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Any wage gains that are derived by unionisation are zero sum. They are economic rent extracted by reducing the competitiveness of labour markets, and advantagin

Any wage gains that are derived by unionisation are zero sum. They are economic rent extracted by reducing the competitiveness of labour markets, and advantaging unionized workers working for big employers at the expense of those without such jobs. In the long run, the reduced profit margins caused by wages that are artificially high (above the rate that would be established by the free market) results in less investment (profits == compensation for investors), which means a slower rate of economic and wage growth. >>If there is one thing I've learned from two decades of reading about labor history, I encourage you to read a diverse set of perspectives. I'd argue that unions have more power than employers in being able to shape the historical narrative.

chimeracoder 9y ago
> I'd argue that unions have more power than employers in being able to shape the historical narrative. I'm not going to compare their power to employers' power, but it is definitely true that unions have been able to write their preferred version of history with labor law. Notice how we never talk about the historical ties between labor unions and white supremacy. It's all right there in the public record - there's no denying that it happened - but it's always ignored in the public narrative.
jeremysalwen 9y ago
Why do you assume that the current wages are the "natural" rate established by the "free market"? Don't we have evidence that employers are already abusing their market power to extract rents? (https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... for an example close to home) In fact, corporate profits are record-high, and wages have been stagnant for decades, suggesting very strongly that the "unnatural" market power that is keeping wages at "artificial" levels is in fact that of employers.
- CryptoPunk 9y ago
  >>Don't we have evidence that employers are already abusing their market power to extract rents? (https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L.. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L.... for an example close to home) Very few firms can engage in such behavior. A pact like this can only be maintained by a small number of very large firms, and only the firms party to the pact will abide by it, leaving the entire rest of the employer market in a competitive state. Even had the antitrust action not stopped this behavior, it's questionable how much of an impact this behavior had in restraining wage growth in Silicon Valley's tech sector, and how long the pact would have lasted given its informal nature, and the temptation to cheat due to the intense completion between those party to it. If wages being below the natural, market rate, due to collusion between large firms is your concern, then the right solution is antitrust action. Unionisation in the current legal environment (where unions can affectively hold their firm hostage, and thus reduce labour market freedom) creates numerous unintended consequences that adversely affect industries. >>In fact, corporate profits are record-high, and wages have been stagnant for decades, suggesting very strongly that the "unnatural" market power Corporate earning growth is at historically low rates. Wages have stagnated because economic output growth has stagnated. See this comment: https://news.ycombinator.com/item?id=15244901 https://news.ycombinator.com/item?id=15244901
  - jeremysalwen 9y ago
    > Very few firms can engage in such behavior. A pact like this can only be maintained by a small number of very large firms, and only the firms party to the pact will abide by it, leaving the entire rest of the employer market in a competitive state. And the same can't be said about the market power of unions? > Corporate earning growth is at historically low rates. Cherry picked statistic. Corporate earnings as a percent of GDP are record high. https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik And your linked chart shows exactly my point, wages relative to productivity have been decreasing. Obviously with anything like this you have a hard time showing a direct causation, which is why I am confused that you are claiming that you can prove a clear causation in the exact opposite direction that the economy has been moving.
andybak 9y ago
What you call rent seeking another person might regard as sensibly avoiding the externalities caused by low wages. An unfettered market merely pushes the costs elsewhere and we all pick up the pieces. Your argument surely requires a mythical perfect market without externalities?
- CryptoPunk 9y ago
  But it doesn't avoid low wages. It's a zero sum wage redistribution from other workers and from future workers to present unionized workers. If everyone was unionized, and if there were zero profits, then unionisation would have zero benefit for any worker. Also low wages are not an externality: https://en.wikipedia.org/wiki/Externality https://en.wikipedia.org/wiki/Externality The point of letting the market modulate supply and demand is that it encourages an economically optimal allocation of resources. If you'd like to have a more in depth discussion on this, perhaps you could post a thread in a more appropriate forum like Reddit and we can discuss it there.
  - andybak 9y ago
    > low wages are not an externality The social cost of poverty is surely an externality. If you don't pay people enough to cover their healthcare, to give them the ability to provide a stable family environment or have a reasonable housing situation then the cost will have to be paid somewhere else in the system. And it probably will cost the economy more the further down the line it finally bubble up. > The point of letting the market modulate supply and demand is that it encourages an economically optimal allocation of resources. Only assuming a perfect market. Which is about as plausible a concept as a socialist paradise. The real world is messy and imperfect. People aren't rational actors. Laws are imperfect. Regulators are corrupt. Information doesn't flow everywhere equally. Monopolies and cartels exist.
    - CryptoPunk 9y ago
      >The social cost of poverty is surely an externality. There may be some externalities associated by poverty, but the same could extend to taxing corporations more. You don't reduce poverty by moving private wealth around by government fiat anyway. >Only assuming a perfect market. Free markets are an ideal to strive toward. The unattainability of the ideal isn't a reason to abandon its pursuit. Economies work better when the ideal is pursued and artificial barriers to contracting and private property rights aren't hoisted on people via legislation. But I digress, if you'd like to discuss this in more detail, please post a thread in a more appropriate forum.
lawnchair_larry 9y ago
I think you are confusing reducing competitiveness in labor markets with reducing asymmetry. If you meant competitiveness of businesses, sure, it probably does that. But the logical conclusion for that line of reasoning ends up with us working in a Gulag.
astrange 9y ago
Wage redistribution isn't zero-sum, because it means less for a rich person to lose a dollar than for a poor person to earn one. Also, I recommend rereading your post with "labour" as "proletariat" and "investor" as "bourgeoisie". Hopefully you'll discover class consciousness.
- CryptoPunk 9y ago
  >Wage redistribution isn't zero-sum, because it means less for a rich person to lose a dollar than for a poor person to earn one. If that were true we ought to make all income flat. Private property rights allows those who are the smartest investors of capital to generally control more of it. This leads to better capital allocation, which leads to more growth of wealth. Wealth has broad societal benefits through positive externalities so it's in our interest to see it expand, regardless of how it's distributed. >Hopefully you'll discover class consciousness. Marxist tribalism. There is a reason all Marxist economies fail to keep up with market economies.
pascalxus 9y ago
This only applies to companies that compete in a competitive marketplace. It doesn't apply to monopolies who have enormous margins: for example: google, facebook, etc.

