Right to Work Dispute Shows Unions Can't Stand Competition

All of the commotion and protests in Lansing about right to work being passed by the “lame duck” legislature should cause anyone paying attention to ask, “Why are union leaders and the left in general so threatened by union members being allowed to opt out of the union?” After all, that is the real issue. The legislation does not take away any negotiated benefits from unions. It does not prohibit them from negotiating in the future. What, then, is the problem?

Some union supporters have complained it was passed the wrong way and just rammed through. Oh, ok. So they would support it if it just had a bit more public deliberation? Well, obviously not. They dislike the bill itself and would always argue and fight against it. Therefore, the real issue must be with the purpose of the law itself — to allow members of unions to do their job without joining the union and paying dues.

Political commentators on the right have speculated that the opposition is politically motivated, since a reduction in union dues would lessen the large contributions going to the Democratic Party. That may explain why some Democrats or union leadership would be protesting, but it still misses the real factor that motivates thousands of people to show up in Lansing to protest: personal economics. That is the explanation that changes the nature of the discussion about unions entirely.

You see, economically speaking, a labor union is a labor cartel. In the likely event you were sleeping in your Econ class, a cartel is an organization of firms (or in this case, people) that reduces output and increases price in an effort to increase joint profits. A familiar example in the oil market is OPEC. That is not a slam or an attempt to label them pejoratively. It is simply the economic definition of what they are.

Another example s when an OPEC member country secretly sells some oil below the price set by the cartel. This benefits the one country since they can sell more oil, but the goals of the group are undermined. Similarly, in the case of labor unions, there are often people willing to work for a lower wage and therefore replace a striking worker. Those people are affectionately referred to as “scabs.”

If you are still skeptical, just imagine the formation of the first union. In essence, a collection of workers believed they were underpaid and overworked. They knew if they went to the boss on an individual basis, they might be replaced, but they reasoned that if everyone “reduced output” the boss would be reluctant to shut down production in order to hire a whole new workforce. By doing this, they were able to demand higher wages and fewer hours —which is the exact definition of a cartel.

That situation might be successful for a bit, but as economic professors will tell you, the problem with cartels is that they are prone to failure, due to game theory. Game theory is a broad term, but is really just the mental calculus of what is one’s best interest, depending on the action of the rest of the members of one’s particular group. Here’s a fun example to watch, but come right back. 

Labor unions attempt to get around the problems of game theory through legislation. By prohibiting the permanent replacement of strikers, and forcing workers to join the union, they effectively corral any dissenters who have desires different than the group and bar any outside competition.

That is why right to work is so threatening to unions. It opens the door to … (gasp) … competition. In the future, if game theory starts to take its toll on their cartel, they would be forced to receive wages and benefits that other rational human beings would take. Not because the evil corporations are doing anything to the unions, but because other individuals are simply acting in their own best interest.

There is nothing wrong with forming a labor cartel, per say. But at the same time, it is not morally permissible to limit the freedom of others in order to preserve it anymore that it would be to legislate that oil refineries must buy oil from OPEC. That is why the discussion is always steered to the benefits the unions provide and how necessary they are, and away from the morality of forcing people to join a group in order to work. No one wants to admit to themselves, much less others, that the true issue is a desire to avoid competition by denying workers more freedom.

If someone wants to argue that the government needs to prevent competition so the unions can maintain their cartel in a particular industry, fine. Argue that. But don’t pretend fundamental rights are being taken away, when in fact life, liberty, and the pursuit of happiness are just now being restored to the citizens of Michigan.

It’s about time.