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Thursday, August 11, 2005

Unions for good and bad

When I was working on my Masters degree in management, I took a course that was basically on labor movements. I recall writing a paper about the strategic value of unions, in which I think the point was that they are useful to have around to keep managment in line. Andrew Samwick finds a good use for a union (policing condo management and a bad (boycotting Wal-Mart) here. My favorite quote:
Boycotts that don't involve coercion, libel, or slander are fine in my book. I don't think it will work, but there's nothing wrong with assembling for that purpose. Later in the article, we read:

To run the new effort, the UFCW hired a refugee from Howard Dean's political campaign, Paul Blank, who operates out of cramped offices on Washington's K Street, where the walls are covered with maps and hand-drawn anti-Wal-Mart signs. Meantime, the Service Employees International Union, another break-off union, has established a rival site, Wal-Martwatch, with support from liberal groups including the Sierra Club and Common Cause. "We have no intention of trying to organize Wal-Mart workers," says SEIU President Andrew Stern. "The purpose is to change Wal-Mart's business model -- a business model that rewards shareholders and executives and doesn't reward workers."

Economics ... professor ... meltdown. Wal-Mart's business model is to squeeze every last piece of inefficiency out of the retail supply and distribution chain. That includes not paying its workers (at all levels) any more than what is necessary to get them to perform their jobs at Wal-Mart rather than their next best opportunity. It is amazingly successful, and it does creates enormous value for Wal-Mart's customers and its shareholders, which the latter (presumably happily) share with the executives who oversee that process and all other workers who contribute to it. That's the workers' reward. As long as Wal-Mart operates within the law and without coercion, this is how the retailing business is supposed to work.(emphasis added)
Exactly right. SEIU seems to be suffering from a fundamental misconception of how free enterprise works.

Update: corrrected "condo owners" to read "condo management" which is what Dr. Samwick was referring to. My bad.

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