Economic

“Any damn fool can pull a strike. It takes commonsense to avert one.”–Joseph Frederick

“As in other warfare, victory in a strike is to the strong, not the just; and often noncombatants suffer most.”–W. H. Hutt

Strike One

When a strike happens, almost everyone loses, whether businesses, or consumers, or workers.

In the 1950s alone, America lost more than 3 billion work hours to strikes. In such a circumstance:

  1. Businesses lose because fixed expenses must still be paid even when no actual work is being produced.
  2. Consumers lose because one result of a strike will almost certainly be higher prices for the goods produced once work is resumed.
  3. Workers lose because in many cases the rise in wages the union by striking will take, literally, decades to make up, if ever it is.

But competitors win. When a business is struck, competitors benefit. Competitors of a stuck company have an easier go of it because they are not subject to the burdens borne by the struck businesses, like higher prices, backlogged and unfulfilled orders, and the fact that their consumers have had to go to other businesses to have their needs met and have established new working relationships that might never have occurred were no strike called.

The freedom to call a strike is, and ought to be, part of participation in a free market. If workers wish to bargain collectively and to call a job action in order to underscore their demands, they should be free to do so. If some workers desire no part in such doings, they ought to be free to decline. All I require is that those who participate and those who do not be free to follow the dictates of their own judgment and conscience. Do not get me wrong: I do not doubt that workers ought to have the right to call a work stoppage. But I do doubt they ought to have the right to stop the work of others.

Strikes are a legitimate economic tool, provided the votes to call a strike are legitimate votes. They sometimes are not. To insure their legitimacy, various conditions of freedom and of equity must prevail:

  1. Let the members themselves, not the union bosses, call the strike.
  2. Let the strike votes be cast by inviolable secret ballots so that repercussions do not follow for workers who dissent from the union’s party line.
  3. Let the details of the various offers, counter offers, and rejections be communicated to the workers by outside observers acceptable to both sides–acceptable both to labor and to management–observers who have nothing to gain or to lose by how the vote turns out.
  4. Let those same outside observers count the votes thusly freely and informedly cast.
  5. Let the union bylaws governing strikes be faithfully, fairly, and equitably enforced, bylaws that state plainly the percentage of members who must formally consent to the strike before one is called or enacted.

Even under such rules the possibility for coercion remains. In some well-established and long-standing unions, leadership has conceived and evolved ways to make the rank and file do the leaders’ bidding. That manipulation cannot be well controlled from the outside. The rank and file themselves must recognize it, resist it, and replace it.

If these pre-conditions do not obtain, both the public and the workers themselves will continue to lose faith in the strike system and in the labor unions that resort to it, whether wisely or not. That public and those workers know that, generally speaking, current American workplace conditions are admirable and are often the envy of workers around the world. They also know that those conditions are due in part to the efforts of the unions themselves and their willingness to strike if need be. They realize as well that–given those current and generally admirable working conditions–peace, not conflict, ought to be the standard operating procedure of both labor and management, that in most cases neither strikes nor lockouts are necessary, and that anyone who goes to that well too often can only do damage to themselves and to anyone else involved.

A union strike is, so to speak, a last resort because it is a padlock. This strike padlock is not used by the owners to protect what is theirs; it is applied by others to property not their own. A strike is a padlock on someone else’s business that prevents it from doing business. If a union wishes to strike, then they ought to have the privilege to do so. But those who are no part of the union and who wish to continue to work, and those who wish to do business with the business being struck, be they customers or suppliers, ought to be free to pursue their chosen activities as well, and not be locked out of them by a union strike without their consent. Unions ought to feel free to put locks on their own property whenever they wish, but not on the property of others. And if you say that union members own their jobs, the simple truth is that they do not. A job is not a possession; it is a mutually agreed upon work/pay arrangement between two or more parties, no one of which is its sole proprietor or owner. A job is a transaction, an arrangement, not a bit of private property. Neither side owns it though in it both participate. One side can strive to hold the other to its contractual obligations, but neither side is free to take control of the other’s property. The union members work for the business. They do not own the business, and they must not be permitted to padlock it without the owner’s consent. Strike it they may, but close it down they must not.

