Lola's brief post, questioning the notion of the "fiscal multiplier" ended up generating 41 comments so far, and DBC Reed kept referring to an editorial in last weekend's Observer. It's a good job he didn't provide a link as Blogger has decided to mark all users who include links as spam, so I'll link to it myself, and let's have a look and see if we can spot any inaccuracies or platitudes in the first two paragraphs...
Effective trade unions are vital components of a strong economy and a vigorous society.(1) Today their weakness is hindering economic recovery.(2) There will be no sustained increase in consumer spending without a rise in real wages,(3) together with the confidence among consumers that these gains are durable.(4) Innovative companies need confident customers whose wages are rising to buy their goods and services, allowing them to break into the virtuous circle of more production, technical innovation and greater spending.(5)
Nor do the positive effects of unions stop there.(6) Efficiency and productivity in the workplace are also closely linked to high trust and trust comes best between partners who are sure they will be heard. Disorganised, atomistic workforces, where workers are disposable commodities always fearful of being sacked, whose voice is neglected or ignored, are mistrustful and low-productivity places,(7) particularly where an employer requires his or her staff to think on their own.(8)
1) Supposition.
2) Although the Thatcherites exaggerate this effect, it is fair to say that in the 1970s and 1980s, the highly unionised industries like car manufacturing fared particularly badly. Or was it that they fared no worse than anything else, but they just kicked up more of a stink? Or was it that the most highly unionised industries were the nationalised industries which had been on life support for decades and Thatcher just pulled the plug?
In the meantime, the number of vehicles manufactured in the UK has gone back up to the levels of the 1970s, but I'm not aware that today's car manufacturing workforce is highly unionised.
3) That's a tautology. Spending = output, consumption = production, and production = wages + profits, and people spend their share of the profits (wages or dividends) and businesses reinvest the profits which are not paid out as dividends (which in turn is somebody else's wages or profits).
4) Confidence is always good.
5) Yes, but that's the same tautology or chicken-and-egg problem as in (3).
6) Woah! The editorial hasn't actually mentioned any "positive effects of unions" yet.
7) Agreed. Trust is good, and good/successful employers know that. They'll do it out of self-interest, recognising that wages are not really a "cost" but a "profit share" and these businesses will thrive. Then there are some employers who treat their employees like shit, these will tend to go out of business anyway.
Nowhere does the editorial explain why trade unions need to be involved in this process. And let us not forget that nowadays, "trade unions" and "public sector employees" are largely synonymous, from BIS/ONS:
Table 1.3 presents trade union density in GB and in UK by gender for public and private sector employees from 1993 to 2010. It shows that trade union density has generally been falling in both sectors during this period.
In 2010, trade union density of public sector employees fell marginally by 0.3 percentage points to 56.3 per cent from 56.6 per cent in 2009, and down 5.0 percentage points compared with 1995. This represented a slight fall in membership of 34 thousand from 2009.
For private sector employees, 14.2 per cent were union members, a decline of 0.9 percentage points compared with 2009, and down 7.2 percentage points compared with 1995.
8) What's so terrible about "requiring... staff to think on their own"? Most jobs are pretty much pre-programmed, but everybody has to "think outside the box" occasionally. Conveyor belts can break down, bus drivers have to decide when to skip a stop (because the bus is full or because the people at the stop look a bit unsavoury), tax advisors have to decide whether it's worth unpicking and resubmitting a tax return because the client later remembers he made a £50 charitable donation.
So in summary, although historically trade unions were A Very Good Thing indeed, most of what they reasonably demanded - redundancy protection, maximum working hours, health and safety, pay equality, minimum wage etc - has been enacted in law. Maybe the law goes too far for some and not far enough for others. Personally, I think it's gone slightly too far but broadly speaking, it's "about right".
------------------------------------------------------
The reason we are in a bloody great recession has nothing to do with all employers suddenly turning into evil bastards....
[Don't forget that the supervisor is also an employee, and the supervisor's manager is an employee and so on all the way up to the Board of Directors (admittedly, most of them live in a separate universe and collect rent/ransom rather than actually working, but hey). It wasn't just the humble check-out assistants at Woolworth's, Comet and HMV who lost their jobs, everybody did. Those retailers did not go into administration because they weren't paying their employees enough money. They simply didn't have enough money to pay them their existing wages, let alone giving them all an increase.]
... and everything to do with the fall-out of the credit bubble, aka Home-Owner-Ism. It's the massive indebtedness, high rents and high taxes on earnings and output which are dragging everything down, and no amount of trade unionisation is going to change that.
Current Magazine