chimeracoder 9y ago

> I'd argue that unions have more power than employers in being able to shape the historical narrative. I'm not going to compare their power to employers' power, but it is definitely true that unions have been able to write their preferred version of history with labor law. Notice how we never talk about the historical ties between labor unions and white supremacy. It's all right there in the public record - there's no denying that it happened - but it's always ignored in the public narrative.

jeremysalwen 9y ago

Why do you assume that the current wages are the "natural" rate established by the "free market"? Don't we have evidence that employers are already abusing their market power to extract rents? (https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... for an example close to home) In fact, corporate profits are record-high, and wages have been stagnant for decades, suggesting very strongly that the "unnatural" market power that is keeping wages at "artificial" levels is in fact that of employers.

CryptoPunk 9y ago
>>Don't we have evidence that employers are already abusing their market power to extract rents? (https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L.. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L.... for an example close to home) Very few firms can engage in such behavior. A pact like this can only be maintained by a small number of very large firms, and only the firms party to the pact will abide by it, leaving the entire rest of the employer market in a competitive state. Even had the antitrust action not stopped this behavior, it's questionable how much of an impact this behavior had in restraining wage growth in Silicon Valley's tech sector, and how long the pact would have lasted given its informal nature, and the temptation to cheat due to the intense completion between those party to it. If wages being below the natural, market rate, due to collusion between large firms is your concern, then the right solution is antitrust action. Unionisation in the current legal environment (where unions can affectively hold their firm hostage, and thus reduce labour market freedom) creates numerous unintended consequences that adversely affect industries. >>In fact, corporate profits are record-high, and wages have been stagnant for decades, suggesting very strongly that the "unnatural" market power Corporate earning growth is at historically low rates. Wages have stagnated because economic output growth has stagnated. See this comment: https://news.ycombinator.com/item?id=15244901 https://news.ycombinator.com/item?id=15244901
- jeremysalwen 9y ago
  > Very few firms can engage in such behavior. A pact like this can only be maintained by a small number of very large firms, and only the firms party to the pact will abide by it, leaving the entire rest of the employer market in a competitive state. And the same can't be said about the market power of unions? > Corporate earning growth is at historically low rates. Cherry picked statistic. Corporate earnings as a percent of GDP are record high. https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik And your linked chart shows exactly my point, wages relative to productivity have been decreasing. Obviously with anything like this you have a hard time showing a direct causation, which is why I am confused that you are claiming that you can prove a clear causation in the exact opposite direction that the economy has been moving.