Strike Two

Putting it all differently, labor unions do not go on strike against companies or against management. They go on strike against you, the consumer.

Like all wise consumers, you probably want to get as much value for your money as you can. You want quality products at a good price. Your chief friend in this pursuit is marketplace competition. To compete successfully for your dollar, producers must compete with each other either to increase the quality of their goods and services, or to lower the price of the goods and services they already provide, or provide some middle ground that you and other consumers might find acceptable. Whatever the outcome, you win:  better products, or better prices, or better compomises. Sometimes you might even get all at once.

But not if unions have their way. When unions go on strike, their intention is for their members to get more–more money, more benefits, more security, more safety, or more time off. The inevitable result of “more” is higher prices and (therefore) less competitiveness for the company that gives the union what it wants. Unions never go on strike in order to do more work for less money. When unions succeed in providing “more” for their members, production costs increase. Whenever unions win, their product becomes less competitive and the companies for which they work become more vulnerable. When unions win, the price of the product they provide goes up. That means you lose. You get less product for the same money, or the same product for more money, or something of each.

Faced with that prospect, you do what any wise consumer does. You go elsewhere. You hunt for the products of other companies, products whose prices are more competitive. Whenever you are forced by a product’s now higher price or now lower quality to go elsewhere, the members of the union whose tactics drove you to the competitor’s product are forced to go elsewhere also. They go to the unemployment office.

Joblessness is the high price union members sometimes pay when they forget that all workers work for you, the consumer, and not for management. Managers aren’t the real bosses, and they’re not the real employers. You are. Consumers decide who works and who does not. Consumers decide who gets paid and how much.  Consumers pay the wages.  By selecting one product over another, consumers keep companies alive, or consumers close them down. Thus, when a union strikes, it strikes against consumers; it strikes against you. You pay the wages, not management. If unions get more money, they get it from you, or they do not get it at all. In that respect, union job actions are job actions against neighbors and friends, who are the real employers. When unions get their way, when they get more money and benefits for their members, consumers respond accordingly. They go elsewhere.

More often than not, companies don’t break unions; unions break companies. Unions do the same to governments, which can no longer afford the to pay for the concessions its Democratic legislators and executives gave to its union constituents. Cities, townships, counties, even states, might go bankrupt from bad deals made and from ill-conceived promises, and some government entities already have done so.

We work in a global marketplace. Because of recent technological and transportational advances, a company’s money, data, and products can be moved all over the globe, sometimes at the speed of light. Transfers, sales, and transactions of all sorts occur at incredibly high speed over remarkably great distances. Technology now permits the complex and instantaneous integration of material, consumers, management, and labor around the world.

As a result, no longer can there be any truly effective barriers to enormous amounts of foreign competition.  No protectionist laws, for example, can prevent the transfer of information, or of electronically transmitted goods, services, and payments. Like it or not, American workers and companies must now compete head-to-head with workers and companies everywhere on the globe. It cannot be avoided. American companies and American workers must compete with their counterparts around the world because American consumers and foreign consumers now can shop globally. As a result, the more international a company’s competition, product, and market, the more injury domestic unions can do.

When American unions win, so do foreign workers. Count on it, foreign workers everywhere desperately want American unions to thrive, to win more and more concessions from their companies. They want American workers to get higher and higher wages, more and more days off, and greater and greater retirement compensation. They want the price of American products to continue climbing. Nothing brings greater confidence and enthusiasm to foreign workers than the news that some American union has been able to wrench even larger concessions out of an American enterprise. That news means that American products have gotten more expensive and that American consumers (and others) will be shopping around. It means that American workers and companies are one step closer to extinction and that foreign workers have gotten one step closer to economic prosperity and to job security.

In that light, the best thing that could happen to American workers today is to have American unions organize foreign workers and leave American workers alone. Send the unions overseas. If you’re an American worker, pray for the success of Japanese, Mexican, and South Korean unions. They’re praying for you.

