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PaperclipPerfector  1yr ago (text post)   28482 thread views

Culture War Roundup for the week of September 11, 2023

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The best argument I've heard in favor of unions is that the equivalent bargaining power of "a company" isn't "an employee" it's "all the employees".

Suppose we remove the distinction of capital versus labor, and suppose that we have two groups of people with disproportionate level of bottleneck in a production process. That is, if we have X people from the first group, and Y people from the second group, then the level of production is something like

f(X,Y) = A sqrt(X)P(Y)

where A is some constant, and P is 0 if Y is 0 and 1 if Y >= 1

That is, you only need one Y (the employer), but can have as many X as you want, but the more X you have in the same job the more diminishing returns you get. For each production process people can gather together and organize and form mutually consensual agreements to find some equilibrium level of X that makes this efficient. BUT, Y has disproportionate bargaining power here. If any individual X threatens to quit, their quitting drops the profits of the process by some small amount. But less than their average. The other X essentially pick up the slack, and the production keeps on going. But X is now unemployed and has 0 income, which is catastrophically awful and wasteful, as all of their potential labor is essentially being wasted unused. X quitting hurts themselves more than it hurts Y. But if Y threatens to quit then everything stops and everyone is at 0, so it's a credible threat.

But if all of the X form a union and threaten to quit/strike together, then again production stops entirely, just as if Y threatened to quit. So now they have equal bargaining power.

I'm pretty sure whoever I read this sort of argument from explained it way better than I just did, but I don't remember who or where (it might have been on the motte, so if whoever it was recognizes this argument as their own and can find the post, feel free to repost it and claim credit).

The issue is the market has a rate of return. Let’s say it’s 10%. If you invest 1000 you get 100 a year.

Now auto manufacturing seems like a scale business but realistically there is no moat. Spending $20 billion to enter the auto industry seems like a lot of money but globally it’s not and your end up having a very competitive business environment where every nation has its auto manufacturer. And there is not some big differentiating factor. Hyundai can make sedans or suvs for middle class Americans.

When America was more of a closed market union wages could be high and since they just compete with other unionized shops the big 3 could pay high wages and then hike the price of their car. And every consumer pays a higher price. In the global trade world whoever has the cheapest wage costs can sell the cheapest car and consumers will buy it. And then labor is priced in the market for moderately skilled labor.

I saw the other day chicago public schools costs $40k per child. That’s unions being able to close the market and fucking over all citizens and tax payers. I see elsewhere it’s 30k but that’s still stupid.

I saw the other day chicago public schools costs $40k per child. That’s unions being able to close the market and fucking over all citizens and tax payers. I see elsewhere it’s 30k but that’s still stupid.

In 2019-2020, the Chicago school budget was just shy of $ 6 billion. Enrollment was 355,000. That is per pupil spending of $16,900. LAUSD, which is also unionized, spent about the same that year. So, if per pupil spending now substantially higher, as it is in LAUSD, it obviously is not because the districts suddenly became unionized and the unions were able to "close the market."

The most obvious reason for the recent increase, in order of magnitude, is 1) the large COVID enrollment decrease, which obviously is going to push per-pupil spending up; 2) an increase in state and especially federal revenue (in LAUSD, it rose from 631M to 1.85B) ; 3) the expiration of the old collective bargaining agreement in LAUSD and the signing of a new one; and 3) inflation.

I think you're sort of making two points here:

  1. Union shops can't compete with non-union shops because their costs are higher, and

  2. If all shops for a given industry in a given market are unionized then the customer suffers higher prices.

My responses to those are:

  1. Agreed, we should really try to make sure all shops are unionized so it's a fair playing field.

  2. Agreed, we should really make sure that all industries across all markets are unionized, so that everyone has better wages and can afford those higher prices.

Trying to pit workers against consumers through the contrivance of higher prices is a common rhetorical tactic, but what it elides is that all workers are consumers and most consumers are (or are supported by) workers. Helping one helps the other.

It’s not just a “rhetorical” trick. Labor is one of the main inputs I ti goods so most of higher labor costs do flow to it prices.

Sounds like you want everyone unionized. That sounds like you would be fixing the price of labor in the economy which would mean no more market for labor. Personally markets appear quite successful so I wouldn’t want to go down that route. And prices themselves gives producers a ton of signals on how to produce things more efficiently.

I feel like what you want is basically just communism and it doesn’t work.

The 'trick' is not saying the second half of the sentence, which is 'and consumers can better afford those increased prices because of their increased wages.'

If wages go up 15% and prices go up 5%, consumers are better off. The trick is pretending that consumers and workers are different people, and only looking at how something affects one of them, instead of looking at both sides of the equation and asking whether it's a net gain or a net loss.

