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You really have to look at this stuff from first principles and first principles are pretty clear. Unions by definition are exercising market power to withhold

You really have to look at this stuff from first principles and first principles are pretty clear. Unions by definition are exercising market power to withhold labor and force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case. Then one has to ask themselves in which situations could a union pushing up labor prices make things better? There's basically only one situation and that is where there is a labor monopsony and the company holding the monopsony is pushing labor prices down below market clearing rates (because pushing prices higher gets us closer to the market clearing rate in theory, lowering dead weight loss from labor). Is this a monopsony? Yes, it kind of is, but when one looks at the contracts being offered it's really hard to say labour prices are being pushed below market clearing rates. If anything they have been and continue to pay a premium, so this is not a situation where a union is a good idea for society.

roughly 2y ago
> Unions by definition are exercising market power to withhold labor and force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case. Well, everyone except the people who work for money. > Then one has to ask themselves in which situations could a union pushing up labor prices make things better? In the situation where people get paid that higher labor price, those people are better off.
- snapplebobapple 2y ago
  yes, but everyone else is worse off by a greater amount because that higher price causes other reactions and repricings in the supply chain. There are some really nice graphs in first year economics that explain this. That we are in a potential situation where there is market power being exercised by the employer is basically the only reason we have to even consider that a union could make things better off is because the person with the monopsony doesn't benefit from decreasing output as the union pushes wages higher if the end result is at or below the efficient price for labor.
  - roughly 2y ago
    > There are some really nice graphs in first year economics that explain this. Yes, and they’re bullshit, as are the ones that suggest firms price competitively, that markets tend towards competition and not consolidation, that government spending is inherently bad, and all the other Chicago-school Reagan-revolution bullshit that’s left this country with third-world infrastructure, income inequality that would embarrass a Rockefeller, and no industrial base to speak of.
  - Epa095 2y ago
    Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101, and thinking they now understand the world.
    - snapplebobapple 2y ago
      [flagged]
      - Epa095 2y ago
        I invite you to think about how your argument would look like if you actually wrote it out to completeness. It would probably include one or more of the following assumptions: - Infinite(or unlimited amount) of both homogeneous employeers and employees. - Unlimited information about... everything. - Changing jobs is cost-free for everyone (employeers, employees, and society at large). - No participant in the market is large enough to influence any prices (for goods or wages). - Everyone is perfectly rational. - No barriers to entry for anyone. - That all utility-spaces are convex and compact - No externalities. The perfect market is the "spherical cow in a vacuum" of economy. Not to say that game theory, and economy at large, is not usefull! But there are major steps from theory to practice, and to actually do that step you need impossible assumptions about how much the "imperfection of reality" influences the conclusions you make. (Sorry about spelling misstakes, take it as proof that GTP was not involved;-)
        2y ago
- caeril 2y ago
  [flagged]
fny 2y ago
This is a really out of touch answer akin to how globalists and economists argued for off-shoring because “competitve advantage.” The reality is far more nuanced. For example, one could argue wage growth stagnated in the US and instead we had tremendous growth in developing countries. For many Americans, globalization was a tax that further exacerbated income inequality. Congratulations: this is Pareto optimal! Some company’s bottom line is improving, some shareholder is profiting, and wages stagnant—so society is “better off as a whole” definitionally… but is it really? The same can be said about unions and market power. Sure deadweight loss exists. Someone will absorb the cost, but it’s not necessarily “the people”. Companies cannot pass costs onto consumers as easily as economists claim, so often profits take the brunt of the deadweight loss. Think of it this way: if companies could just pass on the cost, why go through the expense of fighting the union when they could do just that? Mind you, I’m talking about unions in general: it’s nuanced. I honestly don’t know enough about the specific demands here to have an opinion, but I encourage everyone to listen to an interview with the longshoremen.
- gruez 2y ago
  >Someone is going to absorb the cost, and at times, corporations cannot pass that cost onto consumers, so shareholders take the brunt of the deadweight loss. Why can't they pass it on? It's not like consumers would have other options, because you know, globalization just got killed.
  - fny 2y ago
