It’s a moving sentiment, and I suspect it’s popular in the United States. I happen to be visiting London – a city thrown back into lockdown this week not by a resurgent pandemic but by a nationwide railway strike – and I’m sorry to be the bearer of bad news.
The unions are promising more chaos in the public sector in a so-called ‘summer of discontent’. This term refers to the decisive “winter of discontent” of 1978-79 – which saw multiple strikes, colossal economic damage, the collapse of public support for the unions, a Labor government removed from office and, in time wanted, Margaret Thatcher’s revolutionary war against organized labor. work.
The United States came to a similar, if less dramatic, turn in 1981 when President Ronald Reagan began firing striking air traffic controllers. After that, many private sector employers also took a harder line on pay and practices. Federal Reserve Chairman Paul Volcker saw this shift in labor relations as a watershed moment for the US economy.
Obviously, the exercise of the right to strike can have serious consequences. But times are changing. According to Pew Research, 58% of American adults say the long decline in union membership has been bad for the country. UK polls on strikes this week are mixed. One survey found 58% supported the action, another said only 37% had done so. Everything will depend on the duration of the disturbance. The British first supported industrial action in the 1970s, then became disenchanted and, in the end, furious. In the United States, strikes have been rare for years. Unions are more popular when they are docile.
Oddly overlooked in most modern discussions of the pros and cons of unionization is the distinction between public and private employers. Biden defends unions as necessary to redress the power imbalance between labor and capital. This fits well with the new enthusiasm for assertive antitrust regulation, in turn based on increasing concentration and monopsony power in the labor market. However, in both the US and the UK (unlike much of Europe), public sector unions now dominate.
What excess power do public sector unions seek to control? Presumably that of the government. Labor claiming its fair share from capital is one thing. Demanding payment from taxpayers is another.
To complicate the problem, the public sector is usually a monopoly provider. In private markets, a balance of power is established between employers, unions and customers: if high wages make the product uncompetitive, buyers go elsewhere and the company loses business. Either the unions show restraint or they put their members out of work. The situation is different for public monopolies. When high wages and benefits drive up costs, money may be borrowed or taxpayers may be asked to spit, and customers have nowhere to go.
Network Rail, which runs Britain’s rail infrastructure, is state-owned and the rail operating companies depend on public subsidies. In the end, therefore, the quarrel of the National Union of Railways, Maritime and Transport is with the taxpayers. It has a decent record: its members are being offered pay raises well below the current high rate of inflation, and layoffs have also been threatened. But accounts of the deals he struck — on job demarcation (which workers do what and when), automation, new technologies and other issues — evoke the stubbornness of decades past. No private company could sustain such nonsense.
In the United States, police unions work hard to keep their contracts confidential, secure generous legal privileges, and keep bad cops off the payroll. During the pandemic, pressure from teachers’ unions has kept schools closed for far longer than necessary, placing heavy burdens on parents and children. Dock workers’ unions have made US ports one of the least efficient in the world, adding significantly to recent supply chain disruptions. In the public sector, salaries are good, benefits are excellent, and pensions (by private sector standards) are exceptional.
The fact is that unions do not represent workers as a whole. They represent their members and seek to advance their interests at the expense of all who are available: owners of capital, customers, non-union or foreign workers and, above all, taxpayers. Maybe organized work has its place, but this week in London I don’t see much to be proud of.
More from Bloomberg Opinion:
• Now is the summer of British railway discontent: Thérèse Raphaël
• Unions have not kept up with the new economy: Allison Schrager
• Britain’s business should be business: Adrian Wooldridge
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Clive Crook is a Bloomberg Opinion columnist and editorial board member covering the economy. Previously, he was associate editor of The Economist and chief Washington commentator for the Financial Times.
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