With Ohio Vote, Analyzing the Rights and Economics of Unions

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With Ohio Vote, Analyzing the Rights and Economics of Unions

Yesterday, Ohio voters struck down a law that restricted public workers' rights to bargain collectively. But, not too long ago, Governor Scott Walker argued that changing the negotiating rights of unions would help to balance the state budget and save jobs. I would like to answer the following questions: Is there a right to unionize, and what role should the government play? The answers to these questions are vital to both the future of our economy and freedoms.

The decision to join a union and pool individual resources together are choices that are made by free people, not particular “rights” set by a government entity. I would argue that we do not want these to be rights, because if they are deemed rights by our government, then they can certainly be taken away.

Unfortunately, there are many issues that have become rights over time because of social justice arguments, such as a right to unionize, right to an education, right to healthcare, etc. I argue that we do not have a right to any of these. We have a right to freedom that will allow for the choices to be made and this right to freedom allows us to obtain healthcare services, learn in schools, and unionize. Expanding the rights that we have through government intervention is the wrong path to bringing about economic prosperity and increased liberty for individuals. 

Moreover, our right to freedom provides the means to organize into a union, but the union itself should not have any rights. A union’s primary goal should be to maximize the satisfaction of its members by negotiating higher wages, expanded benefits, and better working environments. These were the essential components that popularized unions in the early 1900’s, but they failed to continue this over the years.

Instead, individuals have found it more beneficial to argue on their own behalf because it is not in their best interest to pay fees to a union that is looking out for the union and not its members. In other words, the goal of unions has drifted towards gaining more due paying members to finance its bureaucracy. In addition, unions demand wage floors that are above the equilibrium wages in the labor market that creates a situation of higher unemployment.

Political economist Adam Smith noted that the best outcomes arise when an individual acts in his/her best interest. John Nash wrote that an optimal scenario occurs when each individual does what is in his/her best interest and in the interest of the group. Both of these teachings – allocative efficiency and Nash's equilibrium – are violated by unions.

While the freedom to choose allows individuals to join together, pay dues, and argue for increased earnings, there is not a right that should be imposed by government to unionize. This is based on the foundation that higher pay is not a right, which unions try to make the case for, but higher pay comes from increased productivity.


It appears that there is an ideology in our society that "big government" equals "good outcomes,” and this has blinded us to reality. Case in point, the Recovery Act of 2009 by President Obama pushed many tough decisions by states down the road because of the Federal funds that bailed them out. One reason why the stimulus package was ineffective, since the funds received by the states were not used to spend on projects or create jobs, but were used to pay down debt and keep public workers in place. Funding from the federal government to the states have now slowed or stopped, and now states are being forced to make the tough choices and balance their budgets.

Cutting bargaining criteria from unions and balancing budgets are tough choices and it would be great if no one had to lose their job and everyone got pay raises, but that is not how it works in the real world. We are not given a right to a job. Although it may not be popular, firing teachers who are not good at teaching, bringing down benefits and wages of union workers to market-based levels, and cutting waste from state and federal government agencies across the country would be one of the best formulas for putting our country on a sustainable fiscal path. These state governments should not be dependent on the federal government and individuals should end their dependence on the government as well.

Although the media hype about unions has subsided, there is still more that must be done. When given the chance, a return to federalism and individual responsibility will help America prosper.

Editor's note: This article originally appeared on PolicyMic earlier this year, in the aftermath of the Wisconsin unions controversy.

Photo CreditWikimedia Commons

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Vance Ginn

Vance Ginn is a Lecturer at Sam Houston State University and is working on his doctorate in Economics from Texas Tech University. Mr. Ginn is an ...

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Darwin Long

I concede Gary - a mic to you for pointing out my ignorance. Thank you. I would point out however that Smoot-Hawley didn't just raise tariffs, it took them to near record levels, and it wasn't the "trade war" that caused the tariffs to fail in their purpose. In fact they succeeded at first. It was the failure of an Austrian bank, followed by a cascade failure of numerous European banks, all in 1931, similar to the bank failure in the US in 1930. I think it might be argued right now that banks are not an industry that is in trouble and a similar scenario would be less likely to play out. http://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act

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Unions have had, and sometimes still do have their place, but I honestly have not ever had a good experience with them (even second hand) in my entire life. The fact that many state employees are forced to pay union dues out of every check even if they are against the union is absolutely wrong. That is one of the ways that "certain" parties and groups try to keep control of the government. That is in blatant contrast to our freedoms .

