Today’s Wall Street Journal has a good article by UCLA economics professor Lee O’Hanian, who discusses Obama’s determination to further strengthen organized labor. Everyone knows that Big Labor spent lavishly to get him into office and the Dear Leader has admitted that he “owes the unions.”
He claims that his pro-union legislation and directives will raise worker wages, but O’Hanian shows how empty that argument is. At best unionization is a zero-sum game. If workers are paid more as a result of collective bargaining (and just because that appears to have been true in some industries in the past, we have no grounds for thinking that it will be true in the future), the money to pay them has to come from somewhere — higher prices, lower returns on capital, lower payments to other factors of production, etc. But unionization is usually a negative-sum game because it has adverse effects on productivity.
So, to the extent that Obama gets his way and succeeds in further tilting the law in favor of unions, the result will be to weaken the economy and raise unemployment. But his backers will be happy and may have somewhat more money to throw into Democratic coffers.
A great book to read on the impact of unionization is W. H. Hutt’s The Strike-Threat System.
