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January 25, 2009

Will the Decline in Union Membership be Reversed? Becker


Unions strongly supported President Obama during the presidential race, and naturally they expect some pay back. A first step would be passage of the so-called Employee Free Choice Act that was supported by both President Obama and Vice-President Biden when they were in the Senate. This act would provide, among some other things discussed by Posner, public voting by employees on whether they want to form a union. I do not like public voting since workers might then be intimidated into voting in favor (or against) a union. Secret voting gives a truer picture of worker attitudes toward unions. While public voting and other pro-union legislation would tend to increase the number of union members, the economic and social forces are aligned against any major comeback by unions.

Union membership has been declining ever since 1954 when it peaked at 28% of total employment -unions' share of nonagricultural employment was then 35 %. During the subsequent half century the union share declined more or less continuously, and now is only about 11%. A mere 7% of private sector employees are unionized. The one bright spot in the union picture is the growth in their share of government employees to about 37%. The overall decline in union membership is seen also from its sharp decline with the age of individuals: the union share of workers is highest among those aged 45-64 at almost 15%, which significantly exceeds the 11% for workers aged 25-44, and the only 5% union share for workers under age 25. Older workers are more likely to be in declining more unionized industries,while younger workers are in the newer less unionized sectors.

The development of what is essentially a non-union private sector of the American economy is due to basic economic and social forces, not to the politics of Congress and the President, for union membership declined under Democratic as well as Republican administrations. The decline of jobs in manufacturing and in heavy industries, like steel and autos, clearly contributed to the overall decline in unionization since large manufacturing companies have been more unionized than other companies. The shift of jobs to smaller service-sector firms has also had a big impact since unions have been unimportant in these firms; also significant was the deregulation of the communications, transportation and utilities industries.

The degree of unionization within each private sector has also fallen greatly, as can be seen from the rapid growth of non-union workers in the automobile sector, particularly among foreign carmakers who produce in the South. For example, membership in the United Automobile Workers union (the UAW) has declined by more than one-third since 1970 as a much larger number of cars were imported from Japan and other countries, and as foreign companies set up mainly non-union plants in the Southern part of the US.

The growth of imports and the shift of employment overseas also have adversely affected the power of unions since international competition from cheaper producers has eroded the ability of unions to raise earnings of their members. In the early days of the unionization movement, unions sometimes increased worker security by providing health and retirement benefits and payments to unemployed union members, and often enforced fair and non-discriminatory rules about discharge and promotions. Non-union companies and governments are also now offering health and retirement benefits, and they have codified their personnel relations, which also considerably reduced the advantages of being in a union.

These forces apply to other developed countries as well, and many of them, especially Anglo-Saxon countries like Great Britain and Canada, also have had large declines in union membership. The declines in union numbers is much less in some countries, like Sweden and Norway, where governments enforce large scale bargaining between unions and employer confederations. But even in these countries, globalization has severely constrained the economic power of unions.

From the 1930s to the 1960s, unions enjoyed considerable popularity in public opinion. I remember being surprised when a graduate student to hear the arguments by Milton Friedman and some of my other teachers that unions were often monopolies that benefited their members at the expense mainly of other workers. As various arguments hostile to unions became more common during the past half-century, public opinion shifted against unions. Unions are considered too selfish, sometimes corrupt, as with the well-publicized troubles of the teamsters union, and they are no longer believed considered necessary to protect employee interests.

Given this radical shift in public opinion, and the fundamental economic and social forces that contributed to the decline of unions, it is unlikely that the new Congress and new President would push for radical pro-union legislation, despite the impressive victory in the past election of the Democratic Party, and the strong financial and other support the larger unions gave to this party.

Posted by Gary Becker at 6:17 PM | Comments (68) | TrackBack (2)

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Comments

I wonder if Prof Becker is committing to Friedman's beliefs, or just tossed this one in gratuitously?

"I remember being surprised when a graduate student to hear the arguments by Milton Friedman and some of my other teachers that unions were often monopolies that benefited their members at the expense mainly of other workers."

