Unions, the Rule of Law, and Political Rent Seeking by Armand Thieblot
Unions in Maturity: Institutionalized Violence, Maximized Economic Rents (c. 1940–c. 1980)
Much was expected of the labor legislation of the New Deal. A basic assumption underlying the NLRA was that any law making col- lective bargaining the national policy would, by elevating the status of workers to equal participants in a new form of industrial democ- racy and giving them an extra share of the rewards of the capitalist system (economic rents), transform the social order and bring on a new era of labor peace and prosperity (Daykin 1950). The new atti- tude and the new laws did not, however, bring industrial peace. Nor could they move the rule of law so far in the unions’ directions that unions could not find ways to transgress it. What they could do was allow some unions to achieve, and sometimes to exceed, the systemic limits of economic rent sharing.
Unions were undoubtedly grateful for their new sanctification and for the boost given to their organizing of the industrial workforce. In 1930, before the New Deal, union membership had retracted from a peak at the end of the World War to about 3 million persons—per- haps 20 percent of a workforce comprising manual laborers employed outside of agriculture. Because of the new laws and atti- tudes, by 1940 membership had greatly expanded, reaching nearly 9 million members and 45 percent of that work force, and by about 1960, 19 million and over 60 percent (Reynolds 1959). Clearly, gov- ernment’s efforts in condoning and promoting unionism had been successful. The body of labor law now included not only the NLRA and the Railway Labor Act, but also the Davis-Bacon Act, the Walsh- Healey Public Contracts Act, and the Byrnes Act (prohibiting the interstate transport of strikebreakers) among others, as well as by the regulatory output of the immense number of bureaus and agencies that the new laws spawned such as the National Labor Relations Board.
From almost a standing start at the beginning of the period, the body of labor law had expanded exponentially after the first breakthroughs and despite initial opposition to government involvement in either procedural or substantive labor issues by strict constructionists on the Supreme Court. By 1980, labor lawyers, consultants, and spe- cialists had to be conversant not only with about a dozen labor-spe- cific federal laws, but also with some 250 volumes of NLRB decisions, 87 volumes of labor cases, 22 volumes of various publica- tions of the Bureau of National Affairs dealing with labor relations, and 22 volumes of Fair Employment Practice cases (Heldman, Bennett, and Johnson 1981: 74), in addition to specialty regulations and findings relating to employees of airlines and railroads, agricul- tural workers and immigrants, pieceworkers, part-timers, appren- tices and youths, minority group members, women, and disabled persons. And this was only at the federal level: at state and local lev- els there were literally untold volumes of cases and decisions ema- nating from various labor-related boards and commissions, and there was also a virtual avalanche of materials on private and public sector arbitration decisions. Furthermore, at all levels there were executive orders and decisions and magisterial, state, district, circuit, and Supreme Court cases adjudicating labor issues and dictating often conflicting details of how employers could or could not react to unions or deal with individual workers. Labor relations had become the most highly regulated aspect of American society, and labor law, itself, had become big business.
The astonishing thing is that almost all of the overwhelming vol- ume of this material that involved procedural issues was related to facilitating how unions could get the “more” that Gompers had alluded to—how they could get access to a greater portion of the economic rents generated by the capitalist system. Only three pieces of federal legislation, the Taft-Hartley Act of 1947, the Landrum-Griffin Act of 1959, and the Hobbs Act of 1946, proposed any restraints. The first mainly blocked closed-shop unionism and added several unfair labor practices by unions to the original NLRA that only recognized “unfair labor practices” by management; the second imposed a reporting requirement on how union leaders were spending union funds; the third prohibited extortionate behav- ior by unions. Despite howls of protest by unions, neither of the first two did much to change the tenor of the law (Leef 2005: 30). The Hobbs Act, never easy to invoke against union leaders, was eviscer- ated in 1973 by the Supreme Court’s Enmons decision, which improbably, found acts of union violence and extortion to be exempt from prosecution if exercised in pursuit of a “valid union objective.”2 In less than 40 years, the rule of labor law had been utterly trans- formed. Not only had it moved from adjunct simplicity to Kabuki complexity, it had encompassed entirely new theories of empower- ment and invented property rights to jobs and work that made unions and their leaders stakeholders in employers’ economic activ- ity as a matter of government fiat, and even allowed them to conduct their own audits of it. All of this was presumed necessary to protect individual workers from the putative evils of the capitalistic oppres- sors who had given them their jobs; but unions, not individual work- ers, were given the huge leg-ups of the new laws and attitudes; many individual union members simply found themselves beholden to a different set of bosses, who took part of their pay for dues. One unin- tended consequence was that unions had to continually demonstrate their bona fides as rent seekers. They had to show their effectiveness in getting “more” for members. Like sharks, they had to keep mov-
ing forward or risk dying. Other unintended consequences set in. First, following the rule of
“what you subsidize you get more of,” unions sometimes expanded dramatically into areas where they had little justification for exis- tence, such as into government and public service employment. Second, following the rule of “be careful what you wish for,” govern- ment’s empowerment of unions’ rent seeking rendered American products overpriced compared to the rest of the world’s because of their embodied excess labor costs. Third, following Alinsky’s seventh and eighth Rules for Radicals (“a tactic that drags on too long becomes a drag,” and “keep the pressure on”), unions escalated both their demands and their tactics. History had taught them that the most aggressive unions were the most successful.
