Wednesday, April 29, 2009

When Free Choice is Terrible

Thank God for the Republicans for opposing this. And may be some centrist Democrats, including the recently inducted Sen. Arlen Specter. I thought no sane, objective person could support the proposed Employee Free Choice Act (aka "card-check".) Yet it is favored by Jagdish Bhagwati and even more so by Paul Krugman, both outstanding economists. Apart of course by Obama and most Democratic lawmakers as a matter of political necessity to appease unions that helped in their election.

Despite its noble sounding name this deliberately misnamed Act subverts workers' free choice about whether to unionize or not. Instead of voting by secret ballot, this Act also requires unions to be formed and recognized if half or more of the workers in an establishment sign pledge cards in support of this. So say, Tony Soprano style thugs knock on workers doors, stare across the dining table and hold the pledge card for workers to sign. Those who refuse can be intimidated, and everyone knows who is unwilling, leaving them open to retaliation down the line, or ostracism by fellow workers, or other unpleasant consequences.

So how do Krugman & Co. favor this over a free and fair vote by secret ballot? They essentially say that the means however imperfect justify the end, which is more unionization. This in turn will improve the lot of workers by extacting concessions from employers, and better redistribute wealth, thus narrowing the gap between the classes. If such ends justify the means, how about allowing the poor to extort money from the rich, or burglarize their homes to achieve redistribution?

Thankfully, it looks like card-check won't be able to clear the Senate with a filibuster-proof majority. Though many people take it as a given, I question the value of unions in many situations, or at least the premise that the pros outweigh the cons.

Unions to me are the most needed when through collective bargaining they are a counterweight to (mostly tacit) collusion by employers to keep wages and benefits below what would prevail in a free market. One example is of US hospital chains that were hit with a lawsuit over colluding to keep nurses' salaries artificially low, despite a national shortage of nurses. Another is of players' unions in professional sports (even though players may be super-rich.) They bargain with a handful of sports team owners that collectively decide on salary caps or player pay structure. But such employer collusion is relatively rare, and generally illegal.

Other pluses of unions include workplace safety, health and social benefits that they can win from employers through collective bargaining and the threat of strikes. I'm certainly for such health and safety measures, but for most of them they are better realized through passage of broader laws applying to all, instead of individually won through unions with the most leverage for their limited set of workers. Thus we have OSHA, or the Workmen's Compensation Act, and even the Minimum Wage Act and can go further along this route.

On the downside unions can severely distort free market efficiencies, hurt consumers who are forced to pay higher prices, and reduce the international competitiveness of US goods and services. Unions are at least as much to blame as the management for the woes of the Detroit Big Three automakers. Wal-Mart opposes unionization (hopefully with entirely legal means) at a high cost to its image and political capital because it understands the threat to its competitive position.
Then there are illegal strikes like the 1981 Air Traffic Controllers strike, the 2005 New York city transit strike and fake "sickouts" by pilots and other airline staff. Except for the controllers whom Reagan rightly fired, the workers get away with holding the public to ransom and breaking laws aimed at protecting essential services. These, and even the legal 2008 American Axle strike where a few UAW workers crashed GM production seem like acts of collective extortion rather than collective bargaining.
Still, in a free society and functioning democracy I realize the need to allow the creation and existence of unions, even if (like trial lawyers) they do more harm than good. Only they should be created where workers exercise genuine free choice through vote by secret ballot, not through the charade of a deceptively named law.

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