No mention, it seems, of the individual going up against the far better organized oligopolies such as Walmart and the like, alone?

No mention of productivity gains greatly outpacing median wages that would clearly indicate some form of leveling the "playing field?"

Nothing about those barely below median HH income ($50K) earning enough to maintain even a modest living standard??

No speculation as to how our current economy can prosper as rising costs eat what little discretionary income those of median income and below once had???

"and they have codified their personnel relations, which also considerably reduced the advantages of being in a union."

........ "codified" eh? Handy!

Posted by Jack at January 25, 2009 6:38 PM | direct link

While I agree with almost everything Professor Becker says substantively, I must questions his dismissal of the public's perception of unions. Perhaps, if unions were very unpopular our current President wouldn't have pressed so hard for pro-union measures during the campaign. I strongly believe that pro-union sentiment thrives amongst politicians because it is quite easy to sell such sentiment as "looking out for working folks" or "defending the middle class." In fact, the average middle class voter would respond well to such overtures despite the negative publicity received by unions such as the Teamsters.

Posted by M at January 25, 2009 7:33 PM | direct link

Another factor that might be mentioned is the shift from labor-intensive to labor-efficient production technologies. Fewer workers are needed to produce a car in 2009 than were needed in 1970, and one might expect this to have cut into the relevance and clout of organized labor.

Posted by Goose The Tax Dog at January 25, 2009 7:43 PM | direct link

Don't mistake political pandering for an even moderately well-functioning proxy for national popularity. Political pandering is designed to do one thing (in the context of a campign): garner votes. Influence, organization, issue-salience, resources, possession of incriminating evidence: these are the things for which a politician's pandering could be seen as a functioning proxy. 'Popularity' is, at best, several degrees removed from any of those items. In short, that the campaigns make their requisite stops at the tired union headquarters throughout the country (often only days apart from their requisite stops at e.g. The Chicago Club, where they denounce 'those infernal unions!') reflects but little upon general attitudes toward unions.

Posted by Cato at January 25, 2009 8:17 PM | direct link

M points out: "Perhaps, if unions were very unpopular our current President wouldn't have pressed so hard for pro-union measures during the campaign." I'd agree.

The politics surrounding the words "strengthening the unions" and the subjects popularity is likely related more to the frustrating exhibited by the divergence between productivity and wage gains. As the graph at the bottom of "The End of the American Dream" indicates even college educated employees are not making any significant gains.

http://news.bbc.co.uk/2/hi/business/5303590.stm

For many of the reasons/excuses both Profs Becker and Posner cobble together it may not be traditional sector or company unions or even newer models such as SEIU, but one thing is sure that pinched by all that has taken place there will be tremendous political pressure to "make it right" for more employees.

If not addressed in the private sector I'd predict the problem will be addressed in the public sphere via more "socialistic" additions; we're already seeing the move for more EITC, and medical care along with dealing with pensions could easily mean that taxation would be one of the means by which falling wages and income inequality will be addressed.

I'm not much of a fan of a scenario in which wages continue to diverge from productivity followed by all sorts of patchwork such as expanding EITC, and a host of "low income" subsidies end up being the "middle class" norm while fewer and fewer very wealthy individuals pay higher and higher taxes to fund the patch job thus creating a society in which most feel they are dependent on government transfers while those at the top lament they are paying for all the transfers. We're on a very unhealthy course.

As the article concludes: "So for politicians of all parties, trying to understand how the average family can gain a greater share in future prosperity may prove one of the biggest electoral challenges of the year." Indeed, and for many years to come.

Posted by Jack at January 26, 2009 1:46 AM | direct link

It is hard to decide which is more responsible for the decline in the US manufacturing base, the unions or the management. I suspect that both were greedy and shortsighted. But I digress; We all know that advocate organizations live on and on for their own selfish reasons long after there is no need for their function. I wonder if the unions fall into that category

Posted by Jim at January 26, 2009 7:25 AM | direct link

god help us if this is passed

Posted by rpjohnston at January 26, 2009 9:29 AM | direct link

It is hard to decide which is more responsible for the decline in the US manufacturing base, the unions or the management. I suspect that both were greedy and shortsighted.