Although the act of organizing was now emphatically legal, there were still employers who resisted and employees who disdained the collective. Extra-legal violence was sometimes used to try to change their minds. It accompanied the still-illegal sit-down strikes to win recognition at Goodyear Tire and at GM in 1936 and at Ford in 1941, and violence accompanied a great many other of the strikes and con- frontations that characterized labor relations at the end of World War II, especially those in the “great strike wave” of 1946, when almost 0.5 percent of that year’s entire industrial productivity was lost. I have written elsewhere extensively of the history and purposes of union violence beyond the rule of law during this period (Thieblot and Haggard 1983; Thieblot and Northrup 1999). Among many oth- ers, the United Mine Workers provides an example.
Coal mining came out of World War II as the country’s most organized industry, employing the country’s highest-paid industrial workers. Technology was cutting into the demand for coal, however, especially for the high-priced union coal. Therefore, in 1948, the UMW set out to eliminate residual competition and establish sover- eignty over the entire eastern coal field region: any coal that was not produced by the UMW would be “scab” coal, to be repressed as nec- essary by dynamite, gunshots, and other violence. It was not enough that the UMW had monopolized labor supply in the coalfields; now the UMW had to create a monopsony for its employers as well— making them the only sellers of coal. Unionized employers needed access to greater economic rents if the union was going to be able to seize them in turn.
Thus began the UMW “organizational drive” that would continue sporadically over the next two decades. At mine after nonunion mine, the UMW established a reign of terror, turning itself into the Godzilla of the Appalachians. It engaged in mass picketing and intimidation using roving caravans, “striking” and shutting down unorganized mines, and beleaguering mine property; it attacked mine owners and operators, nonunion miners, members of non- UMW unions, independent contractors, transporters, customers, suppliers, and others by assaulting, shooting, verbally abusing or threatening them and their families, by bombing, firebombing, vandalizing, sabotaging, or jackrocking their cars, homes, and personal property; it sabotaged or destroyed mining equipment and already- mined product, flooded mines, stranded nonunion miners under- ground, and extorted employers; it attacked transporters of nonunion coal and interdicted the movement of goods throughout the region, even foodstuffs.
Although some of these actions were performed under coloration of the expanded labor laws, much of it was simple thuggery and directed not towards “more” for union members or against union employers, but “more cost” for nonunion individuals and independ- ent operators, many of whom were only peripherally related to the union or its putative opponents, and who should have been entitled to bystander status in the conflict. The drive succeeded in creating a reign of terror, and the succession of gaudy union contracts contin- ued. It was a Pyrrhic victory, however, because the laws of econom- ics prevailed. The UMW had essentially wrung all the economic rent out of its employers that could be had, so that union employers, even with the UMW’s help, could produce no more of it to share. Union employers began to disappear, taking union jobs with them. By the end of the 1970s, UMW membership was down to a small fraction of what it had been, and the union had run out of amenable targets to organize or viable demands that could still be satisfied by their existing employers.
