I wrote the essay below in response to another titled “Unions are one of our key tumours in this cancerous economy,” written by Mark Borkowski, owner of Mercantile Mergers and Acquisitions Corp. of Toronto, Canada.
His essay, which was posted on the LinkedIn Rotman Alumni Network on Jan 3, 2010, is a general argument that unions, by driving up wages, are a major cause of business failures and plant closings in the current economy because “[t]he increased costs of labour in North America will make it more expensive to produce goods than almost anywhere else in the world.” It is for this reason, asserts Mr. Borkowski, that we should prepare ourselves for more plant closings.
I agree with Mr. Borkowski that unions often act contrary to their economic self-interests. And it is that observation that enticed me write my supportive response.
Ideology, Not Wages, Make Unionized Workplaces Uncompetitive
Posted by Barry Linetsky, January 6, 2010, on LinkedIn Rotman Alumni Network. © 2010, Barry L. Linetsky, All Rights Reserved.
Greed is a human condition. It applies as much to ill-informed unionists as it does ill-informed executives.
Many unions, but not all, and not unions per-se, are a major problem, not because they are unions, but because they attract and operate with an underlying philosophical commitment to a Marxist ideology of class struggle. To this extent they are at war with the process of wealth creation which is at the base of Capitalism, even though they want the benefits. Earning the benefits, though, requires a system of non-coercive cooperation, which is the social-political system of capitalism.
When I was a child, I recall union advertisements that unionized workers did better work due to training and pride. This may have been true about the union movement at one time. I don't claim to know if it was ever true about the union movement in general, having not studied it. But it makes some economic sense.
If you can gather like-minded people who join together voluntarily to engage in self-actualization and workplace excellence as a means to protect their jobs, then all the power to them. But at the base of this is an economic argument that workplace excellence and cooperation creates additional efficiencies and market competitiveness that justify higher wages. If a union can voluntarily organize and motivate employees to achieve and sustain excellence as defined by market competitiveness and customer perceived quality, then they serve their members and their families, the communities they work in, and themselves. But this requires a philosophical mindset and paradigm model of cooperation, not class warfare and envy.
The flip side to this from management's perspective is the general and erroneous - yet common - conclusion drawn by Mr. Borkowski that businesses move their locations because it's "cheaper to get it somewhere else with non-union labour." This is not a sound business reason for rejecting a union.
If the success of the business really rests on the costs of labour - which it might in a labour-intensive commodity business - then this is likely the result of management failure over a number of years to recognize and deal with a failed business model, which, if parts of the business are unionized, both the company and the union are likely to be the culprits. Where unions make it their mandate to prevent adaptations to market conditions, then clearly they must shoulder the blame for increasing uncompetitiveness that culminates in a crisis around wages.
The proper focus for both unions and management is economic value added by the labour relative to competitors, not wages per se. I may be accused of being naive, but there is no inherently necessary reason why management and workers can't cooperate to combine economic and human resources to build and sustain great businesses over time. At its root, any such constraints are primarily philosophical and ideological, not economic. That individuals think that their interests are best served by unions today given the antagonism of the underlying social philosophy of the movement to social benefits of voluntary cooperation, explains why they join unions. In many cases business owners and managers operating and struggling under unsustainable business models engage in poor employee business practices to try to meet their own financial obligations, thereby attracting ill-will and retaliation through union organizing. Yes, those people should seek other jobs rather than seek coercive retaliation through unionization, but the law allows otherwise, and humans don't always act wisely.
IMO, it is ideology, not wages, that is the primary cause of the clash between businesses and unions. Unions would better serve their members by aligning themselves with a market-driven, cooperative perspective to serving their members. The future success and social viability of unions will depend on it. Kudos to those 'progressive' unions that already do.
Barry Linetsky
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