When unions go on strike, an employer is faced with the following choice: 1) pay wages that are higher than are justified by supply and demand in the labor market; 0r 2) shut down operations. If they follow course #1, that will eventually lead to course #2, anyway. So how can you call management "greedy", when that happens?

No mention, it seems, of the individual going up against the far better organized oligopolies such as Walmart and the like, alone?

The individual has a right to withhold his or her services from one employer, and go to work for another. All an employer such as WalMart can do, when it needs to fill a certain job in a certain store, is to pay enough, so that someone takes/keeps a job in their store, rather than going elsewhere. I don't see what a union can bring to that situation, that the law of supply and demand does not already provide to such an employee.

Posted by Richard at January 26, 2009 12:01 PM | direct link

Richard,

It should be very simple for management to evaluate the lives of their employees and to be concerned that they can live decent lives along with their families. To do otherwise would seem to indicate that they are trying to maximize profits at the expense of their workers. That might be good MBA stuff but it doesn't work in the long run. After all, what is "an economy" for if not to provide the people in it the opportunity to sustain themselves for the purpose of "living". When there are managers who cannot comprehend that and believe that the ultimate end is to please the board abd stockholders each month and don't have the cajones to say otherwise, you get unions who make the job much tougher and force on management what it could have done without the coercion, not to mention the government idiots getting involved. It is very difficult for the politicians to intervene if I am running my businees in an enlightened and generous way.

Posted by Jim at January 26, 2009 12:25 PM | direct link

Richard sez: "The individual has a right to withhold his or her services from one employer, and go to work for another. All an employer such as WalMart can do, when it needs to fill a certain job in a certain store, is to pay enough, so that someone takes/keeps a job in their store, rather than going elsewhere. I don't see what a union can bring to that situation, that the law of supply and demand does not already provide to such an employee."

However the individual has no effect on the market, and a closer look at "supply and demand" will show that the price of generic labor and commodities will fall below the costs of production w/o intervention. That is why all advanced nations have a minimum wage law.

In addition, it's not a "free market" a we've the Gspans and Bernankes at the big valve in DC charged with tightening it down whenever LOW end wages threaten to rise. You see CEO and upper end wages aren't seen as "inflationary" and have risen hundreds of percents while median and low wages have remained flat or fallen. Kinda sounds like the last gilded age/depression that spawned the unions?

As Jim indicates, for the most part the employees generate the wealth and should participate in the profits, and, of course, the economy can not fly on the one wing of wealth at the top.

At the bottom of this article is a graph showing the divergence of wages from productivity gains, is there anyone here who can explain why "supply and demand" has not brought wages in line with productivity? Or what will bring these lines back in line?

http://news.bbc.co.uk/2/hi/business/5303590.stm

Posted by Jack at January 26, 2009 2:24 PM | direct link

Today, Caterpillar announced it is slashing 20,000 jobs from its workforce. One wonders how many of those jobs could have been saved if, for example, Congress had passed the CAFTA, and Caterpillar was allowed access to Central American markets. Instead, union-led opposition forced the Democrats to kill passage of the bill. Speaker Pelosi tied herself into rhetorical knots attempting to rationalize such a short-sighted decision. Union power and political influence is a deadly, job-killing machine.

Posted by Greg at January 26, 2009 8:34 PM | direct link

Greg....... I too had been wondering why CAFTA was not a slam dunk but the reasons seem fairly complex and perhaps not a hit in the CAFTA nations and the resistance here not likely to be only that of "the unions".

http://lasolidarity.org/CAFTA_report/CAFTAYear2_monitoring_eng.pdf

Apparently NAFTA pushed over a million Mexican farmers off their land as our subsidized corn was substituted, then as we further subsidized putting corn into the fuel tanks of our gas guzzlers prices soared to the point that tortillas became unaffordable.

I saw a report on Haiti some time ago and while it would seem like an advantage that Tyson chicken and our, heavily subsidized, powdered milk were cheaply available but their own dairy and poultry businesses were crushed. Cheaper goods but higher unemployment. One asked "What is our niche?" There was no answer.