Armand Thieblot
Unions, the Rule of Law, and Political Rent Seeking
(PDF, 22 pp., 191Kb)
An Interdisciplinary Journal of Public Policy Analysis
Volume 30 Number 1, Winter 2010
http://www.cato.org/pubs/journal/currentissue.html
Unions in Maturity: Institutionalized Violence, Maximized Economic Rents (c. 1940–c. 1980)
Much was expected of the labor legislation of the New Deal. A basic assumption underlying the NLRA was that any law making col- lective bargaining the national policy would, by elevating the status of workers to equal participants in a new form of industrial democ- racy and giving them an extra share of the rewards of the capitalist system (economic rents), transform the social order and bring on a new era of labor peace and prosperity (Daykin 1950). The new atti- tude and the new laws did not, however, bring industrial peace. Nor could they move the rule of law so far in the unions’ directions that unions could not find ways to transgress it. What they could do was allow some unions to achieve, and sometimes to exceed, the systemic limits of economic rent sharing.
Unions were undoubtedly grateful for their new sanctification and for the boost given to their organizing of the industrial workforce. In 1930, before the New Deal, union membership had retracted from a peak at the end of the World War to about 3 million persons—per- haps 20 percent of a workforce comprising manual laborers employed outside of agriculture. Because of the new laws and atti- tudes, by 1940 membership had greatly expanded, reaching nearly 9 million members and 45 percent of that work force, and by about 1960, 19 million and over 60 percent (Reynolds 1959). Clearly, gov- ernment’s efforts in condoning and promoting unionism had been successful. The body of labor law now included not only the NLRA and the Railway Labor Act, but also the Davis-Bacon Act, the Walsh- Healey Public Contracts Act, and the Byrnes Act (prohibiting the interstate transport of strikebreakers) among others, as well as by the regulatory output of the immense number of bureaus and agencies that the new laws spawned such as the National Labor Relations Board.
From almost a standing start at the beginning of the period, the body of labor law had expanded exponentially after the first breakthroughs and despite initial opposition to government involvement in either procedural or substantive labor issues by strict constructionists on the Supreme Court. By 1980, labor lawyers, consultants, and spe- cialists had to be conversant not only with about a dozen labor-spe- cific federal laws, but also with some 250 volumes of NLRB decisions, 87 volumes of labor cases, 22 volumes of various publica- tions of the Bureau of National Affairs dealing with labor relations, and 22 volumes of Fair Employment Practice cases (Heldman, Bennett, and Johnson 1981: 74), in addition to specialty regulations and findings relating to employees of airlines and railroads, agricul- tural workers and immigrants, pieceworkers, part-timers, appren- tices and youths, minority group members, women, and disabled persons. And this was only at the federal level: at state and local lev- els there were literally untold volumes of cases and decisions ema- nating from various labor-related boards and commissions, and there was also a virtual avalanche of materials on private and public sector arbitration decisions. Furthermore, at all levels there were executive orders and decisions and magisterial, state, district, circuit, and Supreme Court cases adjudicating labor issues and dictating often conflicting details of how employers could or could not react to unions or deal with individual workers. Labor relations had become the most highly regulated aspect of American society, and labor law, itself, had become big business.
The astonishing thing is that almost all of the overwhelming vol- ume of this material that involved procedural issues was related to facilitating how unions could get the “more” that Gompers had alluded to—how they could get access to a greater portion of the economic rents generated by the capitalist system. Only three pieces of federal legislation, the Taft-Hartley Act of 1947, the Landrum-Griffin Act of 1959, and the Hobbs Act of 1946, proposed any restraints. The first mainly blocked closed-shop unionism and added several unfair labor practices by unions to the original NLRA that only recognized “unfair labor practices” by management; the second imposed a reporting requirement on how union leaders were spending union funds; the third prohibited extortionate behav- ior by unions. Despite howls of protest by unions, neither of the first two did much to change the tenor of the law (Leef 2005: 30). The Hobbs Act, never easy to invoke against union leaders, was eviscer- ated in 1973 by the Supreme Court’s Enmons decision, which improbably, found acts of union violence and extortion to be exempt from prosecution if exercised in pursuit of a “valid union objective.”2 In less than 40 years, the rule of labor law had been utterly trans- formed. Not only had it moved from adjunct simplicity to Kabuki complexity, it had encompassed entirely new theories of empower- ment and invented property rights to jobs and work that made unions and their leaders stakeholders in employers’ economic activ- ity as a matter of government fiat, and even allowed them to conduct their own audits of it. All of this was presumed necessary to protect individual workers from the putative evils of the capitalistic oppres- sors who had given them their jobs; but unions, not individual work- ers, were given the huge leg-ups of the new laws and attitudes; many individual union members simply found themselves beholden to a different set of bosses, who took part of their pay for dues. One unin- tended consequence was that unions had to continually demonstrate their bona fides as rent seekers. They had to show their effectiveness in getting “more” for members. Like sharks, they had to keep mov-
ing forward or risk dying. Other unintended consequences set in. First, following the rule of
“what you subsidize you get more of,” unions sometimes expanded dramatically into areas where they had little justification for exis- tence, such as into government and public service employment. Second, following the rule of “be careful what you wish for,” govern- ment’s empowerment of unions’ rent seeking rendered American products overpriced compared to the rest of the world’s because of their embodied excess labor costs. Third, following Alinsky’s seventh and eighth Rules for Radicals (“a tactic that drags on too long becomes a drag,” and “keep the pressure on”), unions escalated both their demands and their tactics. History had taught them that the most aggressive unions were the most successful.
