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Top Economists: Politics, Not Industry Changes, Responsible for Decline in Unionism


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The upcoming issue of the New York Review of Books features a piece by Paul Krugman, who reviews the new Robert Reich book, Saving Capitalism: For the Many, Not the Few.  In analyzing and highlighting some of Reich’s arguments, Krugman pieces together the changes that have occurred in both the U.S. and global economies since Reich published his influential The Work of Nations in 1991.  Among the more interesting arguments made by Reich and expanded by Krugman is the one that rejects the “unions are obsolete due to changes in industry” position.  As both economists note, it is politics, not the economy, that has held down unions for the past few decades and helped create greater income inequality.  From the New York Review of Books:

We tend to think of the drastic decline in unions as an inevitable consequence of technological change and globalization, but one need look no further than Canada to see that this isn’t true. Once upon a time, around a third of workers in both the US and Canada were union members; today, US unionization is down to 11 percent, while it’s still 27 percent north of the border. The difference was politics: US policy turned hostile toward unions in the 1980s, while Canadian policy didn’t follow suit. And the decline in unions seems to have major impacts beyond the direct effect on members’ wages: researchers at the International Monetary Fund have found a close association between falling unionization and a rising share of income going to the top one percent, suggesting that a strong union movement helps limit the forces causing high concentration of income at the top.

Following his schema, Reich argues that unions aren’t so much a source of market power as an example of “countervailing power” (a term he borrows from John Kenneth Galbraith) that limits the depredations of monopolists and others. If unions are not subject to restrictions, they may do so by collective bargaining not only for wages but for working conditions. In any case, the causes and consequences of union decline, like the causes and consequences of rising monopoly power, are a very good illustration of the role of politics in increasing inequality.

Reich’s book is currently available in stores and online.  Krugman’s review of the book appears in December’s issue of The New York Book Review and can currently be viewed on their website.


One Comment on “Top Economists: Politics, Not Industry Changes, Responsible for Decline in Unionism”

  1. I totally agree with both Paul Krugman and Robert Reich. They know what they’re talking about when they say that the lack of many and strong unions have hurt the middle class in their struggle to earn honest, decent wages so they don’t have to rely on food stamps and other social programs to survive! Because of the take-over of our economy and everything else, by the ultra wealthy and their corporations, America has lost a very vital part of our economy: a thriving middle class who is the main driver of a healthy economy.

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