Ha! with the US flooded with cheaply available goods but suffering from $800 billion trade deficits, I'm wondering more than a bit about "our niche" as well.

Perhaps trade agreements, like business agreements, are better arranged bilaterally instead of as multi-nation umbrellas? Don't know........ but wondering.

Posted by Jack at January 26, 2009 10:54 PM | direct link

The Union Way Up
Monday 26 January 2009
by: Robert B. Reich, The Los Angeles Times

America and its faltering economy need unions to restore prosperity to the middle class.

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America's middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline.

But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.

It's no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn't share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.

Typical families kept buying only by going into debt. This was possible as long as the housing bubble expanded. Home-equity loans and refinancing made up for declining paychecks. But that's over. American families no longer have the purchasing power to keep the economy going. Lower paychecks, or no paychecks at all, mean fewer purchases, and fewer purchases mean fewer jobs.

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won't work because they don't permanently raise wages. Most families used the rebate last year to pay off debt - not a bad thing, but it doesn't keep the virtuous circle running.

Bank bailouts won't work either. Businesses won't borrow to expand without consumers to buy their goods and services. And Americans themselves can't borrow when they're losing their jobs and their incomes are dropping.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages - taking home $863 a week, compared with $663 for the typical nonunion worker - and are 59% more likely to have employer-provided health insurance than their nonunion counterparts.

Examples abound. In 2007, nearly 12,000 janitors in Providence, R.I., New Hampshire and Boston, represented by the Service Employees International Union, won a contract that raised their wages to $16 an hour, guaranteed more work hours and provided family health insurance. In an industry typically staffed by part-time workers with a high turnover rate, a union contract provided janitors with full-time, sustainable jobs that they could count on to raise their families' - and their communities' - standard of living.

In August, 65,000 Verizon workers, represented by the Communications Workers of America, won wage increases totaling nearly 11% and converted temporary jobs to full-time status. Not only did the settlement preserve fully paid healthcare premiums for all active and retired unionized employees, but Verizon also agreed to provide $2 million a year to fund a collaborative campaign with its unions to achieve meaningful national healthcare reform.

Although America and its economy need unions, it's become nearly impossible for employees to form one. The Hart poll I cited tells us that 57 million workers would want to be in a union if they could have one. But those who try to form a union, according to researchers at MIT, have only about a 1 in 5 chance of successfully doing so.

The reason? Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don't heed the warnings, they're fired, even though that's illegal. I saw this when I was secretary of Labor over a decade ago. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business.

This isn't right. The most important feature of the Employee Free Choice Act, which will be considered by the just-seated 111th Congress, toughens penalties against companies that violate their workers' rights. The sooner it's enacted, the better - for U.S. workers and for the U.S. economy.

The American middle class isn't looking for a bailout or a handout. Most people just want a chance to share in the success of the companies they help to prosper. Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

--------

Robert B. Reich, former U.S. secretary of Labor, is professor of public policy at UC Berkeley and the author, most recently, of "Supercapitalism."

................ahh such do economists differ!

Posted by Jack at January 27, 2009 2:06 AM | direct link

Slightly off topic but maybe not; what is lacking in our country is moral leadership in politics, the unions, management, education, religion, law, medicine, etc. No other form of leadership is worth anything especially coercive leadership. So long as the general attitude is I'll get mine before the whole thing falls apart, we will be in dire straits. Maybe Malthus's theory is correct with the added caveat that greed and stupidity should be added to his other causes of social disruption, what I like to call social evolution or devolution as you wish.

Posted by Jim at January 27, 2009 9:25 AM | direct link

Don't our largest employers just laugh if people try to start a union? I thought Walmart and McDonalds and those guys just closed any store where a union was forming using the theory that it may be illegal to fire someone for trying to form a union but it isn't illegal to fire him, all his friends and co-workers, and create a huge economic hit for his entire area, since the chain had often driven out competitors and just leaves a vacuum. Might that have anything to do with the decline of unions?

