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Jens Heycke's avatar

Big business counterbalanced by big government and big labor. What could possibly go wrong?

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Frank Lee's avatar

There is a gap in business sense from the left view of labor that is ultimately detrimental to labor. Unions were a needed allowance back when employee protections did not exist. Today the book of labor law protecting employees is massive. So are the regulations to dictate workplace safety. So all that is really left is wage and benefit extortion of strike threat. And this isn't feasible in the long-run because of the example of Hostess Corporation.

Capital expects a return. Today we have a big problem in that domestic capital is chasing too many alternatives to those projects that would benefit domestic labor. Don't believe the government unemployment numbers... they are inflated by low-paying service jobs and don't count the number of people working part-time and working multiple jobs. They also ignore the regional disparity in unemployment denoted by Labor Surplus Areas (LSA).

The growing gap between corporate profits, executive pay and labor is largely a function of corporate consolidation and continued improvement in productivity from automation. Fewer workers are required and they are working for larger companies that sell products in an increasing global market... a global market that, unfortunately, includes labor as a global commodity.

If improvements in working class wages and benefits are the goal, it should be a long-term goal. And if a long-term goal then unionized wage extortion is the wrong solution. What is needed instead is restrictions on corporate consolidation so that there is greater competition and more investment opportunities for capital (many small businesses instead of three giant multinationals dominating the market). Tax incentives for hiring domestic labor.

But the primary solution to the problem with labor being left behind is to expand the ease and benefits of ESOPs. What we need instead of labor unions against management is for labor to share in ownership. They, labor, will have both skin in the game for supporting a profitable business while also being able to share in the returns of business ownership.

Union wage extortion is just a race to the bottom. We need better solutions.

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