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December 05, 2007


Jim Donovan

Workers in a closed shop become a monopolist supplier of labour. The long term non- survival or stutification of such workplaces suggest that workers should be wary of becoming too powerful.

The ultimate monopsonist is government - and as buyers of goods and services, its agents often abuse their position. Ask anyone selling to govt - e.g. rest home operators or IT development companies.

However, something changes when govt, as monopsonist buyer of labour,deals with a highly unionised workforce, as monopolist supplier of labour. Both sides keep the arrangement cosy, because they are protected from market forces. The outcome isn't overly high wages (the rest of the economy can at least compete there) but ineffective workplace practices, lack of personal or organisational accountability for outcomes, and massive bureaucracy adding little to core services. Yet the core workers who thought they were being well-served by their union are increasingly frustrated by that environment.


Sorry - that should be stultification


If you grant workers power against their employers you discourage anyone from hiring them - exactly the argument against increasing their legal rights.

You could increase their bargining power, without this effect, by making them more valuble to their employer e.g. by subsidising their employers, excluding them from some of the more pointless and expensive employment laws etc.

The key is to make people more valuble, not more powerful.


Yes and equally obvious, is that you need to keep labour scarce. The trick is how do we do this without excessive inflation? Now where was that Monty Python sketch I heard about building box girder bridges?


you don't seem to understand market theory. Monopsony, like monopoly allows you to capture excess value - it gives you market power. And if people are more valuable (and the market is truly competitive) then they will cost more which also discourages employers from employing them. If greater power for workers is needed to offset a power disadvantage against monopsonistic employers then so be it.

I'm all for using the power of competitive markets. The key word is competitive however, not markets.


I meant "more valuable to their employer".

This is a characteristic unlikely to make potential employers less likely to hire them.

And who are all these monopsonistic employers?

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