Unionization only eliminates market forces if everyone in the country is in the same union, which would indeed be weird. The point is to have enough unions that a boss firing everyone in one union to switch to another is as costly and disruptive for them as losing a job and trying to find a new one would be to an employee.

Rounding everything that advocates for any change at all to the current economic regime off to 'communism' is a thought-terminating cliche in discussions like this.

That’s sounds like make believe. It’s not a “trick”. It’s just let’s assume prices and wages go up different amounts.

The magic of markets is the price system and firms competing in prices forced them to become more efficient.

At best this sounds like pre-Reagan/Thatcher where growth was slower and people were poorer. You would need to invalidate the productivity gains from that era.

With history as a guide the more likely scenerio would be prices go up 30% and wages go up 15%.

Lots I disagree with here. The correct way to analyze employee vs. employer negotiating power is by considering all potential employees and all potential employers, e.g. the free market as a whole. If there are 1000 people who could be widget workers, then the single employed widget worker obviously doesn't have nearly as much bargaining power as their employer. On the flip side, if there are 1000 widget factories and only 1 qualified worker, that worker obviously has much more bargaining power than any of their employers do.

Whoops. I skimmed grandparent comment and sort of of vaguely inferred it was making a good argument similar to one I've read in the past, but you (meriadoc) are right and it's just wrong.

A liquid, free market that has a thousand sellers of same good and a septillion buyers will still be a very efficient market (assuming the thousand sellers are legally prevented from coordinating with whatever singularity tech allows a septillion entities to communicate in the first place). Any buyer who's being stiffed can just switch to another of the 100k sellers.

So in an idealized economic labor market with 1000 big employers and a hundred million employees, the employer still doesn't have much bargaining power, because the employee's alternative to not working still isn't 'not being employed', it's getting a job at another employer - their BATNA is just a slightly lower wage than their current one.

What GP was probably vaguely reaching at is all of the non-basic-econ-model reasons that employers have market power over workers - real world issues like specialization in certain jobs, the reduction in income caused by the gap in labor where you apply for a new job, risk in unknown gap spent not working and income of the future job, the fact that companies appoint (relatively) specialized and (relatively) high IQ people to create a system for negotiating with workers while workers are lower IQ and less sophisticated in negotiation, your commute restricting you to workplaces in your geographic area, the sheer convenience and habit of your current workplace, the gap in income interrupting spending you had planned because you made the mistake of not saving money (whether the spending is discretionary, which people still care a lot about, or mandatory spending on necessities for you or a family you need to support), cutting off benefits like health insurance tied to your workplace... All of these create situations where (in the current set of social circumstances) negotiations between employers and workers look and feel like ones where the employee's BATNA is 'no income for a few months and begging for rent money'.

Also, the difference in pay between modern non-union and modern union jobs, for any specific occupation, is much lower than you'd expect from either OP or the (more accurate claims in the) non-libertarian FAQ.

Yes, exactly, you put it better than I could.

Yours didn't have 200 word, paragraph-long run on sentences, though, I should probably put more effort into composition...

But the second situation is not even possible, you cannot have a factory without any workers...

Robots make it more and more possible every day.

Then there will be no need of a skilled worker...

You seem to think that's an issue. Pray tell, if workers accomplish nothing of value, why should they have any bargaining power at all? At that point better to go with UBI or something than support unions.

I agree, it would not be an economical problem. However it seems to me it is a problem with your argument: the negociating power of the workers has not increased because there is no need for them.

I was talking about what negotiating power actually is, not what it should be. Generally (with plenty of exceptions, such as monopolies) I think we should leave negotiating power as it is, though, and regulate around it.

I'm not sure I understand. First message, you say that negociating power would be better for workers if there were less skilled workers and more factories and you give an example.

Then I proved the negociating power would not be better in this situation. Nothing about what it should or should not be there.

Then, you reply that it's true, but there are better things to do than to protect unions in this situation.

To that I reply that you might be right, but it has nothing to do with my concern that the first message I replied to was based on a false hypothesis.

Now you tell me that it's about the negociating power as it is, and I almost agree: it's about the negociating power as it would be, if we changed the situation. But you still did not answer my concern?

More comments

If there are 1000 people who could be widget workers, then the single employed widget worker obviously doesn't have nearly as much bargaining power as their employer. On the flip side, if there are 1000 widget factories and only 1 qualified worker, that worker obviously has much more bargaining power than any of their employers do.

Right... but which of those is closer to reality, though?

In reality there are about as many jobs as workers, considering the entire market together, though the quality of each varies.

In reality I'd say high-quality jobs and high-quality employees have a big edge, with the latter slightly winning out overall. In other words there are far more potential jobs for skilled applicants than there are highly skilled applicants.

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