Unions’ Time is Coming Back

By SAM URETSKY

John Kenneth Galbraith, Harvard economist, JFK’s ambassador to India, and best selling author, once said. “Liberalism is, I think, resurgent. One reason is that more and more people are so painfully aware of the alternative.” That was then, this is now, but then Galbraith also said “nothing is so admirable in politics as a short memory.” He was a leading figure in what may have been the golden age of economics, between the unintelligible writing of Adam Smith and the equally unintelligible computerese of modern economists.

One of his more influential works was "American Capitalism: The Concept of Countervailing Power". Oversimplified, countervailing power is competition from an oblique angle. In the classical model, competition comes from somebody else who does the same thing – two farmers, two shoemakers, two or almost anything. Countervailing power is the economic force exerted by somebody or something that’s less direct – such a chain stores. Chain groceries can bargain for lower prices with packaged goods producers both by offering house brand products, or by putting the branded products on the bottom shelf of a display.

The best example of countervailing power was, and still is, unionization. Without unions, employers have complete control in setting wages and working conditions. A single individual may go looking for a better paying job, but even if she finds it, that won’t have much influence on social conditions on a national basis. A union, bargaining for all the employees in a company, or even an industry, can raise wages for everybody, and alter the local, or even national economy, usually for the better. When all the workers in a factory get a raise, they benefit, but so does the lunch counter across the street. When the factory lays off 10% of its employees, the lunch counter goes out of business. Classical economics is based on supply and demand, and when the employers have full control over wages and working conditions, salaries fall, demand falls, and so does the regional economy.

Unions are not a universal good, but they do seem to be a universal “better than the alternative.” Red states, which have engaged in union busting and “business friendly” laws and regulations, include some of the poorest, least developed states in the union. The governments of these states are glad to offer their citizenry at discount prices to any corporation that can offer minimum wages and carpal tunnel syndrome. At the moment, Scott Walker, governor of Wisconsin and a union buster with a strong conservative base, seems to be in the ascendancy in the clown car that is the Republican presidential contenders. The map of Right-To-Work states should show these states in red so that it will serve a double purpose.

There has been some discussion about why people accept this state of affairs and don’t protest putting businesses over people, and there are a lot of reasons offered. One is fear that businesses will move, either to another state or another country. That was popular for a while, but in Japan and China workers have demanded raises, and corporations have to keep moving in search of cheap labor. Another is resentment. In this theory, which has turned up in Salon, The New Yorker, and other publications, when non-union workers see the benefits their neighbors receive from the union, the reaction is not to unionize, but to support the union busting politicians, to bring their neighbors down to the non-union level.

It may be time for the unions to go on the offensive. As the economy recovers the labor market is getting tighter. The Affordable Care Act decoupled health insurance from employment so that more people can leave jobs, either to create their own businesses or retire before Medicare age. Protests for a higher minimum wage have worked, so that corporations are offering pre-emptive increases. The drop in gas prices has given people more disposable income whether to save or pay off debts. Historians have noted that revolutions come, not when people are most severely oppressed, but when they get a bit more freedom. As corporations are faced with a tighter labor market, it may be a good time for unions to reassert themselves and offer unionization as an alternative to resentment. The fast food workers went on strike for $15/hour and were joined by employees of discount convenience stores. Maybe the pendulum is swinging back.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@outlook.com.

From The Progressive Populist, April 1, 2015

Populist.com