It Was Unions Who Forced Business to Pay More

Matt YglesiasMatt Yglesias is showing real signs of cognitive dissonance. He wrote a very perceptive but confused article this afternoon, Companies With “Cash on the Sidelines” Should Pay Their Workers More. Let me explain what he’s talking about before getting to the dissonance. Corporations are currently sitting on piles of money. Conservatives claim that they do this because the future is uncertain and that the problem is all this government regulation. Their theory is that the government needs to provide regulatory “certainty.”[1] That theory is just silly. For one thing, the future (including regulation) is always uncertain. That’s why business is hard. What’s more, “regulatory uncertainty” is rarely mentioned by businessmen themselves as a cause for not spending, and it is pretty clear that those few who do mention it are just conservative ideologues who have been trained by right wing media to do so. The truth is what the vast majority of businessmen themselves say: they aren’t investing because there isn’t enough demand for their products.

Yglesias understands this very well. In his article, he points out that the companies should be doing something with their assets. Just sitting on them makes no sense. What does make sense is to pay workers more:

Back in the day when we had labor unions in the private sector this would go without saying. If profits soar, people are going to say “give us some of the money or else we’re going on strike and the profits will vanish.” That doesn’t mean the management has to give in, but they have to come up with something to say in response. “No, we won’t give you the money because we’re doing blah blah blah with it and that’ll be better for the long run because such and such.” That’s management. You’ve got money, you come up with something to do with it. This idea that somehow the United States Congress needs to step in and create “certainty” so that you know what to invest in is ridiculous. Either come up with an investment, or cough up the money.

But why should companies do that? It’s their money, after all. It makes no sense to sit on the sidelines and claim that businesses ought to be—What?!—nicer to their employees. That isn’t the way that our economic system works. There are really only two options that will help this system. First, the government could tax assets that companies just sit on. That would have two benefits. It would encourage businesses to invest and hire. And it would give money to the government to redistribute. (This would almost certainly have to go along with an individual wealth tax, otherwise, the companies would just pay their top managers huge bonuses.) Second, we could have a regulatory framework that supported rather than suppressed labor unions.

I’m in favor of both, but clearly having strong unions is critical to having a reasonably egalitarian country with a large middle class. But here’s where Yglesias’ cognitive dissonance comes in. He has never been all that big a supporter of unions. Now, he isn’t like some conservatives who think that unions are evil incarnate. But he seemingly never misses an opportunity to slap down the who idea of them: teacher’s unions suck because they are public; unions are unpopular; the decline of unions is inevitable. It isn’t that Yglesias necessarily thinks this is a good thing. Not at all. I’ve just never gotten the idea that he cares about—for that matter knows about—labor unions.

It is all very fine to stand around and wish that we were all one big happy family singing Kumbaya. But as Yglesias reminds us again and again: the world doesn’t work that way. What we need is for business and labor to be equal players in the economy. But since the Taft–Hartley Act, labor has had far less power. And since Reagan, there has been an effective open season on their existence at all. Doug Henwood, in arguing against Yglesias, put it well, “The ‘what about the taxpayers?’ lament is straight out of the Reagan playbook—from which it’s clear that a lot of Democrats are taking instruction these days.”

At this point, political reform is blocked by sociological issues. The first issue, which I don’t think plays a role with Yglesias, is resentment. My sister told me that she was in the car with her husband when they drove past a group of BART strikers. She said, “We should honk.” Her husband scoffed at this and made some comment about how overpaid they are. The interesting thing here is that both my sister and her husband are union members. In particular, he makes a lot more money than I ever have. What’s more, he makes way more than those striking BART workers, but given the coverage of the strike, I can understand where he got the misinformation. But whether union or non-union, there are a huge number of workers who resent unions because they think union members are getting an unfair advantage.

The other problem is apathy. That’s what you get from people like Yglesias. His father might have been in the WGA, but that’s about the extent of his experience with unions. I know what it’s like to work at jobs of the kind that Yglesias and all of his friends have. It’s really nice. In general, you are well compensated and people are nice. You are in the upper-middle class, if not in the upper class. Why would you want to be in a union? Of course, I’m sure that Yglesias has a fairly good idea what it’s like to work, say, framing a house. But I don’t think he has much of an emotional connection to it. So it’s easy for him to have airy thoughts about companies using their money to pay their workers more while not caring too much about the demise of unions.

I most definitely don’t think Yglesias is a villain in all of this. But his article was uncharacteristically facile. And it fits into a broader narrative of disregard for what economics means to actual people.

[1] Although this is what conservatives say, it is not what they mean. Businesses would be just as certain if the government stepped in and said, “Corporate taxes will be 90% now and forever more.” So what conservatives mean is basically no regulations. It is rather annoying. It’s one thing to be for that, but it is quite another to hock a theory you don’t actually support.

Update (19 July 2013 4:35 pm)

It just occurred to me why so many labor unions voted for Reagan in 1980: self hatred—or more accurately, hatred of other people’s unions. My experience is that people in unions tend to be conservative. In fact, not that long ago, I almost came to blows with a union man over Occupy Wall Street. This is yet more evidence suggesting that the Democratic Party really needs to focus on economic issues. And by focus, I mean, focus on liberal ideas. The New Democrats have been very focused on conservative ideas for two decades now.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

0 thoughts on “It Was Unions Who Forced Business to Pay More

  1. That’s very perceptive about union members resenting other union members. I’ve heard it as well. And of course that was one of the intentions of Taft-Hartley. It forbade unions from waging sympathy strikes with other unions or calling on members to boycott companies screwing over other unions. In effect, it aimed to whittle away at union solidarity, and it worked (along with the Red scare, right-to-work laws, and many other things.) It’s one of the main reasons strikes aren’t effective anymore; everyone crosses picket lines.

    I think it was James Baldwin who compared America to a self-colonized nation. Most colonizers used the same strategy of divide and conquer. They’d promise, if not true membership in the upper class, at least a place in the high middle class to their colonial officers. Colonial officers would promise positions of authority to those members of the colonized nation who helped keep their countrymen subservient. Ethnic and religious divisions were inflamed to aim the colonized at each other’s throats instead of the colonists, and so on. The parallels are pretty obvious.

    If people don’t like unions, that’s fine. Then propose some other method for raging wages, benefits, and job security while forcing corporations to be more transparent and eliminating ridiculous CEO salaries. Saying "Washington should pass laws to that effect" is not an answer, as Washington will not pass such laws without intense political pressure (of the sort unions used to provide.)

  2. @JMF – You’ve got the catch-22 right there. I fear there is no solution.

    BTW: divide and conquer was how we got black chattel slavery in this country.

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