Strikes arise because employers and employees have forgotten, if ever they knew, that they are teammates not enemies; that their fortune and their fate are tied inextricably together in the business of which they both are a part. If the business fails, they fail along with it. The question at hand should never be “How can we conquer the other side?’ because the other side is not actually the other side; it’s our team too. Imagine the Detroit Lions’ offense determined to defeat the defense, and both intent upon defeating the special teams. The result is inevitable and predictable: Detroit loses. Employees and employers must never think of themselves and others as the crushed or the crushing, but as mutually supportive. They must convince themselves and each other of their good will, not of their intention to prevail at all costs. To do that, you give, not demand. Employers want, and need, happy workers. Happy workers are the most dependable and productive workers available. Workers want dependable and rewarding jobs. They each can provide what the other wants and needs. They are partners in enterprise, not enemies on the field of battle. They do have enemies, to be sure, and those enemies are competing enterprises intent upon trying to win an ever greater share of the market. Labor doesn’t compete against management; labor and management together compete against other labor and management teams for the consumer’s dollar. Labor doesn’t get its money from management; together labor and management get their money from the consumer in competition with other business teams of labor and management. In a battle, the Army works with the Navy, not against it. The Army and Navy, like labor and management, are allies and work for the citizens. Together they need to see their mutual dependence and learn not to upset a delicate balance in their negotiations with each other.

Strike Three

So as not to prejudice any contemporary strike or any resistance to it, let me take an example from the late 1950s and early 1960s. Work stoppages at nearly two dozen domestic missile sites resulted in more than 160,000 lost workdays. It did so even though the mechanics, electricians, and plumbers involved actually made more money per year than did (A) the US secretary of Defense, (B) the chief nuclear scientist, and (C) all the astronauts.

In the long run, over-reaching does no one any good because labor and management are partners. They share a common task from which they will reap a common destiny, whether good or bad. They work for the same boss, the consumer, for whom they all are “at-will” employees. The consumer provides their only real revenue. The consumer can fire them at any moment. When the consumer does so, labor and management lose their jobs together, not one or the other. If this is the case, then they ought always to remember their partnership in production and in destiny, and not to gouge at each other as if their teammates were their enemies.

All too often, union strikers seem to forget that they are part of a complicated and interlocked economic system, and that they rise or fall along with those around them. They are obligated by wisdom, therefore, to find ways of helping management to produce more goods, and better goods, in order to earn more money from consumers, which they can share with management and stockholders, for their varied achievements in these difficult enterprises all contributors deserve their rightful share. If, in their strikes and job actions, unions do not remember these multiple economic interdependencies, they will learn the hard way the difference between striking it rich and striking it poor.

Here’s what I mean: When a labor union calls a strike, it unavoidably pushes those companies and consumers with whom the stricken company does business to find their products elsewhere. All too often, and sadly for the union, those companies and consumers succeed in doing so–the consequence being that union workers become obsolete. By going on strike, a union forces the companies and consumers that do business with the stricken company to find other ways to do business and other partners with whom to do it. If those companies discover that the new ways and new partners are preferable to the old, then the stricken company and its union workers suffer adverse effects. Short-term gains can lead to long-term losses. The classic example of this principle is the American steel industry strike actions I mentioned earlier, which endured the loss of more than 3 billion worker hours due to strikes in the 1950s alone. Those multiple, lengthy, and expensive strikes drove steel purchasers to procure their steel elsewhere, from companies and nations overseas where steel supplies were both cheaper and more reliable. From that migration of business, American steel manufacturing has not yet recovered and likely never will. Even though steel purchasers had to pay to have their steel shipped in from around the globe, which costs them both time and money, it was preferable to doing business with more expensive, strike-prone, unreliable, producers at home.

If you wish to assess the wisdom and utility of a possible strike, you must take the long view.

Some economists, like W. H. Hutt, question whether or not labor union members have ever gained enough back from their strikes to offset the financial losses imposed upon them by those strikes. The evidence, he says, is ambiguous. Unions tell you something else.

Books mentioned in this essay may be found in The Imaginative Conservative Bookstore.

