Noah Smith: Unions Did Great Things for the American Working Class: "Politically and economically, unions are sort of an odd duck. They aren’t part of the apparatus of the state, yet they depend crucially on state protections in order to wield their power. They’re stakeholders in corporations, but often have adversarial relationships with management. Historically, unions are a big reason that the working class won many of the protections and rights it now enjoys...
...but they often leave the working class fragmented and divided -- between different companies, between union and non-union workers, and even between different ethnic groups. Economists, too, have long puzzled about how to think about unions. They don’t fit easily into the standard paradigm of modern economic theory in which atomistic individuals and companies abide by rules overseen by an all-powerful government. Some economists see unions as a cartel, protecting insiders at the expense of outsiders. According to this theory, unions raise wages but also drive up unemployment. This is the interpretation of unions taught in many introductory courses and textbooks. If this were really what unions did, it might be worth it to simply let them slip into oblivion, as private-sector unions have been doing in the U.S. But there are many reasons to think that this theory of unions isn't right -- or, at least, is woefully incomplete....
Supporters of free markets should rethink their antipathy to unions. As socialism gains support among the young, both economists and free-market thinkers should consider the possibility that unions—that odd hybrid of free-market bargaining and government intervention—were the vaccine that allowed the U.S. and other rich nations to largely escape the disasters of communism in the 20th century. It looks like it’s time for a booster shot.
#noted #equitablegrowth #labormarket #politicaleconomy