Posted by blake at January 27, 2009 2:23 PM | direct link

Blake, that's about right but there may not be a "huge economic hit" as an areas has only so much money to spend in stores and Walmart's tactics, including predatory initial pricing, drives out the local stores while pumping profits out of the region to Bentonville or some tax haven. And they pay so little that taxpayers chip in over a billion a year in low income subsidies for their workers.

McD's? the same on wages, and today we've forgotten that what they and other chains have driven out are locally owned burger joints and cafes that often served fries made on site out of real potatoes and perhaps a homemade pie to boot.

Having businesses in one's town that don't pay a living wage is not much of a boon as someone, somewhere must fill the gap, and if they put a couple kids in school it costs nearly as much as they earn, no possibility of their paying enough in property or sales taxes to fund local services.

Posted by Jack at January 27, 2009 4:31 PM | direct link

Some are arguing that unions are able to help workers obtain a high wage, and that is good because higher wages are good for the economy since higher purchasing power makes for a more vibrant economy. This seems to be a simple enough argument. Right?


The price of a commodity, including labor, is not determined by how much the seller wants, or needs, or is entitled to. It is determined by how much the buyer is willing to pay.


If I bring a box of apples to the farmers market to sell everyday, I can well do that to support myself. If I got married and have a wife and a kid to support, do you think I can just double the price of my apples?


Somehow, some commentors seem to believe that a fair wage (or a "living" wage, as it is fashionable to call) is what will provide a family of four with a comfortable home of their own, two cars, a boat, three nights at the bar and two restaurant meals a week, a ball game at the stadium every quarter, two vacations a year, and two college education for the kids, and a pension and life-time health care at retirement at 55. This is what the union should be able to get from the employer for every worker - wait a minute – all that, plus job security.


I know people who earn such a "living" wage. They are highly motivated people with exceptional skills that are indispensable to their employers. They worked 10 to12 hour days, 7 day weeks, to bring business and customers in, and take worries off the minds of their employers. They are not the average employee who clocks in at 8:59 and clocks out at 5:01 and does exactly one thing at the shop floor.

Posted by Redmund Sum at January 27, 2009 11:45 PM | direct link

The price of a commodity, including labor, is not determined by how much the seller wants, or needs, or is entitled to. It is determined by how much the buyer is willing to pay.

The way I see it, the price is determined by both of those things. How much the seller wants is measured by the supply curve. What the buyer is willing to pay is measured by the demand curve.

The intersection of those curves finds a price at which quantity demanded equals quantity supplied.

If a buyer and seller are unable to transact at that price due to, e.g., a minimum wage law, a lower quantity is demanded, than would otherwise be the case. That is how minimum wage laws increase unemployment.

However, they don't have that effect, if the minimum wage is set so low that it's below the wage level that the market would produce on its own. Reagan achieved that effect, by refusing to sign any increase in the minimum wage, and thereby letting it fall, in real terms.

Posted by Richard at January 28, 2009 6:31 AM | direct link

Hmmm all this textbook theory! But how explain this sharp divergence between wages and productivity growth? Graphed at the bottom of the article:

http://news.bbc.co.uk/2/hi/business/5303590.stm

Apparently all those goodies repped by the blue line got sold quite profitably while even college level wages remained flat and both median and high school wages fell. Had, say the min wage, at least, kept up with inflation and maintained the inflation adjusted $10 it was pre1980 it would not have made the slightest dent in the area between wages and productivity. What's wrong here guys? That even the recent trend/ratio between wages and productivity increases has broken down even for college folk who are typically most able to "sit down" and arrive at something close to the equilibrium of the "supply and demand" for skilled labor?

Nearer the bottom where labor's skills have little market power the econ texts tell us that they WILL be bid down which is why every advanced nation has a min wage law.

Redmund....... let's not change the terms too much, OK? Recently in moderate cost OK a study determined that $18 was the minimum pay that would enable one person to live an independent life in a modest apartment, skimpy allowances for clothing and food and bare bones medical care. We could quibble about whether that is enough, or that some creative soul might "get by" for $2 less, but the point is that when folks work for less, the $10 paid by one of the richest corporations on earth, or the $7 min wage, SOMEONE, somewhere, fills that gap, collectively they are called "taxpayers" via an alphabet soup of subsidies and transfer programs that, of course, distort and limit the productive power of the capitalist engine.

