The New Era Of Unions

Labor unions used to be powerful, and now they seem to be back. I basically support what unions are about but yet my feelings about them are mixed. Since unions are coming back why don't we review the mistakes that they made the last time around.

The first mistake was unrealistically high wages. This is what caused the rampant inflation during the 1970s. Millions of well-paid unionized industrial workers were getting paid more than their labor was really worth, according to the Law of Supply and Demand. The economy adjusted by way of inflation. How much of a coincidence can it be that inflation and the number of people working in manufacturing both peaked at right around the same time.

The second mistake was just being ridiculous. I once worked in a unionized factory where everyone had a specific job description. A worker was not allowed to do another worker's job. One day some bolts had to be taken out of a machine. Any of us could have gotten a wrench and removed the bolts. But it was the job of a specific worker and we had to wait for that worker to get back from lunch. It didn't make sense.

The third mistake was organized crime. Unions became a haven for organized crime. How many construction unions were there where the union assigns work, and the union boss is the dictator, and if anyone doesn't do what the union boss says then they don't get work?

Geopolitics is a factor in unions in western countries. Back in the old days the western countries generally had to lean leftward, which favored unions, because of the global ideological competition from Communism. It is no coincidence that the wealth gap in America, the difference between rich and poor, was at it's narrowest in 1973, at the height of the Cold War. The presence of the Soviet Union is actually the best thing that ever happened to unions in the west. But it is no longer there and unions shouldn't expect to have the power that they once did.

A major factor in the return of unions is simple demographics. Baby Boomers are retiring by the millions and there is not enough young workers to take their places. This is why there is an abundance of jobs, which invites unions back. It is also why there is inflation, these millions of retirees have to be taken care of but are no longer doing productive work. Another reason for inflation is certainly that governments have an interest in making internal combustion driving expensive, in order to push people toward electric vehicles.

The outside world is much more developed, relative to the west, than it used to be. If workers keep going on strike for higher wages, it won't get them what they want it will just get the industry to relocate to where they don't have to deal with unions. But one thing that industrial workers in the west do have going for them nowadays is the high cost of shipping. The advantage of making things where it costs less to make them is negated by the fact that it costs more to ship them.

Let's make unions work this time around by being moderate and sensible.