It was clear from the beginning that the public sector union battle was going to expose fault lines between Pragmatic Libertarians and Progressives. For a time, a strain of self styled liberaltarians had managed to convince themselves that the American left was just a bit misguided and if they only understood the economic arguments against their favored policies they would reject them.
True, progressive allegiance to the nanny-state was strong but even here pragmatic libertarians felt the weight of the empirical evidence was on their side. When the progressive assault on salt, soda and even meat failed to achieve its goals progressives would abandon it; just as they abandoned the similarly widespread but similarly misguided notion that the state should own and operate the major industrial concerns.
In the wake of Wisconsin, Kevin Drum called a resounding but by no means solitary, bullshit, on those hopes and dreams
If unions had remained strong and Democrats had continued to vigorously press for more equitable economic policies, middle-class wages over the past three decades likely would have grown at about the same rate as the overall economy—just as they had in the postwar era. But they didn’t, and that meant that every year, the money that would have gone to middle-class wage increases instead went somewhere else.
. . .
If the left ever wants to regain the vigor that powered earlier eras of liberal reform, it needs to rebuild the infrastructure of economic populism that we’ve ignored for too long
This sentiment is resolute among progressive bloggers. The decline of economic populism in general and unionism in particular is the front line of the new war. Wisconsin its cause celebre.
This fault line strains a potential liberal-libertarian fusionism to its core. The health care debate could be dismissed as a battle between monopolistic health insurance companies and a monopolistic state for control of fundamentally dysfunctional industry. That the federal government might choke the health care serpent to death in its future efforts to balance its budget could be seen as consolation for the growth in state control.
However, there is no such consolation to be offered in the unionization battle. Economic populism is precisely what libertarians hope to dissuade liberals of and to the extent public sector unions matter at all, its because they stand in the way of educational reform. Making public unions the heroes of a new populist revolution is not going to make any of this any easier.
What I didn’t expect though was a divide even within the libertarian camp. Libertarians are coming out in favor of private sector unions. Will Wilkinson is a representative
The right of workers to band together to improve their bargaining position relative to employers is a straightforward implication of freedom of association, and the sort of voluntary association that results is the beating heart of the classical liberal vision of civil society. I unreservedly endorse what I’ll call the "unionism of free association".
That free association is to be respected is without question. What is at issue of course, are contracts in restraint of trade – that is, “the right to band together to improve their bargaining position”
Does industry likewise have a right to create and have enforced by the state contracts which restrict supply and raise prices. May the Airlines, invoking their right to associate, form an organization and contract to hike fairs? May the automakers enter into an agreement to sell their cars at higher prices?
In a perhaps more parallel example, may the pharmaceutical companies enter into a collective bargaining agreement with the health insurers that the health insurers will cover only non-generics or they will not be sold any patented drugs at all?
What justification can there be for permitting labor to enter into such contracts but not business? I can’t help but suspect that it is a sympathy for economic populism and the notion that what is bad for the business must be good for the worker.
We must not forget that these restrictions work by driving up the cost of hiring the least advantaged members of our society. A man who could be profitably employed before a collective bargaining agreement may be forced into a lower paying occupation or even out of the labor force entirely after collective bargaining.
Perhaps, Will can clear it up for me but it seems that this line of reasoning goes against the core liberal-libertarian message as articulated by Will himself
It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.

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Thursday ~ February 24th, 2011 at 1:53 pm
MRP
One could argue that industry already has rights analogous to collective bargaining through corporate charters, and that the prohibition on secondary strikes is analogous to the restrictions on inter-firm collective action. The correspondence is imperfect but useful.
Any discussion of labor issues which elides the effects of corporate privilege is fatally incomplete. Limited liability, compulsory negotiation with unions, & right-to-work laws are interrelated, and elimination of all three together is necessary to simultaneously satisfy both pragmatic & ideological libertarianism.
Thursday ~ February 24th, 2011 at 2:03 pm
jazzbumpa
What justification can there be for permitting labor to enter into such contracts but not business?
