Wisconsin: bruce’s take

This seems to be an issue that is among those dominating the headlines.  I’m torn by it.  That’s true for a number of reasons.

First, I like discussion with out a lot of emotion driving them.  This seems to be laden with emotions on both sides.  One side sees the Wisconsin governors proposals as a last stand for America’s labor, and perhaps middle class against an onslaught to make this a harsher, more unequal, and even less free society.  The other sees the attacks on the same proposals as labor unions making an effort at maintaining an undeserved privilege at the the expense of a America’s labor broadly, and middle class.  Governor Walker is the agent of greater freedom.  Others make it clear this is non-negotiable issue one way or the other.

It has been interesting to read many posts from the perspective of one’s own lifetime relation to labor unions.  Examples are here, and here.  My own background was fairly anti-union.  My dad was a believer in cost-push inflation.  That is he blamed unions for the flation in stagflation. 

Overall economics suggests unions make some workers better of and others worse off, with the losses likely larger than the gains.  Unions are a type of cartel that attempts to fix prices at an above market level, and keeps enough would be seekers of their jobs out of the market to maintain the higher wage.  Workes turned away have to find next best, but inferior alternatives.   This is consistent with findings that unions produce higher wages in unionized industries.  So I’m not convinced unions have benefits for all workers just by raising wages of their members.  (I don’t think labor unions drive inflation however.) 

I am in sympathy that labor is under siege by capital and has been for some time in the US though.  Increasing mobility of labor and capital have moved much of our rust belt industry overseas and that has cost works lower skill workers at least dearly.  The displacement of middle class brands makes clear that a lot of blue collar middle class has gone away.  While free trade, and economic dynamisms have been beneficial overall, they have left a lot of casualties over the last 40 years.

Labor ought to have been focusing on issues like retraining and assistants for these casualties, and working for the interests of labor broadly.  They should serve the interests of their member and facilitate those who need to leave for other types of work.  Have they?

Overall I don’t think so.  They have focused on the interests of their shrinking numbers of private sector members and some growth in public sector unions.  As Karl Smith notes unions are very focused on their dues paying members, not former members it seems.  They also have focused on propping up failing industries, such as the Detroit big three.

But overall what other organized representative other than in a very imperfect way is there for middle class people rather than big money?  The power of big finance to wring a bailout from Washington has raised many red flags.  It doesn’t seem like unions should be crushed for all their flaws.

The Wisconsin budget may require cuts as in other states, including in worker benefits.  But that can be done with out gutting unions.  The downside is for unions pushing around elected officials to grant benefits financed by the monopoly power of the state to take income via taxes.  Can’t governor Walker stand up to unreasonable demand with out crushing the voice of the state employees?  Is he just to sensitive a sole to resist such demands?  It doesn’t seem likely.  Instead the whole things seems like an unnecessary over reaching.


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