Redmund, as for the 7/12s you'd have enjoyed a union bumpersticker I saw in Portland ME....... Labor: The folks who brought you W/E's!

As for Reagan or anyone else' "contribution" to flattening, and even decreasing median wages, let's remember than housing maintained a fixed relationship to median wages.......... until 2001 when they took off. They WILL fall to that median wage relationship again.

Auto purchases too are a predictable fraction of median wages, and of course, what one spends in the stores now closing in record numbers is what is left of median wages which, while flat on the graph, have fallen by $5,000/yr due to soaring H/C and energy costs.

Seemingly, Reagan nor anyone else found CEO and upper echelon pay increases soaring over 400% as any impediment to sales or finding the ever elusive "equilibrium". Any such effect, apparently is much more serious at the min or entry level wage. So serious in fact that were those wages to rise at even 1/10th the rate of CEO pay that the FRB would be tightening every month!

In conclusion we'll not get "growth" or even a healthy flat economy unless median wage earners participate in the increased productivity and wealth.

Posted by Jack at January 28, 2009 5:46 PM | direct link

Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don't heed the warnings, they're fired, even though that's illegal.

I see. Employees are intimidated by big business into refusing to form a union. And so, in order to protect employees from this intimidation, the Employee Free Choice Act will eliminate the requirement for a secret ballot.

After all, the secret ballot is only a good thing when people secretly balloted vote the right way.

Posted by ad at January 29, 2009 1:54 PM | direct link

Perhaps, if unions were very unpopular our current President wouldn't have pressed so hard for pro-union measures during the campaign. I strongly believe that pro-union sentiment thrives amongst politicians because it is quite easy to sell such sentiment as "looking out for working folks" or "defending the middle class."

M, perhaps if unions were very popular the current President’s opponent would have pressed for pro-union measures during the campaign. Along with every other politician. I strongly believe that pro-union sentiment thrives amongst left-wing politicians because they contribute large amounts of money to their election campaigns, launch get-the-vote-out operations on their behalf and are popular with their other supporters and activists.

Posted by ad at January 29, 2009 2:03 PM | direct link

Unions are the greatest obstacle to the cost-effective expenditures of my hard-earned 2008 bonus here at Citigroup. Let me explain.

Unlike most of you ivory tower non-hackers, some of us are self-made men because we had the gumption to take our trust funds and make something of ourselves. As an eighth generation Yale man and a third generation Wharton School grad, I have little love for the Dirty Reds who would sap the lifeblood of what made this country great.

Do you know how many debutante balls and tedious Yale Club lunches I've had to sit through to earn my way? And these wretched upstarts think that a PUBLIC VOTE is sporting? Unions attract the losers of society -- ill-born, uneducated, garlic-smelling NEWCOMERS who want to take this country away from its rightful owners! Can you imagine???

They think they can stand toe-to-toe with Captains of Industry? Pshaw!

Unions are literally TAKING FOOD OUT OF MY FAMILY'S MOUTHS! Imported goods handled by teamsters and longshoreman costs more -- sending the price of fois gras through the deuced roof! Sic the National Guard on the ruffians, like back in the good old days!

I have half a mind to hire one of those Friedmanites at Chicago to write a fancy equation explaining the perfect rationality of market participants and how much better the market performs without interference from the IRS or the SEC.

I want my jet and I want it now!!!!!

Posted by Trickle Down Works at January 30, 2009 2:38 PM | direct link

Ad laments:

"I strongly believe that pro-union sentiment thrives amongst left-wing politicians because they contribute large amounts of money to their election campaigns, launch get-the-vote-out operations on their behalf and are popular with their other supporters and activists."

........... Ad these are definitely attributes of today's political campaigns, but sadly, since about 1980 the other side has been outspending 'em and winning the tug of war. I submit flat wages despite great gains in productivity, again, as my exhibit one.

