Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Smash the Labor Monopolies!

Politics / Employment Sep 15, 2009 - 09:35 PM GMT

By: Ayn_Rand


Thomas Bowden writes: When President Obama addresses the AFL-CIO on Sept. 15, he is expected to reiterate his support for the so-called Employee Free Choice Act. Congress is sharply divided over the proposed law, which would change the voting and arbitration procedures by which federal law forces companies to deal with labor unions.

Because the changes favor Big Labor, pro-union Democrats have been locked in a prolonged partisan squabble with their Republican opponents, and legislative compromise seems likely. But that’s really beside the point. Instead of quibbling over the methods by which unions can be forced upon unwilling employers and employees, Congress should be debating how to make the labor market truly free--free from government coercion.

For more than 70 years, Congress has maintained a statutory scheme that fastens coercive labor monopolies on individual companies. Starting with the Wagner Act in 1935, any union that wins a simple majority of employee votes becomes, by force of law, the exclusive bargaining agent for every single employee in that workplace. Such a victory slams the door shut on individuals who want to deal directly with the company, and leaves the union with a government-protected stranglehold on that firm’s labor supply. Predictably, these company-by-company labor monopolies have had the kind of deadening effects that come with all coercive monopolies.

Here’s how it works in practice: Each company is required by law to “bargain in good faith” with the union before making any important decision affecting jobs, wages, or working conditions. The union, in its legally privileged position, can just say no. When pressed, it can mobilize a crippling strike even if thousands of employees would rather keep working--because here, too, the outcome of an employee majority vote binds everyone. Usually, however, the mere threat of such a strike is enough to keep employers in line.

Now suppose a unionized firm wants to sell or close an unprofitable plant, or revamp a workflow to save expenses. At the “bargaining” table, the union’s predictable resistance is typically followed by one of two results. Either the union stands firm, in which case the unprofitable practices continue--or the union acquiesces, in exchange for higher wages and benefits, or a job for the shop steward’s son, or some other favor. This is not genuine bargaining but organized extortion, made possible by federal labor law.

So, while non-unionized competitors charge ahead with nimble, inventive, rapid responses to market challenges, unionized companies learn to slow down, “negotiate,” compromise, draw up rules--in other words, kowtow to the union. The inevitable results are bloated prices and declining product quality, as witness the domestic auto industry.

Detroit’s automakers, having suffered through painful work stoppages in the decades following World War II, discovered they could avoid labor unrest by caving in to the United Auto Workers’ demands. Over the years, meeting those demands gave rise to labor agreements as thick as telephone books, testaments to the stultifying regimentation that sapped Detroit’s competitive juices.

Because car manufacturing is complex and capital intensive, many years passed before competitors from Japan, Korea, and Germany could establish non-unionized plants in America’s southland. Now, however, the sun is setting on Detroit. GM and Chrysler are writhing in red ink, drained to the point of bankruptcy by costly union concessions, and Ford struggles to survive.

Not all labor unions wield UAW-level power, but most would like to. That’s why the Employee Free Choice Act would eliminate secret ballots in union elections and replace them with individually signed cards, open to union inspection. This would allow union organizers to more easily target, and intimidate, anti-union employees--and therefore win more often. The Act would also allow government arbitrators to impose initial “contract” terms if the union and employer disagree. That’s contrary to existing law, which allows for a no-contract impasse in that situation.

Congress should not only reject the transparent power grab known as the Employee Free Choice Act, it should start hacking at the root of the complex federal regime that denies free choice in bargaining. That means repealing the Wagner Act, so that labor law can recognize and protect the absolute right of companies and employees to deal with each other on an entirely voluntary basis.

Mr. Bowden is an analyst at the Ayn Rand Center for Individual Rights, focusing on legal issues. A former lawyer and law school instructor, and author of the book “The Enemies of Christopher Columbus,” his op-eds have appeared in the Wall Street Journal, Philadelphia Inquirer, Miami Herald, Los Angeles Daily News, and many other newspapers. Mr. Bowden has given dozens of radio interviews and has appeared on Fox News Channel’s Hannity & Colmes.

Copyright © 2009 Ayn Rand® Center for Individual Rights. All rights reserved.

Ayn Rand Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in