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There is a difference between the public and private sector. The problem inherent in any unionization effort is that in order for the process to work it must limit the freedoms of the very individuals it purports to represent.

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3 Replies

  • Jon Awbrey 6 months ago That is like saying that the Consti...

  • Richard Headrick 6 months ago Perhaps. I guess in the same manne...

  • George Schieck 6 months ago Including, Jon, teachers AND studen...

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Perhaps. I guess in the same manner you would suggest they are both the same as in neither case did the individual have the choice of whether or not to join.

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Including, Jon, teachers AND students.

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We have an explicit right to assemble peaceably. We have an explicit right to contract with anyone we want. Taken together, these two explicit rights, enumerated in the Constitution, equate to a right to create and join unions.

If you wish to eliminate the right to collective bargaining, you MUST eliminate one or both of these two rights, which means you are weakening the constitution's protection of the individual in favor of the corporations and the government.

Yes, I can see why multinational corporations and heavily monied interests might want to have that. I don't want them to have that.

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17 Replies

  • Gary W. Patterson, Jr. 6 months ago The multinationals don't have ...

  • Darwin Long 6 months ago And our unionized country has the r...

  • Gary W. Patterson, Jr. 6 months ago Which will result in a trade war. ...

The multinationals don't have to do away with unions, they'll just pick up their operations and hire workers in countries that don't unionize. Which is exactly what has happened over the past 30 yrs. Only 6.9% of the private workforce is unionized.

You have the right to form unions and corps have the right to seek labor elsewhere.

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And our unionized country has the right to place tariffs on imports - and should.

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Which will result in a trade war. Nobody wins. We have been down this discussion before. Tariffs don't work. Take a look at Smoot Hawley for case in point. It largely contributed to the Great Depression.

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Gary, the great depression happened all over the world. I would contend that Smoot Hawley decreased its severity here, and it was still bad enough here.

Tariffs have been used successfully for thousands of years. The ONLY loser in tariffs would be multinational corporations. Those things need to be cut down anyway to insure that people have a chance of governing themselves instead of being governed by someone else's board of directors, such as is happening now.

The holy Unseen Hand is only unseen because its not there.

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Our "unionized country," Darwin, is not that unionized.

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Disagree, Darwin. The corporations will not lose in such a conflict; they will simply alter the price(s) of their product(s), or relocate their marketing and/or assemblying and/or manufacturing.

The way to beat such an entity is to build a better mousetrap. It's not the process, rather it's the result.

Also the workers need not work there, they can work somewhere else (and if such a choice does not exist, then they should find a way to make such a choice).

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Darwin, you may be the only person I have ever seen argue that Smoot Hawley was a success story for the US. I think you would have to acknowledge that nearly every respected economist has concluded that Smoot Hawley made the Great Depression worse (in varying degrees).

http://americanhistory.about.com/od/greatdepression/f/smoot_hawley.htm

More recent attempts at tariffs haven't been anymore successful:
http://www.dailymarkets.com/economy/2011/05/25/do-anti-dumping-tariffs-on-furniture-from-china-create-u-s-jobs-only-for-washington-lawyers/

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"The way to beat such an entity is to build a better mousetrap. It's not the process, rather it's the result."

And then that better mousetrap will be built elsewhere and the US will suffer further.

I know our country is not unionized. Please understand the context of my conversation with Gary. The point of the exercise is to bring employment back to the US for those who are unable to grasp the science involved with highly technical employment - about 4 to 8% of the population judging by the current unemployment numbers - high tech jobs are on the increase and are not being filled.

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I concede Gary - a mic to you for pointing out my ignorance. Thank you.

I would point out however that Smoot-Hawley didn't just raise tariffs, it took them to near record levels, and it wasn't the "trade war" that caused the tariffs to fail in their purpose. In fact they succeeded at first. It was the failure of an Austrian bank, followed by a cascade failure of numerous European banks, all in 1931, similar to the bank failure in the US in 1930. I think it might be argued right now that banks are not an industry that is in trouble and a similar scenario would be less likely to play out.

http://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act

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Of course I would like to have more jobs created here at home. However, I don't think tariffs are the answer. They have been tried repeatedly over the years without success. There's no reason to believe a new round of tariffs would be any more successful.