andybak 9y ago

What you call rent seeking another person might regard as sensibly avoiding the externalities caused by low wages. An unfettered market merely pushes the costs elsewhere and we all pick up the pieces. Your argument surely requires a mythical perfect market without externalities?

CryptoPunk 9y ago
But it doesn't avoid low wages. It's a zero sum wage redistribution from other workers and from future workers to present unionized workers. If everyone was unionized, and if there were zero profits, then unionisation would have zero benefit for any worker. Also low wages are not an externality: https://en.wikipedia.org/wiki/Externality https://en.wikipedia.org/wiki/Externality The point of letting the market modulate supply and demand is that it encourages an economically optimal allocation of resources. If you'd like to have a more in depth discussion on this, perhaps you could post a thread in a more appropriate forum like Reddit and we can discuss it there.
- andybak 9y ago
  > low wages are not an externality The social cost of poverty is surely an externality. If you don't pay people enough to cover their healthcare, to give them the ability to provide a stable family environment or have a reasonable housing situation then the cost will have to be paid somewhere else in the system. And it probably will cost the economy more the further down the line it finally bubble up. > The point of letting the market modulate supply and demand is that it encourages an economically optimal allocation of resources. Only assuming a perfect market. Which is about as plausible a concept as a socialist paradise. The real world is messy and imperfect. People aren't rational actors. Laws are imperfect. Regulators are corrupt. Information doesn't flow everywhere equally. Monopolies and cartels exist.
  - CryptoPunk 9y ago
    >The social cost of poverty is surely an externality. There may be some externalities associated by poverty, but the same could extend to taxing corporations more. You don't reduce poverty by moving private wealth around by government fiat anyway. >Only assuming a perfect market. Free markets are an ideal to strive toward. The unattainability of the ideal isn't a reason to abandon its pursuit. Economies work better when the ideal is pursued and artificial barriers to contracting and private property rights aren't hoisted on people via legislation. But I digress, if you'd like to discuss this in more detail, please post a thread in a more appropriate forum.

lawnchair_larry 9y ago

I think you are confusing reducing competitiveness in labor markets with reducing asymmetry. If you meant competitiveness of businesses, sure, it probably does that. But the logical conclusion for that line of reasoning ends up with us working in a Gulag.

astrange 9y ago

Wage redistribution isn't zero-sum, because it means less for a rich person to lose a dollar than for a poor person to earn one. Also, I recommend rereading your post with "labour" as "proletariat" and "investor" as "bourgeoisie". Hopefully you'll discover class consciousness.

CryptoPunk 9y ago
>Wage redistribution isn't zero-sum, because it means less for a rich person to lose a dollar than for a poor person to earn one. If that were true we ought to make all income flat. Private property rights allows those who are the smartest investors of capital to generally control more of it. This leads to better capital allocation, which leads to more growth of wealth. Wealth has broad societal benefits through positive externalities so it's in our interest to see it expand, regardless of how it's distributed. >Hopefully you'll discover class consciousness. Marxist tribalism. There is a reason all Marxist economies fail to keep up with market economies.

pascalxus 9y ago

This only applies to companies that compete in a competitive marketplace. It doesn't apply to monopolies who have enormous margins: for example: google, facebook, etc.