It’s really distressing, depressing and disappointing to see that you are serious about this question. On the one side you have trans-national corporations – who have been granted the free-speech rights, and effectively OWN government – and billionaires like the Koch brothers.
On the other side you have labor unions. That’s it. The asymmetry is stark and overwhelming.
You want the already rich and powerful to be able to collude legally, more than they already do illegally, and wonder why it has to be justified that individuals who are absolutely powerless alone can band together.
You think this is some sort of equivalence?!?
We must not forget that these restrictions work by driving up the cost of hiring the least advantaged members of our society. A man who could be profitably employed before a collective bargaining agreement world may be forced into a lower paying occupation or even out of the labor force entirely in after collective bargaining.
I call bullshit.
Take a look at the economic circumstances of states with and without collective bargaining in the private and public sectors.
Reality says the opposite.
What a sadly wrongheaded post. This could easily have been written by somebody at the Koch-funded Cato Institute.
JzB
Thursday ~ February 24th, 2011 at 2:06 pm
Dale
“…and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.”
And who’s going to fight for that? Businesses and their owners? Or the workers who stand to benefit from it?
If we’re looking toward more transfers from wealthy owners to poor workers, what’s it matter if it comes about via union bargaining or government intervention? They impetus seems to be the same, even if the scale and efficiency are different.
Would unions be necessary if everything they ever had to bargain for came automatically as a mater of law?
Thursday ~ February 24th, 2011 at 2:36 pm
Lord
While sympathetic, I am not persuaded. The monopoly of unions is no more than the monopoly of business. They have the right to offer their services at a price they are willing to accept. Others also have this right. If these become too large and powerful, then there are legitimate concerns for both. Some may believe they have, others may not, but if they were so powerful we would not be discussing this in the first place. The government has no shortage of power, they are free to do what they feel they must just as the unions. If they feel the need to lock them out they will. If that displeases the public, I expect that will change. I’ll put my faith in the democratic process, even if the results are less than what I would prefer.
Thursday ~ February 24th, 2011 at 2:40 pm
Hal
…What justification can there be for permitting labor to enter into such contracts but not business?
Um, hello? What, pray tell, is the Chamber of Commerce? What about small business associations, lobbying collectives, PACs and god only knows what else. Are you seriously claiming that businesses enter into no collective – and contractually so – bargaining entities?
I can’t help but suspect that it is a sympathy for economic populism and the notion that what is bad for the business must be good for the worker.
I think this belief without evidence is at the root of y’alls problem. I’m a capitalist to the core, having stated, maintained and sold my own business. I’m a big believer in the market and all that jazz and live it in my professional life. The implication that because I see that collectives are useful and proper in an market system does _not_ mean I think it’s bad for business and therefore good.
Perhaps less sloppy reasoning from assumed principles and cartoonish characterization of people’s motives might lead to actual knowledge transfer.
Thursday ~ February 24th, 2011 at 2:45 pm
Jeff
Karl,
You write, “Does industry likewise have a right to create and have enforced by the state contracts which restrict supply and raise prices.” Are you honestly unaware that this happens? Have you never heard of the sugar tariffs that the federal government has had in place for decades? Do you believe they exist because of teachers’ unions in Wisconsin? Are you really unfamiliar with the pipeline between business organizations and lobbies and the legislation that gets passed in Washington and state capitals across the country? Maybe you guys are, since you and Adam complain about unions and such all the time (more Adam than you, in fairness), and yet I have no recollection of a posting decrying the negative, distorting influence of the Chamber of commerce. Another example, in Texas owners of rental properties banded together into a professional association which then created standardized rental contracts for tenants. They also wrote the legislation pertaining to these issues that was passed into law. (Yes, although you may be shocked to hear this, business lobbyists really do write legislation that gets handed off to friendly representatives and passed, sometimes almost unaltered, into law.) All of these were written, fairly explicitly, to favor owners over renters. Of course, given the free market, you can always just rent an apartment from a property owner that doesn’t use these standardized, and unfavorable contracts. As demand for those apartments increases and demand for the standard apartments decreases, prices will shift until the price differential precisely equals the monetary value of the disadvantageous terms in apartments leased under the standard contract. Except… there are no such other apartments in Texas. So the econ 101 textbook analysis does not work in that very specific corner of the real world. The truth is, on its own, this isn’t a big enough deal to amount to much in the big scheme of things (just like whether or not pedicurists are licensed). The problem is, (also like professional licenses) that is not the only such case in the world. Do you remember the series of blog posts where you guys complained about this? I don’t either. Now, if you guys want to argue for eliminating the influence of all special interests of whatever form, I suspect many of the people on the left that you complain about would happily jump on board with you. Because, the distorting influence of monied interests is many times larger than that of organized labor by any reasonable measure.
