that the same price buys less, without informing the consumer? Are these different than "stealing time" from your employer? No - the difference is that our taxpayer dollars enforce corporate interests, while labor has no such assistance.

Does a "free market" benefit corporations? Not a real free market, but certainly the kind of thing described in NAFTA (as an example) does. But that's not a free market, for reasons that I won't explain in this diary (this is about unions, I'll discuss "free trade" agreements and other stuff later). So, what's the conclusion:

1: Don't let the Republicans (or the Libertarian Party, for that matter) claim the term "free market". Free markets do not now and have never existed, probably never will, and none of the major parties advocate for them. Given the improbability of free markets occurring in my lifetime, I'll take the party that distorts the market for labor over capital (that's not really any party right now, but I have more faith in the Democrats for the future).

2: Unions are an example of a free market at work. People banding together to achieve their own interests is the definition of a free market.

3: Unions do exclude people from employment. This is because it's in the best interests of union members to do so. There is nothing wrong with this - it maximizes the value of labor in a particular segment, which strengthens the entire economic system, so the people excluded from the one union can more easily find a way to maximize their value in a different segment. This is an example of a free market at work.

4: Any corporation in which the executives make tens or hundreds of millions while relying on sweatshop labor is not utilizing a free market, almost by definition. If the sweatshop labor is capable of producing this much value, the labor (in a free market) will capitalize on this wealth. The fact that they have not done so is proof that the free market is not functioning (I'll go over the reasons why in another diary, but just to throw some ideas out there: copyright and patent law, a colonialist legacy of concentrated land ownership, transportation subsidies).

3 comments:

Matt Johnston said...

You wrote:

"Are unions effective at bettering the conditions of their members? Well, in a free market, that's not relevant (but yes, anyway). Do unions exclude non-members? Of course. Does that inhibit free trade? Of course not - unions are an association of workers who naturally benefit more by excluding others, just like corporations benefit more by excluding competitors from their markets. "

I will readily admit that unions are a voluntary association of individuals seeking mutual benefit and that is great. But unions do have some protections that are not only anti-market, but unfair. I am speaking required agency fee payments for non-members.

For example, most school systems have a contract with the local teachers union. But not all teachers want to belong to the union, which I am sure you would support their choice. But those individuals not only cannot negotiate their own pay package with teh school system, they have to accept the union negotiated package AND have to pay the union to negotiate a package they may not want. They want to compete on a free market basis against the union but cannot because they cannot offer their labor to the market outside of union negotiated scales. That is not free market, not by any standard.

Yes, the union can seek to exclude nonmembers from the labor market, but having state conferred benefits in the form of mandatory agency fees is not free market.

Lucky Buck said...

They really aren't. Unions are a counterbalance to corporate power, but they are not free market forces in the classical sense. Of course, free markets don't exist and can't exist in this world so it ain't no biggie.

Ophira said...

Keep up the good work.