    Because more often than economists realize consumers can and will reject a higher price. There’s A LOT of substitutes for most things outside of commodities. Try selling products on Amazon, and you’ll experience this. There’s a clearing price for your product, your costs be damned. If you try to “pass it on” some other product—-probably in a different category—-will out compete you, so you must forgo profit to stay competitive. It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost. As a concrete example, I sell a card game on Amazon. If I shift the price up and down, I can see supply and demand in action: there’s an optimal price for my product where I maximize units sold. If I try to raise my price customers will go buy another card game. If we all raise our prices, customers will switch to some other toy. If all toy prices go up too far, people will send their kids to the park. My point is that unions are a nuanced topic. I disagree with the terms of this strike, but if you listen to the longshoremen you can hear their anxiety. There’s some middle ground we need to find, and throwing supply and demand curves around in absolutist terms won’t do that.
throwaway48476 2y ago
In a consumer economy such as the US such inefficiencies are a economic benefit because gains of labor tend to increase the velocity of money in ways gains from capital do not.
- snapplebobapple 2y ago
  That's not really true on any reasonable timeframe because most of the gains actually go to the consumer as competition turns inefficiencies into price decreases on goods and services. I mean it's what some really far out in left field economists want to be true and they certainly goal seek macro data and publish papers on what they want to be true but it just isn't true except in the sense I already talked about where gains to capital were being juiced by market power pushing labor prices below the efficient market clearing rate (which does happen more than we would like to admit, it's just unlikely to be happening here).
  - throwaway48476 2y ago
    On an individual level the marginal value of money exists. The economy is made up of people.
ellen364 2y ago
I'm not convinced the first principals are so clear. Economics research in the last 30 years has often examined market distortion due to incomplete information (especially information asymmetry) in the marketplace. Given the tendency to hide salary data, labour markets have very incomplete information. It's like having a stockmarket where the stock prices are secret.
mattmanser 2y ago
We all know there's a massive accumulation of capital in the hand of a tiny few. That indisputable, right? You don't disagree with that statement? Unless you're one of those billionaires, attacking one of the few mechanisms for correcting that imbalance seems counter-productive to sanely discussing this. A mechanism that programmes are bizarrely hostile to, even though their work is one of the nost exploited.
- arethuza 2y ago
  “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Warren Buffett
jampekka 2y ago
Banning slavery caused dead-weight loss. Market clearing price for commodified labor is minimal sustinence.
- charliea0 2y ago
  Slavery is horrifically evil. Ending it freed 4 million people from daily robbery, abuse, and a life of subsistence poverty. Banning slavery eliminated massive dead weight loss. Slavery used violence to force labor from people below the clearing price - it compelled them to work for free. All liberals should oppose slavery. We should want free people, free markets, and a generous social safety net for all.
  - jampekka 2y ago
    Social safety net causes deadweight loss. To be clear: I'm not for minimizing deadweight loss because free markets are horrible for humans. Free markets don't care about human suffering. Regulated markets can be OK, but then you shouldn't talk about free markets or deadweight losses.
johnnyanmac 2y ago
>force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case. This seems to make an optimistic implication that "market price" is 1) reasonable and 2) realistic. Of course a business wants skilled labor to be paid peanuts to do 168 hours of highly profitable labor a week. But there's multiple layers of barriers here that stop that reality. For the former, the rising cost of living everywhere is why strikes are starting to happen more frequently now. If you cannot pay your expenses while giving half your waking hours to a job, you either ask for more money or leave. that CoL may or may not be that Companie's fault, but what was reasonable in 2019 is not reasonable in 2024. Yet compensation has fallen far under inflation, let alone what is "reasonable" to survive now. unions have flaws, but they are made to make sure workers are "reasonably" compensated and treated well. That's how they make things better. >when one looks at the contracts being offered it's really hard to say labour prices are being pushed below market clearing rate What are these contracts, and are they reasonable by 2024 standards?
rightbyte 2y ago
> making everyone worse off in the base case. Everyone else. That is the point. But only in a theoretical sense. The corporations might benefit from stability in the workforce and the owners might benefit from the workers being able to have the faintest possibility to keep the manager class in check.
abenga 2y ago
Are high profits by corporations a dead weight loss for the rest of us?
datadrivenangel 2y ago
in the early 1900s this is exactly the argument used by wealthy business owners who didn't want to invest in safety equipment or take care of the workers who died or were crippled. It's not wrong, it just assumes that business owners are behaving well.