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Published: Apr 17, 2013
Author
Michael Bauman
Dr. Michael Bauman is Professor of Theology and Culture at Hillsdale College, where he also is Director of the Christian Studies program. He is Scholar-in-Residence for Summit Ministries’ Summit Semester Program and co-editor, with David Noebel, of The Schwarz Report, a monthly conservative watchdog of leftist action and infiltration across our culture.
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7 replies to this post
  1. Dr. Bauman: Among much else worth commenting on your post, I’d like to applaud your statement that “all workers work for you, the consumer, and not for management. Managers aren’t the real bosses, and they’re not the real employers. You are. Consumers decide who works and who does not. Consumers decide who gets paid and how much. Consumers pay the wages. By selecting one product over another, consumers keep companies alive, or consumers close them down. Thus, when a union strikes, it strikes against consumers; it strikes against you. You pay the wages, not management. If unions get more money, they get it from you, or they do not get it at all. In that respect, union job actions are job actions against neighbors and friends, who are the real employers. ”

    Consumers, of course, also happen to be workers, and vice-versa; in that sense, we all work ultimately for ourselves and for each other, our fellow citizens (an old-fashioned word that can include both “consumer” and “worker”). Your recognition that private ownership is a fiction is heartening; no business “owner” can truly say “I built that,” because it was workers and consumers–citizens–who actually did.

    Taking your remarks seriously, I suggest that all union demands be submitted not to management but to citizens/consumers, who are the real owners and, as you say, the real targets of job actions. I also suggest that every American corporation must have on its board a fair number of consumer/citizens, since they are the real owners. Pay raises for CEO’s must be approved by consumers/citizens, as must other management decisions–like deciding to purchase steel from foreign suppliers. Profits must be shared equitably with the real owners–i.e. the public, including workers.

    I have to admit, at first I thought you were just engaged in some very civil and high-minded union bashing, but it turns out (unless I’ve misunderstood you) that you were advocating the notion of collective ownership, for which I thank you.

  2. I think you fundamentaly misunderstand economics.

    When you write of “consumers” you have in mind a political faction whose power needs to be enforced by the state. When Dr. Bauman speaks of “consumers” he is talking about individuals who are free to make decisions based on their subjective preference.

    The term “consumer” and “worker” and “CEO” for that matter are functions or common usage terms that help loosely identify relative relations between market participants not essential economic terms.

    The science of economics treats humans as acting beings motivated by subjective values under conditions of scarcity which are the reason for economizing in the first place.

    Case in point: CEOs and corporations are also consumers. They buy office equipment, computer networks and programs etc etc. There is no such thing as a static “class” of economic actors called “consumers”. This is Marxist economic fallacy.

    Corporations don’t need self-described “consumers” on the Board of Directors, imposed by government. Even Public companies in Europe and Japan don’t do that because in theory the Minister of the treasury is appointed via the democratic process and the Public company’s stock would plummet if they did something that irresponsible.

    But of course Public companies are a seperate issue. They usually are hampered by political considerations rather than being able to react to pure economic factors.

    The same would happen under your scheme. Companies would loose contact with the market and become beholden to political considerations, Yet without access to market derived data, political boards of directors wouldn’t even really know what to do.

    America is an economic catastrophe because so many people don’t understand basic economics, and this is reflected in our elections.

    Finally, a rich CEO is just as much a citizen as his janitor. The idea that the janitor has some higher status of citizenship because he mops the floor is immoral.

    • Mr. Rieth: Economics is surely not my strong suit (assuming I even have one). But please note that I do understand that “consumers” are in fact nothing other than citizens–I believe I made that point–which of course includes CEO’s and workers and retirees etc. I was not envisioning consumers as a “static class of economic actors” (whether or not such a description would constitute “Marxist economic fallacy”); in fact, I pretty much loathe the word “consumers” and believe its usage a symptom of how capitalism (perhaps like Marxism?) reduces people to their economic functions.

