United States: Capitalist Definitely, Democratic Less So at Frankly CuriousFrankly Curious

The United States is a democratic capitalist system. At least in theory. Today, Ezra Klein wrote, Three Sentences No One Should Forget About Unions. The sentences come from Richard Yeselson in an interview with Jonathan Cohn for New Republic, Happy Labor Day. Are Unions Dead? And they get at something I talk about a lot. In fact, I talked about it this morning in the birthday post for union organizer Walter Reuther: liberal policy is an important aspect of making capitalism work.

The issue could not be simpler: you need to feed the lion. If you don’t feed the lion, he will get hungry and eat you. In a democratic capitalism, there are two forces that push against each other: the power of the rich to manipulate the political system to funnel money from the poor to the rich, and the power of the poor to enact laws that take money away from the rich and redistribute it. Labor unions are incredibly important in this. But in modern America, the first force has had far more power over the last four decades than the second force.

Richard Yeselson’s three sentences explain the issue:

What’s ironic about that is that unions are inherently conservative institutions, which historically developed parallel with the development of capitalism itself. They are as much a part of capitalism as Henry Ford or Apple. Unions use contracts — and there’s nothing more intrinsic to capitalism than the right of contract — to link their members to the fortunes of the companies they contract with.

This goes right along with the last article I wrote, The Rich as Spoiled Brats With Infinite Power. The point I was making was that the rich act in a very shortsighted way because they believe that the government will always bail them out. And the poor exhibit all the signs of learned helplessness.

But let’s look at a graph from Ezra Klein (edited by me for aesthetic reasons). It shows the unionization rates of the various countries in the OECD:

You will note that the United States is pretty far down the list and that includes public employees. But unionization rates are not the only thing that matters. France is not on the chart and it has a lower level of unionization. I assume this is because French labor law is such that workers generally don’t feel they need a labor union. The government protects their interests. In the United States, the government is exactly the opposite: it does everything it can to limit what protections unions provide.

Another graph in Klein’s article shows how well correlated the incomes of the top 10% are with the decline in unionization. He cautions us to not read too much into this. That’s correct. In fact, I suspect the relationship is more the opposite. The more power the top 10% has managed to get, the more they have used it to crush unions and everything else that might limit their ever increasing wealth. I’m sure that a graph of the income of the top 10% and their political power would be at least as stark.

There is a complimentary graph that shows public support for labor unions over the last three decades. What it shows is that union support has been shockingly consistent even while actual unionization has gone steadily down. So the dying union movement isn’t caused by people losing interest. It is just that destroying labor unions is a government policy.

In the United States, we clearly have a capitalist system. When it comes to whether we have a democratic system, it is at least not clear. What the people want doesn’t seem to much matter.

Update (1 September 2014 8:43 pm)

According to Richard Yeselson, “France actually has smaller percentage of union members than the US, but union contracts cover almost the entire workforce.”