Tuesday, March 13, 2012

United We're a Monopoly

When I think of the unequal distribution of gains in our economy over the last 30 years I wonder what it would take to reverse the trend. It seems that the solution would have to include reducing the inequality in influence between upper management and employees.

In the past, one way to level the playing field was through unions. In theory this should give employees the power to negotiate with management as equals and claim a bigger share of the proceeds. But personally I've always been a little wary of unions. Part of it is their early association with communist and socialist philosophy and ties to organized crime. And it sometimes appears that the union is just another large corporation with their hand in the till at the members expense. It may be that negative stereotypes have made it easier for corporations slowly reduce the unions power. For whatever reason, union membership is at historically low levels.

Even if unions were more successful there seems to be a bigger problem. Sometimes powerful unions seem to cause undesirable outcomes, like teachers that can't be fired and autoworkers that price themselves out of a job. It seems to me that the underlying problem is that, unlike corporations, unions are allowed to become monopolistic. I believe that one monolithic teachers union can be just as damaging to education as Carlos Slim's lock on the Mexican telecommunications market, resulting in lower quality and higher prices.

I wonder if it would be possible to revitalize the benefits of unions by creating smaller competing entities that could combine the benefits of collective bargaining with the Darwinian forces of a competitive marketplace.

If so, the first step may be to use anti-trust legislation to break the industry wide unions into smaller entities that could compete for employees on their merits. (BTW, I have not idea how or if this would work.)

There could be other ways to reinvigorate or re-invent the idea of unions. One thought is via information sharing which seem to be revolutionizing lots of businesses. For instance, what if employees organized to share salary information, or feedback on management? I'm sure that there are other good ideas out there.

So, a few questions; 
  • Do you agree that inequality is an issue?
  • If so, how can it be reduced?
  • Can unions play a role?
  • Are monopolistic unions really a problem, or should they remain exempt from anti-trust regulations?
  • Do you have an idea for other ways to build employee influence?
Maybe there's a new billion dollar company to be started.