roughly 2y ago

> Unions by definition are exercising market power to withhold labor and force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case. Well, everyone except the people who work for money. > Then one has to ask themselves in which situations could a union pushing up labor prices make things better? In the situation where people get paid that higher labor price, those people are better off.

snapplebobapple 2y ago
yes, but everyone else is worse off by a greater amount because that higher price causes other reactions and repricings in the supply chain. There are some really nice graphs in first year economics that explain this. That we are in a potential situation where there is market power being exercised by the employer is basically the only reason we have to even consider that a union could make things better off is because the person with the monopsony doesn't benefit from decreasing output as the union pushes wages higher if the end result is at or below the efficient price for labor.
- roughly 2y ago
  > There are some really nice graphs in first year economics that explain this. Yes, and they’re bullshit, as are the ones that suggest firms price competitively, that markets tend towards competition and not consolidation, that government spending is inherently bad, and all the other Chicago-school Reagan-revolution bullshit that’s left this country with third-world infrastructure, income inequality that would embarrass a Rockefeller, and no industrial base to speak of.
- Epa095 2y ago
  Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101, and thinking they now understand the world.
  - snapplebobapple 2y ago
    [flagged]
    - Epa095 2y ago
      I invite you to think about how your argument would look like if you actually wrote it out to completeness. It would probably include one or more of the following assumptions: - Infinite(or unlimited amount) of both homogeneous employeers and employees. - Unlimited information about... everything. - Changing jobs is cost-free for everyone (employeers, employees, and society at large). - No participant in the market is large enough to influence any prices (for goods or wages). - Everyone is perfectly rational. - No barriers to entry for anyone. - That all utility-spaces are convex and compact - No externalities. The perfect market is the "spherical cow in a vacuum" of economy. Not to say that game theory, and economy at large, is not usefull! But there are major steps from theory to practice, and to actually do that step you need impossible assumptions about how much the "imperfection of reality" influences the conclusions you make. (Sorry about spelling misstakes, take it as proof that GTP was not involved;-)
      - 2y ago
caeril 2y ago
[flagged]

fny 2y ago

This is a really out of touch answer akin to how globalists and economists argued for off-shoring because “competitve advantage.” The reality is far more nuanced. For example, one could argue wage growth stagnated in the US and instead we had tremendous growth in developing countries. For many Americans, globalization was a tax that further exacerbated income inequality. Congratulations: this is Pareto optimal! Some company’s bottom line is improving, some shareholder is profiting, and wages stagnant—so society is “better off as a whole” definitionally… but is it really? The same can be said about unions and market power. Sure deadweight loss exists. Someone will absorb the cost, but it’s not necessarily “the people”. Companies cannot pass costs onto consumers as easily as economists claim, so often profits take the brunt of the deadweight loss. Think of it this way: if companies could just pass on the cost, why go through the expense of fighting the union when they could do just that? Mind you, I’m talking about unions in general: it’s nuanced. I honestly don’t know enough about the specific demands here to have an opinion, but I encourage everyone to listen to an interview with the longshoremen.

gruez 2y ago
>Someone is going to absorb the cost, and at times, corporations cannot pass that cost onto consumers, so shareholders take the brunt of the deadweight loss. Why can't they pass it on? It's not like consumers would have other options, because you know, globalization just got killed.
- fny 2y ago
  Because more often than economists realize consumers can and will reject a higher price. There’s A LOT of substitutes for most things outside of commodities. Try selling products on Amazon, and you’ll experience this. There’s a clearing price for your product, your costs be damned. If you try to “pass it on” some other product—-probably in a different category—-will out compete you, so you must forgo profit to stay competitive. It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost. As a concrete example, I sell a card game on Amazon. If I shift the price up and down, I can see supply and demand in action: there’s an optimal price for my product where I maximize units sold. If I try to raise my price customers will go buy another card game. If we all raise our prices, customers will switch to some other toy. If all toy prices go up too far, people will send their kids to the park. My point is that unions are a nuanced topic. I disagree with the terms of this strike, but if you listen to the longshoremen you can hear their anxiety. There’s some middle ground we need to find, and throwing supply and demand curves around in absolutist terms won’t do that.

