Quote of the Day

Kevin Williamson in National Review:

I was down at the Occupy Wall Street protest today, and never has the divide between the iPhone world and the politics world been so clear: I saw a bunch of people very well-served by their computers and telephones (very often Apple products) but undeniably shortchanged by our government-run cartel education system. And the tragedy for them — and for us — is that they will spend their energy trying to expand the sphere of the ineffective, hidebound, rent-seeking, unproductive political world, giving the Barney Franks and Tom DeLays an even stronger whip hand over the Steve Jobses and Henry Fords. And they — and we — will be poorer for it.

The low quality of our government-run system of primary and secondary education is the biggest problem in our society. With the right tax and regulatory incentives, squandered investment capital and ruined plant and equipment can be replaced quickly if necessary, albeit at often high cost. However, damaged human capital in the form of inadequately educated and miseducated people can never be replaced. At best, lost human capital can be supplanted only with many years of effort by improving the education of succeeding generations. The long-term compounded aggregate costs in lost productivity for poorly educated individuals, not to mention disastrous unintended consequences at the societal level from the adoption of bad ideas by a voting population largely ignorant of basic economics and history, are staggering.

Rethinking Unions III: Worker Interests

Previous in the series:
I, II

What are the common interests of workers? Do present worker associations, unions, further those goals? This is the heart of any real examination of labor but I can’t recall reading anybody seriously addressing the question.

Workers, in general, have an interest in labor being in short supply relative to jobs in order to drive up the cost of labor. They have an interest in having effective, portable lifetime education available to them at affordable or even free rates. They have an interest in being able to get decent medical care. They have an interest in not being shackled to an abusive employer for any reason. They have an interest in being able to retire from work before their bodies or minds give out and have a dignified retirement that cannot be taken away by anyone.

How do today’s unions stack up in terms of satisfying workers’ interests? I don’t think that they stack up well at all. Unions do create labor supply shortages but it’s on a firm-by-firm basis, forcing employers to exclude non-union dues paying members from employment. If you are not a member, you’re not a real worker in their eyes. Unions provide health insurance through employers but the way that they do it shackles employees to their employer. Union educational programs are not generally portable or accredited or open at all to any sort of healthy competition. And with the coming crackup in Medicare and Social Security, a whole generation of workers is going to feel the betrayal in their pensions.

A worker association that offered accredited education standards and classes meeting those standards would be far superior to present. An association that worked hard to create labor shortages for everybody would raise wages while improving the whole economy. An association that backed associational healthcare would remove the shackles from a lot of workers. And an association that supported a Chile style retirement system would be able to sustainably keep faith with our elders as far as the eye could see.

Rethinking Unions II: A Time to Kill (Firms)

Previous in the series:
I

I started off this series hoping to get some good comments that would further my rethink. Jim Bennet is an articulate representative of a current in the comments – “The first thing is for the union to realize that the primary interest of the union is to see that the employer survives and prospers.” I disagree but only because it ignores an important case, when employers do not deserve to survive.

I am starting from the premise that in capitalism’s 3 legged stool, there is no privileged leg. Capital, labor, rents, all have their heroes and their villains. All need to have the heroes promoted and the villains marginalized. This line of cooperativist thinking denies the need for villain marginalization. But sometimes we do need to kill off businesses. Sometimes we have too many firms and the weak need to go to the wall while salvaging their resources as much as possible. If either hero promotion or villain marginalization processes are weak or missing, the capitalist system suffers economic performance drops. We must have robust systems to more efficiently kill firms that need to die and labor can play an important role in that capitalist process. Labor needs to judge capital and act accordingly.

Let’s take a look at the UAW, for example and grant that everything they say about GM management is true. Let’s stipulate that collectively, GM management is unimaginative, largely made up of poor planners, make repeated bad decisions over a span of decades, and are generally responsible for running an American icon into the ground. So why did the union let them get away with it when they could have destroyed GM and served their members better? Stipulating that the UAW is entirely right about its indictment of GM management should have led to entirely different behaviors and would have largely saved Detroit and helped keep the rust out of what we now call the rust belt.

The UAW should have looked ahead to the inevitable train wreck and politically encouraged company formation in the areas where its members lived. It should have reworked its own structure so that union members moving to “nonunion” firms didn’t lose out with the union by it. It should have educated its workforce on the need to pass judgment on bad management in a practical sense and the importance of creating enough jobs at good employers so there would be sufficient lifeboats at other firms when GM eventually collapsed under the weight of its poor decisions. The UAW did none of this. That’s a good reason why the UAW needs to be replaced.

The UAW should have encouraged the creation of laws to allow quick approval of low volume models so that custom car builders in the Midwest would be a constant challenge to “the big three” and increase the chances of an American firm with better management rising up on a consistent series of hits and replacing GM. That could happen either by simply outcompeting GM or as NeXT software did to Apple by the guppy swallowing the whale and giving the larger company a management transplant.

A proper representative of labor would be agitating against laws restricting the sale of automobiles to expensive dealership networks, for reducing the cost of approving cars so they can be driven on public roads, and generally for pro-startup legislation. A proper representative of labor would pressure local municipalities and counties to constantly diversify their job base so that no matter how badly a particular company did, members wouldn’t be stuck in dying towns with few job prospects.

A capitalist system that had unions like this would have improved growth prospects, healthier communities, and be much more hostile to bad management wasting resources and serving their shareholders poorly. It makes you wonder why nobody’s made this sort of organization.

Rethinking Unions

As they currently stand, Unions are dangerous dinosaurs. But that doesn’t mean that worker interests have no need for structures that serve their interest. If we’re serious about believing in liberty, we need to address how to create viable, sustainable, superior worker organizations. They might just end up keeping the “union” label if the brand isn’t irredeemably sullied by its present users.

So what characteristics would this new type of organization have?

Sustainably low cost
Concentrate on proactively improving worker situations
Unabashedly pro-capitalist
Interventionist in secondary education, aligning student production better with worker needs.

Anybody have some other features?