George Leef’s latest Forbes column focuses on a key lesson from the United Auto Workers’ recent defeat in a union vote at a Chattanooga Volkswagen plant.

Whether the rebuke will prove to be the UAW’s Waterloo remains to be seen, but I think that there is one clear lesson we should draw from this. We have some lousy labor laws.

The prohibition against “company unions”

Much has been said about how the VW management wanted or was at least receptive to the UAW, but what VW really wanted was to establish a worker/management council similar to the ones at its German operations. Under American law, however, there was a problem – due to a 1992 decision by the federal agency that enforces our labor statutes, the National Labor Relations Board (NLRB), a non-union company may not set up any such council.

Why not? In a more or less free country, why can’t people who work together toward a common goal sit down and discuss ways of improving products, morale, safety, scheduling or anything else?

The reason is that the key federal statute, the National Labor Relations Act (NLRA), contains a provision, Section 8(a)(2), that was meant to prohibit “company unions.” Back in the 1930s, quite a few businesses had established such unions in hopes of heading off both legal action by the Roosevelt administration under the strongly pro-union National Industrial Recovery Act, and organization by militant independent unions.

The leaders of the labor movement, however, preferred that workers have to choose only between their own brand of unionism or none at all. As a favor to them, the NLRA was written to prevent a company from acting to “dominate or interfere with the formation of any labor organization or to contribute financial or other support to it.” …

… By forcing labor-management relations into the light switch mode – either an adversarial union or nothing – the law gets in the way of the market’s discovery process. That’s how Big Labor wants it, but it’s bad law.