When I talk about unions people often ask “aren’t you afraid workers will get too powerful?” and in the current context of the US it feels sort of like saying “aren’t you afraid you’ll trip and fall if you run away from this bear that’s trying to eat your face?”
It is possible to have poorly designed institutions that lead to perverse incentives, but the problem isn’t worker power itself
The nordics manage to have near universal public sector unionization without major issues because the government acts as an institutionalized voice for the public, rather than just rolling over to demands (as we’ve done in the US with police unions)
One concern is unions preserving jobs in dying industries like coal. This paper compares the US and Germany, showing that it’s actually worker strength in Germany that enabled mining unions to support phasing out coal with a just transition for workers
tandfonline.com/doi/abs/10.108… Image

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More from @jdcmedlock

5 Sep
This is an interesting paper on the implications of means-testing Norway's Universal Child Allowance
They push back on the idea that universal transfers are "wasted" on higher income recipients, by noting that progressive tax brackets share a similar structure (), and noting that the real costs are not nominal expenditures but distortions to incentives
They note that the effect of means-testing the benefit would be to shift marginal tax rates towards the middle of the income distribution (where it phases-out), while increasing the universal payment with taxes would maintain a progressive structure
Read 8 tweets
3 Sep
The extent to which we face equity-efficiency tradeoffs is really overstated. A lot of the time we're sacrificing efficiency to maintain inequality
Income inequality has a significant negative effect on the long-run level of GDP per capita in developed countries papers.ssrn.com/sol3/papers.cf…
Making wage structures more egalitarian can boost productivity at the same time
(see also: cepii.fr/PDF_PUB/wp/201…)

Read 8 tweets
16 Aug
Unions mostly get talked about as a way of helping workers, but I think their ability to solve collective action problems and improve economic output when properly structured is vastly underrated
For example, in a fluid labor market there's a disincentive to train workers, because a company's investment in training may be poached by another firm. Unions can, in collaboration with employer groups, solve this problem by coordinating training
Sectoral bargaining can also address the prisoners dilemma of wage-price inflation. Under individual bargaining, every worker has incentive to maximize wage growth, even if this leaves everyone worse off due to resulting inflation peoplespolicyproject.org/2018/05/03/cou…
Read 4 tweets
4 Aug
The main variables within the framework of sectoral bargaining are centralization vs decentralization, and coordination vs non-coordination (and every possible combination of those). These are all in contrast to fully decentralized systems with no sectoral bargaining (eg US & UK)
A fully centralized system is one in which the bargaining that happens at the national/sectoral level is binding. In decentralized systems, sectoral bargaining sets parameters which firms must follow (minimum and maximum wages for each position) or allows for selective opt outs
Coordination refers to the degree to which there is cross-sector cooperation in negotiations. For example, non-tradable sectors (like services) may agree to moderate wage growth in line with tradable sectors (mostly manufacturing) to maintain competitiveness and high employment
Read 5 tweets
28 Jul
Honestly the Tax Positivity stuff started out as a troll, but like all good troll positions I’ve come to see it as the correct position over time. The number of people who are up in arms about my tax appreciation posts sort of proves my point
Taxes are an incredible innovation that have helped solve massive collective action problems, and and made possible the advanced societies that we all reap the benefits from. Of course we should celebrate taxes!
Many of the problems with public policy in the US are rooted in an aversion to taxation. We jump through hoops and choose second-best solutions all so we can brand policies as not “taxes” (see: means-testing, the individual mandate, tax advantaged savings accounts, etc)
Read 5 tweets
22 Jul
Here’s a thread on ideological divisions within the Swedish Social Democrats in 1930s and the ideological basis of the Swedish welfare state.

Screenshots taken from Just Institutions Matter (Rothstein, 1998)
It’s been a matter of debate whether the Swedish welfare model was created in an effort to increase individual autonomy and furnish citizens with basic capabilities, or to paternalistically control citizens lives
There were strains of both sentiments among the Social Democrats in the 1930s, as the welfare state was begining to be built up. On the paternalistic side, Alva Myrdal was the most prominent voice
Read 11 tweets

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