Labor Roundtable: Thoughts on a Libertarian-Labor Alliance

Freddie offers a bold plan:

I think I can identify an interested party who, theoretically, could help to restore labor power, American unions, and the counterbalancing effects of collective bargaining and worker strikes and protests: libertarians. […]

Most libertarians will at least concede the right to unionize in an abstract sense, although I’m sorry to say that this seems to be fading with the new cohort of young libertarians these days. The right to organize with other workers stems from basic human and civil rights: the right to free speech in advocating a union, the right to assemble with your fellow workers, your right to free association in forming whatever kind of affinity group you choose, and the right to control your own labor power and sell it however you choose. It’s hard to straightfacedly endorse, for example, the rights of corporate personhood while denying the rights of workers to band together in any way they see fit.

So far, so good! I would only quibble that corporate personhood isn’t confined to for-profit limited-liability corporations. Unions have it too, as indeed they should. Corporate personhood is really just legal shorthand for saying that individuals don’t shed any of their other rights when they exercise the right to associate. And, of course, they shouldn’t.

But how exactly does being pro-union work out for libertarians? Freddie continues:

For those who fear government growth, the questions are how fast it will grow, what legitimate purposes the growth will serve, and what counterbalancing forces can be shored up against government. My contention is that unionism represents an alternative to government social programs that can slow the growth of government and act as a third force to counterbalance both government and the corporation.

Whatever your particular feelings about government social programs, it’s to the benefit of the conversation if we acknowledge that they exist out of real need. That’s not a question begging statement; I’m not assuming that the fact that there is a need means that it is appropriate or beneficial for government to fill it. But I am saying that the safety net expands because people have needs that are not being met. If I’m right that a renewed, reinvigorated American labor movement could provide its members with the economic security and social goods that are provided, piecemeal and unequally, by the American social state. If you simply see the world in a reductive way, then you might not care to examine the difference– government and unions going in the file “stuff lefties like.” But actually, the differences are considerable. A union provides more for its members by capturing value from corporations, not from taxpayers.

The social safety net certainly exists out of real need, at least in part. Yes, there is abuse. Yes, there is fraud. Yes, there is a culture of dependency. Strip them all away, and there’s still a core of genuine need.

Could labor unions fill a lot of it? Yes! In fact, they used to, and they probably could again. Could they do it better than the government? Quite possibly. But would progressives let them? I have my doubts.

After the rise of unions but before the completion of the modern welfare state (think 1910s through mid-1960s), unions were popular among the working class in part because they actually did perform many of the very functions that the welfare state would later take on. Above all, unions made sure that ordinary workers maintained a reasonable standard of living given the economic conditions of the day. In this, they made having a welfare state somewhat less necessary, ceteris paribus.[1]

They went further, too. They pooled insurance. They offered career counseling. They opened networks of formal and less-formal charity. In all of these, unions were human-scaled, community-oriented, and insisted on responsibility, dignity, hard work, and genuine support for the downtrodden. After you got back on your feet, you worked extra hard to help the next guy.

Now, unions weren’t without their downsides. Some were blatantly racist. Others were corrupt in other ways. But for a while, they helped fill a very important role, and most often they did it with honesty, courage, and competence.

Where unions weren’t sufficient, private fraternal and mutual aid societies stepped in. As historian David Beito explains:

Mutual aid was one of the cornerstones of social welfare in the United States until the early 20th century. The fraternal society was a leading example. The statistical record of fraternalism was impressive. A conservative estimate is that one-third of adult American males belonged to lodges in 1910. A fraternal analogue existed for virtually every major service of the modern welfare state including orphanages, hospitals, job exchanges, homes for the elderly, and scholarship programs.

But societies also gave benefits that were much less quantifiable. By joining a lodge, an initiate adopted, at least implicitly, a set of survival values.

Societies dedicated themselves to the advancement of mutualism, self-reliance, business training, thrift, leadership skills, self-government, self-control, and good moral character. These values, which can fit under the rubric of social capital, reflected a kind of fraternal consensus that cut across such seemingly intractable divisions as race, sex, and income.

But a funny thing happened. Progressives — not libertarians or conservatives — gradually created a network of means-tested state and federal programs for the poor. As the welfare state rose, the Elks, the Masons, the Shriners, the Moose, and all the others declined.[2] The welfare state crowded them out, because it’s hard to compete when the government gives handouts — and when it taxes you whether or not you give privately. Beito writes:

The first three decades of the 20th century brought a rapid and unprecedented expansion in the government’s social welfare role. The two leading sources of growth were mothers’ pensions and workers’ compensation. In 1910, no state had either program; by 1931, both were nearly universal. During the 1920s, the number of individuals on the mothers’ pension rolls almost doubled.