On another note, you seem to be advocating a weakening of unions out of concern for the working class. (“We must not forget that these restrictions work by driving up the cost of hiring the least advantaged members of our society”.) If you want to push that line, you really have to take seriously the very, very obvious fact that working class people are much worse off in right-to-work states than in non-RTW states, and that even within non-RTW states, the stronger the union presence the greater the economic security the working class have, instead of just ignoring these facts as seems to be your guys’ preferred strategy.
Thursday ~ February 24th, 2011 at 2:54 pm
Hal
Now, if you guys want to argue for eliminating the influence of all special interests of whatever form, I suspect many of the people on the left that you complain about would happily jump on board with you. Because, the distorting influence of monied interests is many times larger than that of organized labor by any reasonable measure.
I’ll second that.
Thursday ~ February 24th, 2011 at 2:49 pm
Gimlet
These comments make my eyes bleed.
Unions are granted a special exemption from anti-trust laws – that is the only reason they are allowed to collectively bargain. An even better example (IMHO) than the one proffered by Prof. Smith is of physicians (or other service providers), who are disallowed from banding together to set their rates at some minimum level.
Unions favor members at the expense of non members and consumers – you get higher unemployment rates and higher priced goods with unions than without them. This is basic econ. That’s also why it seems basic to favor the safety net over unions as a way of achieving a level of wealth transfer (the safety net) – it’s more fair, and it’s more efficient.
A corporation is simply an effective means of pooling capital. It creates some agency problems between management and owners (shareholders), but the limited liability is in no way a trade off for collective bargaining (it was a trade off to encourage economic risk taking – much like personal bankruptcy laws do – and pooling of capital to allow for larger-scale endeavors). It’s limited liability for the individual shareholders, limiting the amount they can lose to their ownership interest in the corporation – it’s not limited corporate liability.
Shareholders are everyone from billionaires to old ladies and pension funds. Why should they bear the cost of transfers to favored union employees as a matter of societal policy?
Thursday ~ February 24th, 2011 at 3:00 pm
Hal
You’d almost have an argument if it wasn’t for the fact that income distribution and wealth distribution in this country follows a power law. Consequently, corporations – as they exist in reality, not theory – are benefiting the rather tiny minority.
Thursday ~ February 24th, 2011 at 3:01 pm
MRP
My point was that, without limited liability afforded to shareholders through incorporation, there would be more, smaller partnerships in the place of corporations; thus, the corporation is functionally equivalent to the would-be partnerships collectivizing.
It is indisputable that corporations encourage capital pooling & risk taking; what is disputable is whether the social benefit of such pooling & risk taking is worth the cost of increasing the market power of industry.
The distribution of the cost of transfers to unions would be irrelevant if, as I suggested, compulsory negotiation with unions was eliminated contemporaneously with limited liability.
Thursday ~ February 24th, 2011 at 6:23 pm
anon
“It is indisputable that corporations encourage capital pooling & risk taking; what is disputable is whether the social benefit of such pooling & risk taking is worth the cost of increasing the market power of industry.”
It seems quite clear that it is. Plenty of corporations compete in contestable markets where market power is not a serious issue.