Although the act of organizing was now emphatically legal, there were still employers who resisted and employees who disdained the collective. Extra-legal violence was sometimes used to try to change their minds. It accompanied the still-illegal sit-down strikes to win recognition at Goodyear Tire and at GM in 1936 and at Ford in 1941, and violence accompanied a great many other of the strikes and con- frontations that characterized labor relations at the end of World War II, especially those in the “great strike wave” of 1946, when almost 0.5 percent of that year’s entire industrial productivity was lost. I have written elsewhere extensively of the history and purposes of union violence beyond the rule of law during this period (Thieblot and Haggard 1983; Thieblot and Northrup 1999). Among many oth- ers, the United Mine Workers provides an example.
Coal mining came out of World War II as the country’s most organized industry, employing the country’s highest-paid industrial workers. Technology was cutting into the demand for coal, however, especially for the high-priced union coal. Therefore, in 1948, the UMW set out to eliminate residual competition and establish sover- eignty over the entire eastern coal field region: any coal that was not produced by the UMW would be “scab” coal, to be repressed as nec- essary by dynamite, gunshots, and other violence. It was not enough that the UMW had monopolized labor supply in the coalfields; now the UMW had to create a monopsony for its employers as well— making them the only sellers of coal. Unionized employers needed access to greater economic rents if the union was going to be able to seize them in turn.
Thus began the UMW “organizational drive” that would continue sporadically over the next two decades. At mine after nonunion mine, the UMW established a reign of terror, turning itself into the Godzilla of the Appalachians. It engaged in mass picketing and intimidation using roving caravans, “striking” and shutting down unorganized mines, and beleaguering mine property; it attacked mine owners and operators, nonunion miners, members of non- UMW unions, independent contractors, transporters, customers, suppliers, and others by assaulting, shooting, verbally abusing or threatening them and their families, by bombing, firebombing, vandalizing, sabotaging, or jackrocking their cars, homes, and personal property; it sabotaged or destroyed mining equipment and already- mined product, flooded mines, stranded nonunion miners under- ground, and extorted employers; it attacked transporters of nonunion coal and interdicted the movement of goods throughout the region, even foodstuffs.
Although some of these actions were performed under coloration of the expanded labor laws, much of it was simple thuggery and directed not towards “more” for union members or against union employers, but “more cost” for nonunion individuals and independ- ent operators, many of whom were only peripherally related to the union or its putative opponents, and who should have been entitled to bystander status in the conflict. The drive succeeded in creating a reign of terror, and the succession of gaudy union contracts contin- ued. It was a Pyrrhic victory, however, because the laws of econom- ics prevailed. The UMW had essentially wrung all the economic rent out of its employers that could be had, so that union employers, even with the UMW’s help, could produce no more of it to share. Union employers began to disappear, taking union jobs with them. By the end of the 1970s, UMW membership was down to a small fraction of what it had been, and the union had run out of amenable targets to organize or viable demands that could still be satisfied by their existing employers.
Armand Thieblot
Unions, the Rule of Law, and Political Rent Seeking
(PDF, 22 pp., 191Kb)
 |
Volume 30 Number 1, Winter 2010
http://www.cato.org/pubs/journal/currentissue.html
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