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June 13, 2006



But strong labour unions are bad anyway, since they are just licensed monopolies whose purpose is the short term enrichment of their members by the impoverishment of their non-members, achieved, usually, by violence or coercion, and without redeeming virtues.

Backword Dave

I completely disagree with DM. So much so that I'd need both sides of a lot of A4 so I won't bore you. No, I think I'll have a go anyway. There's a good passage in Marx on this (I've read little of the flocculent Kraut, but this was in a book on argument) about profit: how it's excess income, which could go to expenses (ie wages) or be thrown into the sea and so forth. So the enrichment of the workforce isn't necessarily the "impoverishment" of the drinking classes or whatever you call layabout capitalists. Take the newspaper industry pre-Wapping. Printers earned fantastic amounts compared to, say, coal miners or taxi drivers. I don't recollect the proprietors ever lacking the proverbial pot to piss in or wearing threadbare clothes except on account of fashion and choice.

Ok, "companies are scared to invest in poor countries". Could you define 'poor' here? Bhopal (spelling?) looked like an investment (building a chemical factory has to be an investment, surely). Is India poor? Well 'poor' is relative isn't it? So compared to the US, India qualifies. Unless I've missed something. What about all the goods I have bought (almost anything partially plastic) which turned out to be "Made in China"? Someone built those factories. Companies may feel the fear, but they do it anyway, it seems to me.

When we had an empire (I think even DM may agree with me here), "higher taxes, riots disrupting production, the need to pay bribes, or even outright revolution" were regarded as trade-off risks. Investment is about risk. Those things may happen. You may lose your life savings. You may also grow incalculably rich if they don't. And fools and investors rush in.

Hasn't the US had a "strong union movement" in its history? But it's not enjoyed (suffered?) "redistributive politics" apart from one short period. Why would companies fear this? And since when were companies decisions taken by these Milquetoasts?


I'd have tried to define "strong". Clearly Norm doesn't mean militant, or arm-bending. Strong could mean popular, historically/culturally grounded, legitimate, organised, involved as a respected party in policymaking/cooperative structures, representative of a modern, liberal polity, and so on. None of these, I feel, implies expropriation, and there are ways of gaining an economic reputation/deterring capitalists' fears without going to the extremes of suppressing workers' organisations, or the other "extreme" of radical redistribution.

I don't 100% reject DM's view (for once), but I see unions as an essential part of the democratic infrastructure that needs setting up in the developing world.

Bob B

"I see unions as an essential part of the democratic infrastructure that needs setting up in the developing world."

Does that account for the verging on precipitous decline in trade union membership in Britain since 1979?

In 2003, union membership in Britain, estimated from the Labour Force Survey, was 7.42 million. . . In 1979 13.3 million people were members of trade unions.

Could the decline in trades union membership in Britain be a contributing factor explaining why and how the British economy is performing so well relative to that of the other major European economies?

Btw can anyone this side of sanity and in their wildest and most psychedelic fantasies envisage that Norm could conceivably say anything remotely different?


Dave - I define "poor" as simply the developing economies defined by UNCTAD. In 2002-04 they received $545bn of FDI inflows. The 25 EU countries got almost twice as much - $975.5bn. France got more FDI than all of Africa in this time. (Table B1 in the statistical annex in the link I gave) This is a remarkable discrepancy, given the much lower wage costs.
B4L - I wasn't thinking of unions as a means of expropriation in themselves. Rather, I surmise that global firms might regard an active union movement as diagnostic of political pressures for future redistribution, which might deter investment.
On the other hand, though, it's possible that strong unions can benefit firms, for example by policing workers, encouraging training or by reducing corruption.
I wasn't making a dogmatic popint here - hence the use of "could" and "might." I merely wanted to raise the point that "gradualism" isn't a self-evident good; there's one mechanism at least through which it can make workers worse off.


"So the enrichment of the workforce isn't necessarily the "impoverishment" of the drinking classes or whatever you call layabout capitalists." Dave, whatever makes you think that I think it's the 'layabout capitalists' who get impoverished? It is, of course, the other workers - the ones excluded by the union - who pay much of the price. The members get paid above the market rate, the others don't get the jobs that otherwise they would.


"Norm calls for... etc"

The post is by Shalom Lappin.


very sorry Norm - correction made.


I would hardly agree with derieme's rather negative assessment trade unions. Nevertheless, he has a point in that their primary function is to preserve the interests of their members. This is obviously ok in as far as it goes but far too much weight is given to them in Shalom's piece as a force of 'progress'. Since the IMF/World Bank regime is being criticised here, he seems to be arguing that protectionism is good for developing countries but bad for the EU/USA, particularly in the agricultural sector. The problem is, trade unions don't advocate protectionism in economies that are developing, then magnanimously abandon this to benefit other countries after they have become more prosperous - they advocate it consistently.


Oh dearie me, I meant dearieme.


What's the relationship between inequality and underinvestment like? Because, presumably, moderate degrees of inequality, if the problem is uncertainty about property rights, would lead to less underinvestment than high degrees of inequality, since they would associated - I'd guess - with a lower likelihood of expropriation.


I'd suggest that Unions are often partly self-serving bureaucracies. They often adovocate totemic policies that are superficially popular with the most vocal element of their membership (protectionism?) rather than policies that are based upon a more nuanced understanding of their members interests. And, as officers, they don't always ooze competence. You don't always get near the top of a Union by being massively competent.

So far, each sentance I've used has had terms like 'don't always' or 'often' in place of 'never' and 'always' because there are competent, well-run Unions that adopt a professional perspective. I would argue that Unions could be a lot better, and that the networked individuals (bloggers and other smartarses) have the ability to improve Unions significantly.

In short, I'd suggest that Unions are ripe for reform - and that sensible Eustonish lefties could spend their time doing worse things than getting involved in Unions and making them more accountable and professional in what they do.


"An early paper* by Guido Tabellini and Torsten Persson showed that inequality is bad for economic growth precisely because it deterred investment by increasing capitalists' fears of expropriation."

Expropriation ain't the same as redistribution. Redistribution will tend to reduce the political pressure for, and therefore the likelihood of, expropriation and revolution - which is what happened in most industrialised countries in the 20th century. Far from signifying future revolution, the emergence (and tolerance) of strong unions usually means the forces of labour and capital are learning to live with each other, and that civic society is developing independent of the state - all signs of stability. I suspect low investment in poor countries is indeed linked to inequality, not so much because of fear of expropriation but because of mass poverty, low productivity, poor provision of public goods and corruption.


"They often adovocate totemic policies that are superficially popular with the most vocal element of their membership (protectionism?) rather than policies that are based upon a more nuanced understanding of their members interests."

They do this, certainly - but in the case of protectionism, it often *is* in their rational self-interest. It's just that this doesn't mean it's in everyone else's interests.

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