throwaway48476 2y ago

In a consumer economy such as the US such inefficiencies are a economic benefit because gains of labor tend to increase the velocity of money in ways gains from capital do not.

snapplebobapple 2y ago
That's not really true on any reasonable timeframe because most of the gains actually go to the consumer as competition turns inefficiencies into price decreases on goods and services. I mean it's what some really far out in left field economists want to be true and they certainly goal seek macro data and publish papers on what they want to be true but it just isn't true except in the sense I already talked about where gains to capital were being juiced by market power pushing labor prices below the efficient market clearing rate (which does happen more than we would like to admit, it's just unlikely to be happening here).
- throwaway48476 2y ago
  On an individual level the marginal value of money exists. The economy is made up of people.

ellen364 2y ago

I'm not convinced the first principals are so clear. Economics research in the last 30 years has often examined market distortion due to incomplete information (especially information asymmetry) in the marketplace. Given the tendency to hide salary data, labour markets have very incomplete information. It's like having a stockmarket where the stock prices are secret.

mattmanser 2y ago

We all know there's a massive accumulation of capital in the hand of a tiny few. That indisputable, right? You don't disagree with that statement? Unless you're one of those billionaires, attacking one of the few mechanisms for correcting that imbalance seems counter-productive to sanely discussing this. A mechanism that programmes are bizarrely hostile to, even though their work is one of the nost exploited.

arethuza 2y ago
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Warren Buffett

jampekka 2y ago

Banning slavery caused dead-weight loss. Market clearing price for commodified labor is minimal sustinence.

charliea0 2y ago
Slavery is horrifically evil. Ending it freed 4 million people from daily robbery, abuse, and a life of subsistence poverty. Banning slavery eliminated massive dead weight loss. Slavery used violence to force labor from people below the clearing price - it compelled them to work for free. All liberals should oppose slavery. We should want free people, free markets, and a generous social safety net for all.
- jampekka 2y ago
  Social safety net causes deadweight loss. To be clear: I'm not for minimizing deadweight loss because free markets are horrible for humans. Free markets don't care about human suffering. Regulated markets can be OK, but then you shouldn't talk about free markets or deadweight losses.

johnnyanmac 2y ago

>force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case. This seems to make an optimistic implication that "market price" is 1) reasonable and 2) realistic. Of course a business wants skilled labor to be paid peanuts to do 168 hours of highly profitable labor a week. But there's multiple layers of barriers here that stop that reality. For the former, the rising cost of living everywhere is why strikes are starting to happen more frequently now. If you cannot pay your expenses while giving half your waking hours to a job, you either ask for more money or leave. that CoL may or may not be that Companie's fault, but what was reasonable in 2019 is not reasonable in 2024. Yet compensation has fallen far under inflation, let alone what is "reasonable" to survive now. unions have flaws, but they are made to make sure workers are "reasonably" compensated and treated well. That's how they make things better. >when one looks at the contracts being offered it's really hard to say labour prices are being pushed below market clearing rate What are these contracts, and are they reasonable by 2024 standards?

rightbyte 2y ago

> making everyone worse off in the base case. Everyone else. That is the point. But only in a theoretical sense. The corporations might benefit from stability in the workforce and the owners might benefit from the workers being able to have the faintest possibility to keep the manager class in check.

abenga 2y ago

Are high profits by corporations a dead weight loss for the rest of us?

datadrivenangel 2y ago

in the early 1900s this is exactly the argument used by wealthy business owners who didn't want to invest in safety equipment or take care of the workers who died or were crippled. It's not wrong, it just assumes that business owners are behaving well.