Striking Out

Strikes are in the news: There's going to be a mass walk out, it seems, on the 30th June. I think unions are another thing where people have very muddled thinking too - at least if the near-800 exam papers I marked this year are anything to go by. Students hate the free market, and describing something as free market is perjorative.

If you ask this man, he would tell you it's all because of their education - all teaches are whacko lefties and they indoctrinate students to be left-of-centre too. Apart from those with right-wing parents of course. But that's by the by. Because despite people having an inherent distrust of the market, they also think that unions should be "smashed", and that the job the Tories did on the Unions in the 1980s was an unfettered good thing.

Why do I find that odd? Well, in a free market wages are set theoretically where marginal costs equal marginal revenue for the firm. Not though if they have any bargaining power though and are able to extract economic rents. In most situations, the firm is a single unit bargaining with many disparate workers in the absence of unions which gives firms bargaining power. In addition to that in most situations the outside option (what they get if bargaining breaks down) for the worker is unemployment while for the firm they can just hire from the pool of unemployed workers. The more than likely upshot is that firms can bargain wages down in the absence of unions to below the marginal product of labour, and surely lower than if workers were able to organise themselves into a single bargaining unit.

Potentially my students will realise on entering the workforce that actually, a system by which wages are bargained higher and nearer to marginal product is handy.

Now of course, the unions do other things. Most libertarians I know, and Cranmer, paint them as sinister organisations, and the linked article is nothing but personal attacks on various union leaders; a great example being this:

One fully expects the NUT’s ghastly Christine Blower to insist that her members ‘have no alternative’ but to strike. But when meek and mild Mary Bousted of the ATL screeches from the same multi-faith meditation sheet, it may indeed be ‘a warning shot across the bows to the Government’.

The main offence all these people commit, in Cranmer's eyes, is they are "leftish". That they may be, but what they are doing is trying to ensure that they get a fair deal, something that might not otherwise be the case. Cranmer also attacks them as being entirely in the way of any kind of education reform - Cranmer's implicit assumption is that all education reforms proposed by the "rightish" Conservative Party must be sound and sensible, and should just be passed through parliament like the rest of those reforms that haven't yet seen U-turns.

On the subject though of U-turns, I liked this on politicalbetting. Why? Well it gives a nice insight to the bargaining aspect of all of this. The government has started making a whole load of U-turns, and so why wouldn't the unions sieze upon this to try and get a better deal?

Now of course, I do realise that there can be nasty elements in Unions that get in the way of progress - just as there can be nasty elements in firms (British Airways springs to mind) and in the government that seek to crush unions. But how much of that is propaganda (like Cranmer) and how much of it is reality? Why should workers be crushed from trying to organise and get their wage up nearer to marginal product? How do we know where the wage currently is, and who, really, are we to comment?

Of course though, if we are a staunch right winger (or leftie for that matter), we will respond by taking one side or the other. But I do still find it amusing that in otherwise leftie products of our education system, scepticism towards unions is strong...