Sunday, October 18, 2009

Caveat Lectores on the Value of Unions

At an Oktoberfest get-together this past Saturday, I encountered two former Employment Law students. I am proud to say they were good students and both are in graduate school. One former student is in law school and credits me with motivating him to become an attorney. That is a little scary, but I will enjoy the image of me as a mentor. I am always afraid that the motivation went like this: “If he can make it through law school, so can I.”

The other student is more familiar to me and getting a master’s degree in Economics. I enjoy speaking with him because I fancy myself a student of economic theory and have claimed to have what could be considered a dual undergraduate major in Business Administration and Economics. I am not sure that is correct, but I did take several courses in economics, and that makes me a self-styled expert.

Remember, we met at a bar so my professorial demeanor was diminished by Paulaner Beer. His pretense of professorial respect had diminished, as well.

Somehow we started to talk about labor unions and how unions interfered with the economic models that work best. He excited my indignation when he said that unions existed only for the benefit of the union leadership. Naturally, this college student has never lead a union nor even belonged to one. He is the victim of his upbringing and anti- union readings, lectures from teachers and peers who know, at best, little more about how unions work than he.

Unfortunately, he may not be entirely incorrect. Unions do indeed interfere with the employer’s unilateral manipulation of the workplace. So far as I can determine, that is their purpose. He was correct when he said the need for unions,in many areas of protections for employees, has been supplanted by the laws the unions helped to pass. (OSHA, ERISA, COBRA, HIPAA, Title VII, FLSA, et al)

Where he was dead wrong was in the statement that unions exist only for the benefit of union leaders. He may know more than I about economic theory after one semester of graduate school, but he is ignorant of union leadership and will likely remain so. That is the risk of academic education. He can become an expert and develop “educated” opinions without the benefit or burden of experience.

Most union leadership is performed at the lowest levels. Local union leaders seldom prosper because of their involvement. They occasionally receive some payment for their time, but the good feeling that comes from helping others is about all they get. At the upper levels of national leadership the remuneration is much, much greater. However, there have never been any national union leaders who even begin to make as much as the upper level corporate executives of the 21st century. This was a major source of our discordant social intercourse as well.

I am reminded of a speech I gave to an IRRA labor management group about twenty years ago. I offended all in the room when I said that my experience with both labor and management convinced me that, as far as greed and corruption were concerned, labor could be just a greedy and corrupt as management just not as successfully. The most corrupt of labor leaders have never robbed the economy like today’s robber barons who call themselves banking executives, CEOs, CFOs. Just read the papers about executive pay gaps. The Internet has a lot of information about this topic.

15 Oct 2009 Goldman Sachs Nine-Month Compensation Totals $527192 a Person ...

And oh yes, have a nice day.


1 comment:

T said...

Interesting. You're definitely right to point out that he wasn't wrong to say that unions disrupt neoclassical economic models. That's got to be true. What always boggles me, is that rather than doing what social scientists are supposed to do (i.e. re-work models in light of countervailing evidence), economists by and large seem to prefer to whine that reality doesn't adequately fit their models. Much of the profession's reaction to the current crisis has borne this out. Many 'freshwater' economics-types are still holding fast to the strange belief that *all unemployment is voluntary*. Evidently the Great Depression was just the Great Vacation.

Economics, as such, is terribly interesting and important. But the way it get's done in many depts in the US often reeks of management book-keeping techniques, rather than critical social science.