We need to expand our exports if we want to create jobs. Tariffs will only result in other countries following suit, thus making our goods less competitive.

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Darwin, your logic doesn't work. True, we have a right to assemble into a union and collectively bargain. However, we have no 'right' to prevent the employer from hiring someone who didn't join our collective.

I'd say that by legislating certain laws forbidding non-union labor, we've chosen to create an opportunity for the working class to earn more, because we prefer that outcome. Different from a right.

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"we have no 'right' to prevent the employer from hiring someone who didn't join our collective"

True David - Unless . . . The employer allowed such a phrase to be put into the contract with the collective.

"legislating certain laws forbidding non-union labor" - I have no control and less comprehension about what a legislature might do. I have a formula for determining the intelligence of such a group of people. Find the highest IQ in the group and divide it by the number of people in the group.

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This discussion has failed to carefully define "rights". We need to differentiate "inalienable rights" from rights created by legislation or contract. The opening essay confuses the issue by using both senses. There, "freedom" is considered an inalienable right but education and unionization are legislated rights.

I was using "rights" in the inalienable sense. All union rights are legislated, driven by our belief that unions are beneficial.

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Look more closely at my original post Dave. I combine two "inalienable rights" enumerated in the constitution to show an "inalienable right" create unions. This doesn't give those unions any power necessarily, that comes from the number of members in that union and the percentage of members that work at a single company.

People have rights. Unions have bargaining power because of numbers. They have no rights.

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You are right we do not have an explicit right to unionization, just to free speech and assembly. Any legal benefit a union enjoys is granted by the government.
I do think Krugman makes a very valid point to be wary of Political Economists. Yes, he of all people saying that..

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Yes people have a right to unionize while unions do not have rights to e.g. block non-union employees. But Americans have given unions _privileges_ because we believe that yields a better society. E.g. we pass laws allowing unions to monopolize work and negotiate "wage floors that are above the equilibrium wages in the labor market" because we feel _overall_ this yields a fairer distribution of wealth. Fewer jobs, but better paying.

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7 Replies

  • Jon Awbrey 6 months ago Unions don't monopolize work. ...

  • David Karger 6 months ago They don't by themselves, but ...

  • George Schieck 6 months ago I wouldn't call them scabs, I&...

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They don't by themselves, but when we pass laws forbidding companies from hiring non-union labor, we are giving those unions a monopoly. To be clear, I think this is a good thing as I said above. But call a spade a spade. If we left it all to the market, the union would have no power. There would always be scabs willing to undercut the union for a job, driving wages down to their natural "market level" which is lower than we consider fair.

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I wouldn't call them scabs, I'd call them persons hungry for a job, and/or unwilling to work within the strictures of unionization.

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Yes, Jon, unions do monopolize work wherever there are strictures requiring employees of a certain type or category to become union members.

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I would call them that too, if I had more than 450 characters!

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"I would call them that too, if I had more than 450 characters! "

All things must pass Dave.

The way a union gains power over a particular company is by convincing ALL the workers in that business that they are being damaged by their management. If that's true, its an easy sell. If the company treats its employees well, its a lot tougher.

Legislature acts in this drama only when the companies involved choose to shut down rather than to capitulate to the unions, because this damages the entire community.

If the company is actually taking advantage of the employees, non-union labor is a good deal harder to find because nobody likes to be taken advantage of.

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It's true that nobody likes being taken advantage of, but they'll often choose that over having no job at all. Which means you've often got a non-union pool of labor willing to accept whatever conditions the union is trying to prevent.

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5 Replies

  • Gary W. Patterson, Jr. 6 months ago Only 12% of Americans now work for ...

  • Jon Awbrey 6 months ago Why, you'd almost think that c...

  • Gary W. Patterson, Jr. 6 months ago No they have something against high...

Only 12% of Americans now work for unions, and most of them work for the gov't. It's no coincidence that the industries most unionized also happen to be the ones now operating overseas.

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No they have something against high labor costs. Pretty simple.

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That's a category fallacy, Jon. You should know that. Confusing one thing for something else.

Anti-poverty program = income source, jobs training, education.

Union = employment constrictor

Collective bargaining = variant of negotiation for employment

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