Moreover, incorporation reduces the cost of raising capital and starting a new firm which will compete with established businesses. The pre-corporation era was rife with monopoly problems, precisely because raising capital for a new business was very hard.
As a rule, libertarians only object to limited liability for torts and crimes, not debts incurred voluntarily.
Thursday ~ February 24th, 2011 at 4:46 pm
Console
HAHAHAHA… empirical evidence, oh man
If all this union talk were true, Mississippi would be the paragon example of civil service and industry in America.
Seriously, the problem is that a good portion of libertarian intellectual thinking is concerned with dealing with things on the margin (let’s have another hard hitting post on how we shouldn’t license barbers anymore) while progressives and conservatives alike have serious aspirations for remaking american society. On complicated issues where the principle matters way more than whatever marginal economic increase you can squeeze out comes in at, this divide will pop up. When the changes have big enough benefits, then that’s where the interests can merge.
I’m being somewhat tongue in cheek, it’s not like there’s no radical libertarians out there. It’s just that the ones willing to engage in mainstream politics seem more likely to worry about zoning regulations than coming up with a reasonable second best theory of healthcare reform or a way of talking about unions that doesn’t involve “
hocus pocusceteris paribus, my ideas should give the desired results”Thursday ~ February 24th, 2011 at 5:39 pm
basketballisthe#1sport
What justification can there be for permitting labor to enter into such contracts but not business?
J.F.C you must be bullsh*ting here. If unions didn’t have an exemption from anti-trust laws unions COULDN’T exist. Every job would require you to renounce forming a union as a term of employment.
There is an UNEQUAL BARGAINING POWER BETWEEN CAPITAL AND LABOR. Exemption from anti-trust laws for unions are to even somewhat attempt to level the playing field.
___________________
It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.
rofl.
1. still little proof that the libertarian economy you’re describing leads to the best growth rates. Growth in the developed world has slowed down since the neo-liberal poison began tot take hold the 80s.
2. It isn’t possible to have a strong welfare state with the form of capitalism you are describing. Unequal concentration of wealth will result in the capitalists scumbags using their power to stop redistributing wealth.
_____________________
A fusion between libertarianism and progressive was always an awful idea. Libertarians are to the plutocrats what court historians were to medieval kings. Spewers of bullshit designed to fool the masses.
Thursday ~ February 24th, 2011 at 5:44 pm
basketballisthe#1sport
I can’t help but suspect that it is a sympathy for economic populism and the notion that what is bad for the business must be good for the worker.
1. Economic populism is nothing more than the idea that labor should have the ability to influence the rules of the office and the wages they receive. They can’t effectively due that as individual due to unequal bargaining power, they need a larger organization. Work is where the average person spends 30-40% of their waking hours.
Workers should not be slaves to the capitalist class who would have dictatorial control of the workplace in your system and the technocrat class who would make public policy w/o popular influence in your utopia.
2. Capital and Labor are often adversaries.
Thursday ~ February 24th, 2011 at 6:06 pm
anon
“… labor should have the ability to influence the rules of the office and the wages they receive.”
um, what? Many private businesses give workers a voice in how the work is organized. Contrary to what you might expect, workers are not slaves: firms pay quite a bit for the privilege of employing them, and they are eager to reduce their payroll expenses by improving work conditions as much as is feasible.
Thursday ~ February 24th, 2011 at 6:11 pm
basketballisthe#1sport
Many private businesses give workers a voice in how the work is organized.
ROFL. The average worker is low skilled. Low skilled workers have no voice. Wages are complete crap in the US. We have an income distribution on par with the banana republics and the capitalists still want more.
workers are not slaves:
rofl. try living a decent life w/o work
Thursday ~ February 24th, 2011 at 6:35 pm
anon
“ROFL. The average worker is low skilled. Low skilled workers have no voice.”
