Thread by @Noahpinion

Howdy, folks! Today's @bopinion post is about labor unions, and why we should try to bring them back.

bloomberg.com/view/articles/…

Mainstream economics, especially what you'll read in Mankiw's textbook, takes a dim view of unions.

It views them as cartels that drive up unemployment.

But is that really accurate??

Not all economists are anti-union. Even back in the late 70s, as Milton Friedmanism was sweeping the econ world, a few economists were arguing that unions had benefits that were overlooked.

Unions, those economists argued, reduced wage inequality, reduced racial wage gaps (!), benefited low-skilled workers the most, decreased turnover, and had positive political benefits for the entire working class.

Now, a few rebellions economists are again daring to question the anti-union consensus:

nber.org/papers/w24587

Again, they find that during the golden age of unions, 1940-1970, unions reduced inequality, reduced racial wage gaps, and reduced skills gaps.

But since then, less-skilled workers have been leaving unions, while mostly skilled workers remain in them.

For some reason, unions have lost their power to raise wages: academic.oup.com/qje/article-ab…

The union wage premium is now mainly due to skills composition; union workers are now just higher-skilled workers, in general, who command higher market wages.

Why did unions lose their size and power?

Anti-union laws and anti-union regulators might be to blame.

But the American type of unions (focused on raising wages instead of preserving competitiveness) might also have simply collapsed in the face of global competition.

We need to try implementing pro-union policies again.

If globalization is the reason unions collapsed, this won't work.

But it MIGHT work. And if it DOES work, unions could be just the medicine our economy needs right now.

So we should try it!!!

Final note: Free-marketers need to rethink their view of unions.

There's a good chance that unions were like a vaccine that prevented rich countries from going communist.

And with support for capitalism in free fall, it might be time for a booster shot.

(end)