I guess it would be OK if ALL of the productivity gains continued to accrue to the "owner class" and top 20% of "earners" however I'm VERY convinced that our current economy is demand limited/choked which is the reason pols and economists are falling all over themselves figuring out how to get a few sheckles broken loose and back in circulation again.

Graph at the bottom:

http://news.bbc.co.uk/2/hi/business/5303590.stm

BTW I wonder if those working to get their fair percentage of productivity gains ought to buy a radio network like the ultra right wing Clear Channel with 1000 stations pumping ideology 24/7?

Ha! Trickle Down! Do you happen to know what size performance bonuses the plumbers and carpenters got this year? I'm understanding the banking set carved off the same amount out of their Congressional dole as they did from traditional theft the year before.

Posted by Jack at January 30, 2009 10:10 PM | direct link

Posted by Anonymous at February 2, 2009 7:16 AM | direct link

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Posted by hosting at February 26, 2009 10:25 AM | direct link

Because the Federal Reserve under Alan Greenspan pushed interest rates too low and kept them low for too long, and because regulation of financial intermediaries had over the years dwindled and became especially lax during the Bush Administration, the bankers were allowed, and competition forced them, to take risks that could have and have had disastrous results. If the government thinks that shaming the bankers and capping their pay will prevent future banking disasters, it will be distracted from making the regulatory changes that are necessary to restore effective public supervision of a vital industry. (italics added)

the claim that competition forced the bankers to take disastrous risks is critical and raises precisely the opposite claim - that it was the absence of competition that allowed such excessive risks to develop

Posner is interpreting the state of competition that resulted from reduced regulation, in a game-theoretic context with individual actors acting rationally - one must incur excess risk to stay in business because everyone else is doing it

but this begs the question of how the same players deregulated or prevented regulation of the financial sector in the first place to allow excessive risk taking, with intended, specific, coordinated, heavily financed lobbying effort by the private sector

it was competition and a key necessary component - transparency - that was eliminated in order to create the shadow financial sector that created excessive risk

to claim that competition was still in effect after it had been stripped completely of any operational effectiveness - which would have made highly visible those excessive and dangerous risks - is to abuse the application of economic competition as something generally expected to move resources to their highest valued use - in this case as used by Posner, it moved housing resources to a near-worst use

Posted by barry payne at February 28, 2009 5:47 AM | direct link

Nice article

Posted by arhiderrr at February 28, 2009 10:26 AM | direct link

Nice article

Posted by arhiderrr at February 28, 2009 7:20 PM | direct link

Nice article

Posted by arhiderrr at March 1, 2009 3:07 AM | direct link

Nice article

Posted by arhiderrr at March 1, 2009 11:01 AM | direct link

Raivo Pommer
raimo1@hot.ee

Obama Strategie

Viele Investmentexperten machen jedoch die ersten sechs Amtswochen der Regierung Obama für die Eintrübung ihres Aktienmarktausblicks verantwortlich. „Die Latte der Erwartungen lag zu hoch“, meint der unabhängige Marktstratege Doug Peta. Zu viele Menschen hätten gehofft, dass die neue Regierung „einen Zaubertrank zur Lösung unserer Probleme zur Hand haben würde“, sagt er. „Das war unrealistisch.“

Vorschläge für ein Gesetzespaket zur Ankurbelung der Wirtschaft lösten ein Kursfeuerwerk bei Infrastrukturaktien aus. So schoss etwa die Aktie des Baumaschinenherstellers Caterpillar von den Markttiefs im November 2008 bis Anfang Januar 2009 um 39 Prozent nach oben, stürzte seitdem aber wieder um 43 Prozent abwärts.

Viele Investoren hatten gehofft, dass Obama die Lösung des größten Problems der Wirtschaft und des Aktienmarktes angehen werde: die Kreditkrise. „Dies erwies sich als falsche Hoffnung“, sagt Brian Reynolds, leitender Marktstratege bei der WJB Capital Group. Nach seiner Meinung „kann die Regierung die Krise nicht aufhalten“.

