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February 25, 2009



Paul De Grauwe is making a provocative, but complementary argument to your petition: http://www.ft.com/cms/s/0/f9e3fee4-0117-11de-8f6e-000077b07658.html


yes . . .

and the vast majority of economists got this downturn correct . . .


How many of the signed have ever been members of unions?


Probably many of them, since they have probably been teaching/research assistants.

Dave Levy

That Frank Levy knows his stuff.

Richard H. Serlin


I know unions are a sensitive issue for economists in the Democratic camp. Unions have pros, but like many things, they aren't all pros. There are some cons, as there are with any form of monopoly. Could you give us your explanation of why you think the pros outweigh the cons, and could you compare the union solution to low wages and benefits for the unskilled to the solution of universal healthcare, more steeply progressive taxation, a better safety net, programs to improve education and make college and retraining much less expensive, with full support to cover reasonable personal and family living expenses, etc.

Tord Steiro

Richard H. Serlin:

There is always a risk that institutions will not work as intended. However, what we know is that the current framwork in the US labourmarket does NOT work anywhere near satisfactory levels.

Of course, you could risk getting unionization Italian style, where both unions and management treats the company as an inextortable source of wealth, hence engaged in a race to the bottom of wealth-grabbing.

On the other hand, you may very well get a Scandinavian-style unionization, that has worked out quite differently.

Karl Ove Moene explains how:http://www1.worldbank.org/devoutreach/nov03/article.asp?id=352

For the Scanidavian economies, this was part of a package. I see you have noticed the rest of this package.


Hi Dani - in principle I have nothing against labour's right to organise. But why would your and your co-signatories' plan have a different outcome to Hoover's encouragement to industry in 1929 (also backed up by influential economists of the day I believe!) to maintain nominal wages in the face of declining demand and falling prices? He believed such "scientific weapons" would bring the business cycle under government control. Industry played ball in 1930, but all the measures did was further collapse business profits, pressurise share price and thus the financial system and arguably make the employment declines worse than they would otherwise have been.


@Dylan & Rich:
I think you approach the issue too abstractly: This isn't about creating incredibly strong unions which could monopolize anything (though cf. the above comment on Scandinavia on why that actually might not be so bad)
but to rebalance labor relations.
Having a union in a company - especially the type of companies that are currently being organized (mainly by the 'Change to Win' unions) will lead to somewhat better wages (but if you look at those companies, the wage results are hardly breathtaking), but perhaps more importantly, union representation provides better monitoring of safety standards and other aspects of labor regulation (overtime, breaks etc.), which are frequently disregarded in the US service sector (ask any labor sociologist).

Reagan very consciously tipped the scale against labor unions in the early 1980s and the EFCA would create some balance.

Remember how weak the labor movement in the US currently is - EFCA is not going to suddenly make labor super strong. It's going to be most effective in those cases, where employers actually engage in borderline or outright illegal activities to prevent unionization.
(and no, I'm not a union member)

Gene O'Grady

Mr. Serlin,

Please define "unskilled." I know it's patronizing, but I'm not sure it's meaningful.

Per Kurowski

I have often been a vociferous defender of the role of unions and so I understand the need of workers to act together in order to defend themselves against management powers (and as shareholders often must do too) but to me “free choice” has to do with the right of a “secret vote” not with having to declare my vote on a public list.

We should always be free to sign up on any list we want, or be free to disclose who we voted for, but a vote should be a vote, should be a vote.

Freedom is much too valuable so as to bend on something as fundamental to it as the right to vote in secret. Opening this door could lead to that next time around a chávez asks us to sign up our vote for him, on his list, and so I do not support the entirety of this communiqué.


Per - funny you should mention Chavez:
No one doubts that votes in Venezuela are secret (at least I haven't seen any such accusations). However, what the anti-Chavez opposition has frequently alleged is that Chavez abuses his power to influence election and that Chavez supporters intimidate opposition voter - exactly the types of obstacles that workers trying to form a union frequently encounter.

Now, I would say that Chavez' Venezuelan democracy is a lot less tilted against the opposition workplace "democracy" in the US is tilted against worker association.
Basically it comes down to this: Who is more likely to intimidate a worker - union organizers or the person who pays his wages and on whom s/he depends for employment. I think the answer is pretty clear, both intuitively and empirically.

Murat Akgun

Using examples like Chaves that invoke strong emotions cloud the critical issues. Just as not all companies are innocent when it comes to their treatment of the "union issue", nor are the unions. One only needs to take a look at a brief history of the Teamsters Union. One side being wrong doesn't make the other side right. As important as it is to put intelligent worker protections in place; it is just as important to protect the integrity of the secret vote that our democratic system depends upon. The two are not mutually exclusive!

Richard H. Serlin

Ok, low skilled, and it is a very meaningful distinction. There's not a concern about the wages of workers with high skills and education in marketable areas (in less-marketable areas, externalities that inefficiently depress wages should be addressed). One of the key reasons for the low wages of the non-unionized low skilled is that their education and marketable skill level is low. Thus, a key part of the solution is to improve education, promote education, provide incentives for education, and make it easier to afford. This will not only increase wages, it will increase the total production of the economy, the total size of the pie.

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Caos und Arbeitlos

Der Machtkampf zwischen Continental und Schaeffler eskaliert. Conti-Aufsichtsratschef Hubertus von Grünberg trat jetzt mit sofortiger Wirkung zurück.

«Es zeichnet sich ab, dass Continental weiter Schaden nimmt«, sagte der 66-Jährige gestern in Frankfurt nach einer Sitzung des Aufsichtsrats des Autozulieferers. «Wir laufen Gefahr, in das Schaeffler-Problem hineingezogen zu werden.« Von Grünberg kritisierte, die schwer angeschlagene Schaeffler-Gruppe sei der Forderung nach einem tragfähigen Zukunftskonzept nicht nachgekommen und stattdessen auf Konfrontationskurs gegangen.

Der Herzogenauracher Autozulieferer, der wegen der auf Pump finanzierten Conti-Übernahme hoch verschuldet ist, wies die Vorwürfe von Grünbergs zurück. Grünberg habe das Vertrauen im Aufsichtsrat verloren, hieß es. Die Besprechung eines Zukunftskonzeptes habe bei der Sitzung in Frankfurt überhaupt nicht auf der Agenda gestanden.


The idea is quite simply a bad one. It fails to account for the use of coercion. I care not one bit that you and a handful of economists support the bill. One can find smart people supporting all sorts of bad ideas for ideological reasons. the use of peripheral cues versus logic and facts suggest that you are making an emotional appeal.

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Remember how weak the labor movement in the US currently is - EFCA is not going to suddenly make labor super strong.

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