Certainly, there were more than a few leaders of fraternal societies who predicted that this rising welfare state would eventually undermine mutual aid. As the magazine of the Fraternal Order of Eagles put in 1915, “the State is doing or planning to do for the wage-earner what our Order was a pioneer in doing eighteen years ago. All this is lessening the popular appeal of our beneficial features. With that appeal weakened or gone, we shall have lost a strong argument for joining the Order; for no fraternity can depend entirely on its recreational features to attract members.”

It seems reasonable to speculate that unions suffered as the welfare state grew, although the unions’ decline came a good deal later, and historians haven’t yet done the real documentary work here. (Beito is something of a pathbreaker.) Still, I’m pretty sure the case can be made, even if progressives sincerely intended welfare and unions to work side by side. Which clearly they did.

While I know this may sound very speculative to some, I’d ask you to consider Wal-Mart. Two standard progressive complaints about Wal-Mart are that it is both successfully anti-union and cleverly exploiting the welfare state to pay its workers less, while taxpayers pick up the tab.

This, I submit, is crowd-out in action. Progressives have been complaining about it all along. To them, Wal-Mart takes all of the blame, and the welfare state takes none. To me, I find some justice to the complaint against Wal-Mart here. But if it weren’t Wal-Mart, it would be some other retailer taking advantage of the very same incentives, and those incentives come from our welfare system. The message to progressives? Incentives matter, so you need to give some hard thought to just what incentives the welfare state creates. For individuals. For corporations. Even for unions.

This is not to say that I expect you to sign up for abolishing the welfare state entirely. I don’t expect it. Still, there’s room for improvement even if we don’t agree. It would be nice to see that improvement, wouldn’t it?[3]

Mutual aid worked psychological magic — it sublimated the shame of taking charity, turning it into an ongoing commitment to the community. Mutual aid took some of the stigma out of getting help and encouraged bonds that transcended social class. There is good reason to think that labor unions were similar. Say whatever else you will about the welfare state, but in these respects, it seems bad in all the areas where these other institutions were good.

Freddie is also right that income inequality has grown significantly in recent years. But it’s far from clear that labor unions can correct the specific type of inequality that we face today. CEO compensation is huge, yes, but the super-rich are not merely or even primarily CEOs these days. Instead, they’re generally in finance. How do you go on strike against an investment banker? Who exactly is he oppressing? Against the management of a steel mill, a union would be the right tool for the job. Here? I’m not convinced.

I’m not denying that finance is capturing a larger and larger share of wealth. It certainly appears to be. The problem is that financiers don’t face a discrete class of disfavored people who can easily self-identify and organize to demand, through some workable mechanism, their fair share of the pie.[4]

As in public choice theory, we seem to be facing a story of concentrated benefits and diffuse costs. The small, well-organized minority who gets a big benefit (financiers) will do whatever it takes to keep it. They’d certainly know how to. The large, poorly organized majority who loses only a pittance (everyone else) isn’t likely to bother regaining it, and even if they tried, how do you go on strike against financiers? Stop paying your mortgage?

Taxes, of course, suggest themselves. Perhaps higher marginal tax rates are in our future, but in the near future, at least, they clearly aren’t. What else is there? Because it seems unwise to me to make our government depend even more on the maintenance of a setup we universally agree has become skewed and unfair. The first-best solution is to fix the system, not to make our government depend on it staying broken.

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[1] Yes, this is a really big ceteris. I know a post like this is going to bring out all the four-legs-good-two-legs-bad instincts on every side of the debate, so I’ll try to be clear: I am not pining for the early twentieth century, for its standard of living, for its labor laws, for its general lack of social insurance, or for anything else about the era. All I’m saying is that in one very, very narrow way, they had something we don’t, and, in fact, it’s something that progressives say that they want: stronger unions that delivered more significant benefits to their members.

[2] My grandpa was a member of the Odd Fellows, a popular fraternal organization that gives some idea of how useful these institutions were. You could even succeed literally with an odd name.

[3] We should also consider that while stronger unions are certainly an “alternative” to bigger government, it’s also possible that, when faced with a choice, the polity always picks the latter anyway, all across the social classes, bad consequences notwithstanding. Who really wants their welfare with strings attached? In the short term, no one does. Corporations don’t want more socially united workers. Recipients just don’t want the strings. Politicians want to say that they’re doing something good, at least in the short term. The logic of collective choice here is pretty depressing.

[4] Those who broke the law, of course, go to prison. No excuses for them. Again, preemption against the 4LG2LB contingent.