Posted by brian reynolds at March 9, 2009 11:36 AM | direct link

Да, похоже что в действительности - так оно и есть. P.S. Сайт, кстати, у вас прикольно сверстан

Posted by FigArorp at March 28, 2009 8:11 PM | direct link

Sic the National Guard on the ruffians, like back in the good old days..

Posted by hosting at April 1, 2009 1:51 AM | direct link

Да, похоже что в действительности - так оно и есть. P.S. Сайт, кстати, у вас прикольно сверстан

Posted by komik fıkralar at April 4, 2009 6:36 AM | direct link

Можно и подискутировать по этому поводу …

Posted by Kigloulk at April 6, 2009 12:32 PM | direct link

what a crazy horse...yiiihaaa

Posted by Alan Jamal at April 7, 2009 4:51 PM | direct link

Nice article

Posted by maynet at April 13, 2009 12:53 AM | direct link

mcx you

Posted by mynet sohbet at April 13, 2009 4:25 AM | direct link

i wonder if somebody understands this from the point of a philisoph?? guys ar u ki..

Posted by alan adı at April 13, 2009 12:59 PM | direct link

thx boys..i like it

Posted by alan adı at April 13, 2009 1:00 PM | direct link

Daniel, I suspect that the real problem is not the free market versus regulation. More likely it is human nature run amok. If we had decent, self- regulated folks with a conscience running the government and our oligopolies, there might be fewer indictments and bailouts.

Posted by rapics at April 17, 2009 6:46 AM | direct link

really good !

Posted by plastic injection molding at April 18, 2009 3:38 AM | direct link

eyw admin.

Posted by chat odaları at April 21, 2009 10:57 AM | direct link

thanks.

Posted by chat at April 21, 2009 10:58 AM | direct link

thanks

Posted by çet at April 21, 2009 11:02 AM | direct link

thanks abi

Posted by komik videolar at April 21, 2009 11:02 AM | direct link

thanks.

Posted by sohpet at April 21, 2009 11:04 AM | direct link

thanks.

Posted by mynet at April 21, 2009 11:04 AM | direct link

Thanks admin

Posted by sohbet odaları at April 22, 2009 8:01 PM | direct link

thanks admin!

Posted by injection molding company at April 28, 2009 3:59 AM | direct link

Posted by aod at April 29, 2009 4:04 AM | direct link

Posted by tyh at April 29, 2009 4:05 AM | direct link

Working scaffolding thanks!!!

Posted by plastic molding at May 4, 2009 3:38 AM | direct link

I highly doubt unions are going to make a comeback.

Posted by Adult Toys at May 5, 2009 11:41 PM | direct link

good topic! injection molding regards!!!

Posted by scaffolding at May 5, 2009 11:50 PM | direct link

I do not agree, but thought you loyal.

Posted by Anonymous at June 10, 2009 6:14 AM | direct link

Suportahan authors

Posted by Anonymous at June 10, 2009 6:14 AM | direct link

There is an element of truth, but you deliberately exaggerates or distorts the facts. You will benefit?

Posted by Anonymous at June 10, 2009 6:16 AM | direct link

What with you? You do not understand ...

Posted by Anonymous at June 10, 2009 6:16 AM | direct link

... or purposely dramatize ...

Posted by Anonymous at June 10, 2009 6:17 AM | direct link

I just think everything is correctly described.

Posted by Anonymous at June 10, 2009 6:20 AM | direct link

Agree!

Posted by Anonymous at June 10, 2009 6:21 AM | direct link

And now I do not agree!

Posted by Anonymous at June 10, 2009 6:21 AM | direct link

It's your right.

Posted by Anonymous at June 10, 2009 6:22 AM | direct link

I think so ...

Posted by Anonymous at June 10, 2009 6:23 AM | direct link

Everyone is entitled to their opinion - this is democracy!

Posted by Anonymous at June 10, 2009 6:25 AM | direct link

And we deserve it

Posted by Anonymous at June 10, 2009 6:26 AM | direct link

And we also deserve that right.

Posted by Anonymous at June 10, 2009 6:27 AM | direct link

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