Monday, December 14, 2015

A Blast from the Past: Unions as Combinations in Restraint of Trade

A move is under way in Seattle to extend collective bargaining to drivers for Uber and Lyft.  The idea is to pass a city ordinance that would do for the city’s gig workers what the National Labor Relations Act does is supposed to do for “normal” employees.

Uber, under the guidance of David Plouffe, Obama’s former campaign manager, is fighting back.  Today’s New York Times has a story that sets out their legal case and suggests one argument might have traction, “that collective bargaining by independent contractors would amount to illegal price-fixing under anti-trust law.”

No irony is voiced in the article, but it should be noted that this was exactly the legal basis for the repression of unions in the nineteenth century–when a legal basis was even sought.  Each worker is supposed to be an independent market competitor, right?  So if they get together and demand a higher price for their labor, it’s a combination in restraint of trade.  Because of this legal history it was necessary to get national legislation to carve out an exemption from anti-trust for labor.

So now here we are again.  National labor law is broken; it doesn’t work for the workers it ostensibly covers, much less for the new proletariat in the gig economy.  And in an age when a few behemoths dominate most markets and mergers between the companies with the highest market shares are routinely approved, labor may once again face the wrath of the state under the banner of anti-trust.

The technology may be new but the political economy is old and familiar.


ProGrowthLiberal said...

When Mayor De Blasio tried to impose sensible rules in New York City for Uber, David Plouffe choose to run a lot of incredibly dishonest ads trying to paint our mayor as being against poor black people. It is sad how he shills for a large corporation,

Denis Drew said...

A labor union is (tries to be) a monopoly -- ONE SELLER -- balancing off against ownership monopsony -- ONE BUYER. The ultimate consumers of their product provide the ultimate checks -- the max they are willing to pay.

Checks and balances in a truly free market: there it is. :-)

Economists (too many progressives I am afraid) neglect the monopsony aspect of ownership while the vast majority of American employees labor under the condition of unopposed monopsony. Unopposed monopsony is the mostly unrecognized pathology in America's economic and political life.

PS. A labor union's ability to withhold its input to production in order to get the best deal may be routinely undercut (sent on the race to the bottom) if another employer can squeeze a bad contract out of its workers and then out compete everyone else on the basis of resulting lower prices, forcing ownership and labor at other firms to cut wages. The answer to this of course -- the gold standard -- is centralized bargaining where everyone doing the same kind of work in the same geo locale works under one commonly negotiated contract. Then, firms can compete on the basis of service and innovation alone -- which a lot of really talented business people prefer to trying to out skunk their employees; who wouldn't prefer?

The centralized bargaining system is featured in such "exotic, radical experiment inclined" economies as French-Canada, Germany and much of continental Europe, to as far away as Argentina and Indonesia. Oddly enough, this system was instituted in continental Europe after WWII to keep labor from going on a race to the wages top -- to conserve money for rebuilding. Don't for get the Teamsters Union's National Master Freight Agreement won in 1964 in (across) America.