      Your claim that Dr. Bauman’s use of “consumer” was merely a reference to “individuals who are free to make decisions” renders his assertion that “consumers decide who works and who does not” unintelligible. He certainly did not mean that individual consumers show up at the workplace and make personnel decisions; he could only have meant that the collective decisions of consumers, understood as an economic class of persons, have that effect.

      I should also note that nowhere did I suggest that any part of my modestly proposed scheme should be “imposed by government”. My suggestion (which was, of course, about 80% or so tongue-in-cheek) was merely about what would constitute “best practices” given Dr. Bauman’s claim that managers are not the real bosses or the real employers.

      Finally–I neither said nor suggested that a janitor has or should have a higher status than a CEO, and I agree with you that such a distinction would be immoral. In our current system, of course, it is the CEO who has (a) more money, (b) more power, and (c) “higher status” than the janitor; and I believe that to be immoral too.

      • 2 points:

        You: “Your claim that Dr. Bauman’s use of “consumer” was merely a reference to “individuals who are free to make decisions” renders his assertion that “consumers decide who works and who does not” unintelligible.”

        Me: Quite the contrary. The free decisions of consumers regarding what to purchase, where and at what price are exactly the very decisions which serve as signals to firms regarding what to produce and who or how many people to higher. The relation is thus rendered intelligible, not unintelligable.

        You: “the CEO who has (a) more money, (b) more power, and (c) “higher status” than the janitor; and I believe that to be immoral too.”

        Me: I wrote that it was immoral for either of them to have a “higher status of citizenship”, not a “higher status.”

        Citizenship is, as Aristotle defined it so well, the power to rule. This status is the highest political status and if all Men are created equal with certain inalienable rights, then citizenship should be their birthright under a Republic, guaranteed by law.

        There are of course many other types of “status” – most fashionable celebrity, most eligable bachelor, “rich person” – and all of these are relative (fashion is a matter of taste, eligable bachelorhood is a matter of female taste, and Mitt Romney is poor compared to Richard Branson, who may as well be considered poor compared to John Paul II since the former is considered rich only if we define wealth as having lots of pieces of paper and rare rocks in a building)

        • Mr. Rieth: Thank you for correcting my inaccurate quote of your statement; you did indeed refer to “higher status of citizenship,” not just to some vague “higher status”.

          So I rephrase my response: under our system, the CEO has (a) more money, (b) more power, and (c) higher status of citizenship than the janitor; and I believe that to be immoral too.

          Just to anticipate: I realize you’ll deny that a CEO has a “higher status of citizenship,” but I’m referring not to formal citizenship but to the existential reality–more influence on government, better access to the legal system, better access to the medical system, etc. I don’t expect you to agree, but I stand by my point.

  3. I had a neighbor once who was a maintenance machinist, about as high quality a trade as there is in a factory that cannot have its lines shut down. He was a union member, against his will. He told me that whenever strike talk got serious he gathered up his tools and looked for another job, because a strike of even short duration would lose him wages that he would never, ever make up. This means essentially that the best and most valuable workers always understood their position exactly, and thus another loss for both the business and the unions. They wouldn’t come back to a place where strikes were likely.

  4. Jack,
    Much as I’d like to be worthy of your kind words, I am not. I confess that the notion of collective ownership never once crossed my mind. (Perhaps that means i am not so imaginative as the blog title suggests.) While I do think that consumers hold the key to corporate life and death, I don’t think of them as the owners any more than I think of the jury as owning the accused. The jury owns the obligation to determine the accused person’s fate, but they don’t thereby own the accused. Similarly, even though the apostles and their spiritual descendents have the keys to the kingdom, the keys to binding and to loosing, they do not own the church or its members. Those belong to God, Who has laid upon the apostles this great burden and privilege.

    Peter,
    If I correctly understand your argument, we agree. The notions expressed were more economic than political.

    John,
    Exactly so. Your friend was quite right. These losses are hard, sometimes even impossible, to make up. If memory serves, W. H. Hutt argues that the losses incurred by workers in the great steel strikes of the 50s and 60s would have taken about 125 years to make up. I say “would have” because the death of so many steel companies in the wake of those strikes means that such recoveries can never happen.

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