The Union Monopoly Monster

Banning single-company unions creates mega-unions that crush companies.

Barack Obama's recent State of the Union address made his re-election strategy perfectly plain: blame Republicans for obstructing all the good things he wants to do which would have fixed the economy by now if only they hadn't fouled them up.

There's no truth to this charge, of course; he had a hyperactive Democratic Congress for his first two years and what they collectively did only made our economy worse.  He does have the germ of a point, though: Republicans are not inclined to compromise or cooperate with him.

This is because there really is no overlap or common ground anymore; Republican and Democrat beliefs are now precise opposites.

The Democrats, for example, believe our economy can only be fixed by increasing government spending; Republicans believe salvation is found only in slashing government spending and the taxes and borrowing which support it.  What sort of compromise-space does that leave?  Just leave spending levels as they are?  Everybody on both sides knows that won't do any good.

The Tilted Pendulum

Political pundits often talk about the "political pendulum" which swings over time from right to left.  Yes, there certainly are swings; it swung left in 2008, and then back somewhat rightward in 2010.  But at no time has the pendulum swung into the right-hand-side proper, which would involve actual substantive cuts in the size of government.

Why is this?  Because the far-seeing progressives have set up the laws in ways which institutionalize leftism and the eternal growth of government.

We've seen how well-meaning civil service reforms had the devastating effect of creating a large, well paid, permanent professional class with a strong interest in ever-growing government.  The recent Wisconsin union battles graphically illustrated how public-sector unions are now so rich and powerful that they can, almost, hold an entire state to ransom.

But as the grotesquely-unlawful Big Three automaker "bankruptcies" showed, private-sector unions have also somehow managed to accumulate vastly more power than the companies whose wages pay their dues.  Many foreign countries have the same overweening union power or even more so - France and Italy are famous for strikes and so was Britain until Margaret Thatcher destroyed the most militant unions just as Reagan broke the air traffic controllers union here in the States.

In Asia, though, they don't seem to have the same trouble.  Japanese companies like Honda and Toyota may be well-known for union-free factories in the United States, but back home in Japan, their employees are as heavily unionized as any in Detroit.  They're not dummy unions either - they demand, and get, pay raises.

What they don't do is drive their host companies into bankruptcy.  Yet the UAW knowingly shoved GM's and Chrysler's stockholders off a cliff; as in the Eastern Airlines bankruptcy two decades ago, it's not unheard of for unions to drive their own jobs into extinction.

Why?  Are Japanese workers simply smarter than American ones?  No, there's a significant structural difference: In Japan, companies are permitted to have single-company unions, whereas in America that's illegal.

A Well-Matched Fight

What's the difference, you ask?  Consider the UAW: the United Auto Workers.  As the name implies, it has nothing to do with GM, Ford, or Chrysler specifically, nor with Packard, AMC, or other manufacturers of bankruptcies past.  The goal of the UAW was to unite all auto workers together, unified in their demands against their giant (in those days) employers.

This seems sensible on its face; after all, the companies are big and rich, the workers are poor and small.  When you get thousands of workers all paying forced union dues as a condition of employment, though, the unions are every bit as big and rich as the companies paying their workers' wages; more, actually, since unlike the companies the unions don't have to persuade anyone to voluntarily fork over any dough.  The dues get sucked out of paychecks before the workers even see them.

As a result, today you have one giant union with massive political backing thanks to its enormous donations to Democrats, pummeling on many individual companies that are far smaller and poorer.  The contest is unfair and imbalanced; the companies cannot hope to win and they don't.

What's more, because the UAW's members work for several companies, the union bosses don't overly care about any one of them.  If GM goes bankrupt, well, there'll still be dues flowing in from Ford.  Threats of corporate bankruptcy really don't affect the union bosses; threats of a strike do directly harm the company.

The several auto manufacturers can't even join together to combat the union collectively as the union members have joined together as one; that would be illegal collusion for which you go to jail.  Is it any wonder that American mass-employment manufacturing is dying out, surviving only in states where workers can't be forced to pay dues?

The dynamic is different in Japan because the law is different.  Toyota has a powerful and well-funded union which negotiated raises for its workers during the good times a few years back.  That union, though, represents only Toyota employees; not Honda, not Mitsubishi, not anybody else.  As a union and as individual employees, it can only be as successful as the Toyota corporation itself.

Right now, Toyota is struggling.  The Big Three have struggled for years and the UAW demands raises regardless.  In Japan, the response could not be more different: Toyota's union did not even ask for a raise, a shockingly sensible thing to do when your employer faces shrinking sales and a deeply uncertain economy.

Of course Toyota's workers want the biggest paychecks they can get, don't we all?  Of course Toyota's union wants to get them those paychecks.  More than that, their union bosses understand something ours don't: their jobs, and those of the workers, depend on a healthy employer.  Bleeding the company white is ultimately devastating to everybody.

When our American companies were allowed to have single-company unions, those unions understood this as well.  Today, our unions have long forgotten it, particularly the public-sector unions which attempt to be nationwide.

Maybe it's time to make the fight fair again, and restrict one individual union to representing the workers of just one company?  It wouldn't be good for the Democratic party which garners billions from forced dues, but it sure would help the economy and employment.

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Business.
Reader Comments

Petrarch has introduced logic into the conversation.

February 13, 2012 2:00 PM

He's right about multi-employer unions. The International Typographer's Union put a great many New York newspapers under. This cost them dues. Killing a paper meant increased sales for the survivors, for a while, but that didn't need any more ITU members.

Finally, the Times had to break the union in order to survive as described here:

February 13, 2012 7:55 PM
Add Your Comment...
4000 characters remaining
Loading question...