Yes. You can blame globalization and immigration of low-skilled workers from poor countries. But the most effective way to help unskilled workers is to expand EITC and/or subsidize their SocSec contributions. “Unionization for all low-skilled workers” strikes me as an especially poor fit: even raising the minimum wage would be a better policy.
Thursday ~ February 24th, 2011 at 7:07 pm
Hal
Well, I don’t think you’ll find many that think that unionization is their ideal solution to the many issues that it addresses. However, the alternative is…? As far as I can tell, the alternatives being offered are along the lines of what Karl quotes Wilkinson in this post. A devils bargain that if you give them enough rope, they promise not to hang you with it. It’s laughable and patently obvious that such a deal wouldn’t even withstand first gentle light of dawn. The truly sad thing is that this is probably the best of alternatives the liberaltarians can come up with, given their ideological bent.
Or maybe the truly sad thing is that they actually really think it’s one hell of a deal…
Thursday ~ February 24th, 2011 at 7:00 pm
jazzbumpa
@lord:
The monopoly of unions is no more than the monopoly of business.
Beautiful understatement, my friend. The monopoly of unions (really, just how far up in your cheek is your tongue tucked?) is less than the monopoly of business – by how many orders of magnitude? 3? 5? 8? 13? We’re talking about a high school math teacher with a Master’s degree making $36,500 (as I heard about a WI teacher today) vs billionaires.
Suppose you have 10,000 math teachers with M.S degrees. That 10^5. Times 10^ 3 $.
Do I have to remind you that a billion is 10^9? These guys (the Koch’s, in case you were wondering) EACH have the prefix MULTI! And that is only TWO OF THEM! Without taking into account their CORPORATIONS. And – oh, by the way, in case you haven’t noticed THEY ALSO OWN THE GOVERNMENT.
Thank you for a wonderfully exquisite moment of comic relief.
And if you have a free moment, take a look at this.
http://illusionofprosperity.blogspot.com/2011/02/domestic-financial-profits-and-trade.html
or this
http://jazzbumpa.blogspot.com/2010/07/income-mobility-revisited.html
Now I must go hug a squid.
JzB who occasionally does the math
Friday ~ February 25th, 2011 at 10:34 am
Mark A. Sadowski
“It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.”
Except, how do we get there from here? Do you really think the Koch brothers are for that?!?
Madison is a pitched battle between billionaires and the NEA. Gutting the NEA isn’t going to lead us to heaven. But it’s a surefire path to Pottersville.
I consider myself a libertarian (no purity tests please). But posts like this make me question wether most libertarians are grounded in reality.
Friday ~ February 25th, 2011 at 1:24 pm
anon
“Except, how do we get there from here? Do you really think the Koch brothers are for that?!?”
The Koch brothers probably aren’t for it, but the general public could be. You might as well ask: “How can we make labor unions big and strong again, as Kevin Drum would like?” Kevin’s answer to the second question is “economic populism”, whatever that means. Libertarian proponents of “wicked good redistribution” can probably get away with less populism and more economics.
Friday ~ April 1st, 2011 at 11:06 am
Barry
“Libertarian proponents of “wicked good redistribution” can probably get away with less populism and more economics.”
No, because the ‘wicked good redistribution’ is strongly opposed by the elites (except when it’s from us to them).
Friday ~ February 25th, 2011 at 10:53 pm
How to Make Unions More Powerful, the Libertarian Way | Daily Libertarian
[...] Smith at the “Modeled Behavior” blog also riffs off Wilkinson on Carson on unions, and sees in this an unbridgeable gap between [...]
Saturday ~ February 26th, 2011 at 3:52 am
Kevin Carson
FWIW, I think businesses should be able to collude contractually to do anything (anything nonaggressive) they can reach agreement on, so long as they do it without any help from the state.
So I’d be overjoyed to allow pharma companies to negotiate any deal they wanted with health insurers — so long as the state doesn’t enforce drug patents or any other kind of so-called “intellectual property,” all the state’s licensing and other barriers that prop up the insurance cartels are removed so that cheap healthcare can be organized on the lodge practice or contract practice model without insurers getting the regulators shutting them down, and it’s possible to set up a drugstore co-op that sells generic drugs in bulk the same way the natural foods co-op sells bulk dry goods, without any licensing or other entry barriers.
