Mimsy Were the Borogoves

Editorials: Where I rant to the wall about politics. And sometimes the wall rants back.

A free market in union representation

Jerry Stratton, November 13, 2019

I tend to disagree with most conservatives about unions. For one, they tend to lump all unions together; but there is a huge difference between real unions, who negotiate with owners on behalf of their employee members for more money and better conditions from the owners, and government unions, who negotiate with employees on behalf of other employees for more money from taxpayers. This is critical, because real unions have an incentive to make sure that the business their members work in stays competitive. There is no such incentive for government unions. Both ends of the table are negotiating with other people’s money.

Outside of government unions, however, the problem with unions is that they are set up as monopolies. Monopolies tend toward maintaining their monopoly rather than providing better service to the people forced to buy from them.

When people have a choice about what services they buy and who they buy it from, when services must compete, the people paying for those services are better off. They receive better service at a better price. When a service has a monopoly, when people are forced to buy that service and forced to buy it from one provider, the service always suffers, and badly. Worse, the people buying the service have no idea what they’re missing.

People had no idea what they were missing under AT&T's monopoly. Or under airline monopolies.1 Or electrical power monopolies. In every case so far, removal of government-sponsored monopolies in favor of choices has resulted in better products, better services, and better prices2. Even though in every case, many people complained that the change would be for the worse, that in this case a monopoly was necessary. They couldn’t see the benefits behind the forest of their fears.

There’s no reason to expect union monopolies to be any different. We have no idea what we’re missing because unions are monopolies. But history tells us that what we’re missing will be so amazing we won’t be able to remember how we lived without it once the monopoly ends.

Conservatives who oppose all unions instead of just government unions make the same mistake from the other end. They recognize how bad union monopolies are for workers, but have no idea what a healthy free market in union services would do for workers or the economy.

Basic economic theory says that a monopoly’s customers are not the people forced to buy from them. A monopoly’s customers are the legislators and bureaucrats who made them into a monopoly. So they support bureaucracies and big government over their members.

In the case of unions, it is the government that not only makes unions a monopoly within any business, but also until recently has made membership mandatory. Representation continues to be mandatory. If your membership is mandatory there’s no reason for the union to support you. They’re going to support the government that makes your membership mandatory.

An obvious example of this in government unions is that government unions almost always side with governments over government employees when it comes to retirement funds. Governments love pensions. Governments can use pensions to offset debts; they can borrow from pensions with only vague promises to pay the pension funds back; they can use pensions for corruption and cronyism; and they can underfund pensions through unrealistic assumptions, allowing them to spend the money that should have gone to employee retirement funds.

All of that puts employee pensions in jeopardy. Under 401k-style retirement plans, retirement funds are walled off from government raiding. The funds have to go into the plan when they are earned, and once in the plan the employer can’t take them back, borrow against them, or borrow from them. It’s even up to the employee to choose the kind of savings they want, which protects their retirement funds against corruption and cronyism.

But government unions almost always lobby in favor of leaving retirement funds open to government raiding. That’s because their customer is not the employee, but the government that makes them a monopoly.

Worse, I’ve discovered while writing this that some private-sector unions manage their own pension funds. This is a very dangerous conflict of interest. It means that the union itself is subject to temptations to use the fund for non-retirement purposes. There is a lot of money in pension funds; that temptation is going to be impossible to resist.

Similarly, unions of all kinds tend to side with big government and bureaucracy over their members. They lobby for complicated tax regulations that their members will have to calculate. They lobby for big government programs that their members will have to pay for. Their funds are dependent on government. So they side with the government over the employees they’re supposed to be representing. Open them up to competition, and that malfeasance will end. Unions that have to compete to appeal to members will be much more likely to lobby for policies that help workers rather than hurt them. A free market in unions would contribute to a healthier, more vibrant, and better-paying job market.

This is America. You should be able to join any union you want. You shouldn't be able to force your coworker to join the same union you do. Imagine if local elections worked the same way as union representation does. You move into a neighborhood and you are forced to join whatever political party your neighbors voted for decades ago. You are forced to accept the representation of whatever political party your neighbors voted for years ago. You would consider that crazy, and rightfully so.

Even allowing employees to opt out of the union that represents their colleagues does not change the fact that the union they’re opting out of is a monopoly. This is why unions fight harder to maintain exclusive representation than they do to maintain forced membership. AT&T would much rather allow some people to not own phones than they would to allow some people to get their phones from MCI or Sprint.3 The former keeps AT&T as the monopoly; the latter requires AT&T to provide better phones and better service.

The same is clearly true of union monopolies as well. The very fact that they can afford to spend so much money on issues completely unrelated to their members’ employment is because they are a monopoly and don’t have to provide better service to their members to stay in business.

Let people join whatever union they want and be represented by whatever union they join, and their job conditions will improve, their pay will improve, and their benefits will improve, because the unions they choose will have been incentivized to represent them rather than the bureaucracy that enables them.

And that will make us all better off.

In response to The Union Free Rider and the Orphaned Stalker: Unions want all workers to date them exclusively, because they care about all workers, and they don’t want those workers seeing other people.

  1. I’m currently reading the November, 1978, Omni magazine, and it has an article about video conferencing. Video conferencing is expensive, the article says, but not nearly as expensive as traveling coast to coast, which costs over $400 round trip. Checking online, even without counting inflation, the costs for a round trip from Los Angeles to New York City is under $400 round trip. And yet there are still people—especially former bureaucrats in the legacy airlines—complaining about deregulation.

  2. Of course, being generally against choices governments often replace monopolies with bigger monopolies and pretend that they’re offering more choice, as happened in California when I lived there, and they replaced the power monopoly with a central, inescapable, government-controlled exchange.

  3. I know it’s hard to believe, but there was a time when you could only use AT&T phones with your phone line. You could only use AT&T equipment. If AT&T didn’t make it, you had to ask permission to use it. Which was very annoying in the early days of computing when modems began to be popular—AT&T didn’t make them, at least for individuals. They were oriented toward government and bureaucracies. Because that’s who their real customers were.