Sunday, January 17, 2010

Labor Unions and Real Wages Are in Conflict

In an ideal productive society, a worker gets what he or she produces. Labor has to be productive. If it is not, there is an eventual disconnect somewhere.

The perfect example is the downfall of the American automobile industry which priced itself out of business primarily because of its labor costs. You can talk style and product non-competitiveness, but the bottom line is this: Management was bulldozed into giving eventually catastrophic labor contracts, in order to avoid immediate catastrophic union walkouts.

The breakdown in schools can be attributed to the same cause. Here it is the avoidance of competition in the form of breaking the public-school-only monopoly unionized teachers have. A choice of vouchers would make for better productivity of teachers and better schools.

Unfortunately, the labor unions and real wage conflict has grown into the American social and cultural contract, and has been so highly politicized by union campaign funding, it will be almost impossible to rectify in the foreseeable future.

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