If big corporations really think they can carry off a voluntary monopoly in a totally free market, i say “bring it on.”
Saturday ~ February 26th, 2011 at 8:01 pm
kenneth
IMO the controversy is only in the minds of those who misrepresent Libertarianism.
Where do I begin? The man who launched modern Libertarianism and outlined the original USLP platform, which alone maintained the absolute right to unionize for 30 years until the people from the extreme GOP gutted its platform and took over much of the LP, was a union member…and the right of agency and association is generally pretty uncontroversial with Libertarian activists, though they may not have thought out all the details.
Before this latest rowdydow there were some interesting links on Libertarian-friendly union models at the Facebook of http://www.Libertarian-International.org, which has been encouraging unionism since before Marx.
At the site is an article about doubling the pay of public school unionized teachers as part of the Libertarian agenda of the people who brought home-schooling to one state as part of the voluntary approach. Unions simply are not the problem, coercion is. Libertarianism isn’t big-government conservatism or coercive government anything else. And so on.
Monday ~ February 28th, 2011 at 3:39 pm
Craig
“What justification can there be for permitting labor to enter into such contracts but not business?”
This is pretty obvious, once you close the Micro 101 textbook. The answer is: most large businesses are oligopolies. They do not participate in truly classical markets. I mean, seriously: how do we even talk about firms like General Motors as if they were small providers of undifferentiated goods? Large firms possess a substantial power to set, rather than take, prices.
Providers of labor, on the other hand, are much closer to the model embodied in Microeconomics. Collectivization, while not without problems, at least allows oligopoly to face oligopoly when it comes time to negotiate the labor contract.
The joke about the two economics professors walking down the hall, where one points out a dollar bill on the floor and the other says, “Impossible. If it existed, someone would have come along and picked it up?” It never stops deserving your serious attention. Do not confuse the model with the reality. Did Marxism teach us nothing?
Tuesday ~ March 1st, 2011 at 8:08 pm
Magnus
If your analogy considers unions a conspiracy of individuals, then shareholders should be treated likewise — as a conspiracy to negotiate as a group and to set a price not otherwise obtainable as individuals.
Wednesday ~ March 9th, 2011 at 2:45 pm
floodingupeconomics
I hate it when libertarians fail to understand there own ideology and instead argue what public policy pundits have been saying on TV instead because its intellectually easier than thinking.
So you admit: “The health care debate could be dismissed as a battle between monopolistic health insurance companies and a monopolistic state for control of fundamentally dysfunctional industry.”
But in the same breath fail to realize that public employee unions are subject to the same type of monopoly employment conditions regarding public employment… are you going to now argue there are sufficient private k-12 schools such that the government doesn’t have a monopoly on primary education?
Public employee unions (esp teachers/firefighters/police) operate to counterbalance an employment monopoly held by the state. Any self righteous libertarian should realize this, and in arguing for a “free-er market” (because there are no true free markets in reality) support public employee unions as necessary counterbalances to market frictions for specialized jobs imposed by state mandate. Or do you support the state’s right to bargain from a monopoly employer standard because Fox News does too (I thought libertarians hated the state?).
For saner economic analysis check out my blog instead.
Sunday ~ March 20th, 2011 at 1:26 pm
Barry
One thing not covered in the comments is the idea of ‘maximizing economic growth, distribution be damned’.
The neoliberal/Reganite has not done jack for growth rates for the US economy, last I heard.
Friday ~ April 1st, 2011 at 11:08 am
Barry
Adding on – the current ‘shock doctrine’ attack by the GOP is not to free up markets; they expect to increase the money they get from the state, directly and indirectly (see both WI and FL for examples).
Their goal is to weaken opposition to right-wing looting and power – full stop.