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> 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

> 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;-)
      - snapplebobapple 2y ago
        As I have already said a few times, the corner cases where a union might make things better involve correcting other market failure like monopsony (which is usually caused by the barriers to entry item you listed, which in turn causes the participant size problem). None of these apply to the specific case in the article we are talking about (i.e. this specific union is bad for society) because everyone is already highly paid relative to similar work elsewhere in the economy. Of course there are assumptions in the theory, those drive the corner cases (of which I mentioned the most relevant one in my first post) and is also present in the theory you are relying on to say what the corporations are doing is bad. You can't like the stuff that says monopoly is bad when it applies to corporations and then turn around and think it's good when it is clearly happening in labor via unions, that's utterly illogical. It's either clearly bad in both cases, or the theory is worth nothing and we have no justification for any market intervention, which is obviously not true. We need market interventions (arguably a lot more than we are currently doing, but likely less than we used to do pre Rhenquist supreme court) to correct market power abuse and there are no sacred cows. It is largely bad both when capital and when labor does it.
- StanislavPetrov 2y ago
  >There are some really nice graphs in first year economics that explain this. One of the first things I learned when I started to seriously study economics is that economists never let objective reality interfere with their theories or charts.
caeril 2y ago
[flagged]

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;-)
    - snapplebobapple 2y ago
      As I have already said a few times, the corner cases where a union might make things better involve correcting other market failure like monopsony (which is usually caused by the barriers to entry item you listed, which in turn causes the participant size problem). None of these apply to the specific case in the article we are talking about (i.e. this specific union is bad for society) because everyone is already highly paid relative to similar work elsewhere in the economy. Of course there are assumptions in the theory, those drive the corner cases (of which I mentioned the most relevant one in my first post) and is also present in the theory you are relying on to say what the corporations are doing is bad. You can't like the stuff that says monopoly is bad when it applies to corporations and then turn around and think it's good when it is clearly happening in labor via unions, that's utterly illogical. It's either clearly bad in both cases, or the theory is worth nothing and we have no justification for any market intervention, which is obviously not true. We need market interventions (arguably a lot more than we are currently doing, but likely less than we used to do pre Rhenquist supreme court) to correct market power abuse and there are no sacred cows. It is largely bad both when capital and when labor does it.
StanislavPetrov 2y ago
>There are some really nice graphs in first year economics that explain this. One of the first things I learned when I started to seriously study economics is that economists never let objective reality interfere with their theories or charts.

caeril 2y ago

[flagged]