Thursday, February 24, 2011

Bonus Argument for Strong Unions

Ezra Klein's excellent interview with Jamie Galbraith covers the importance of having organizations representing labor as part of the national political-economic conversation as a "countervailing force". This, in and of itself, is a strong argument from equity, but there's also an embedded arguement from efficiency and competitiveness in the middle of the interview that I find even more interesting:
those countries which have high union coverage manage to stay in the forefront of competitiveness in world industry. If you ask why is it that the Scandinavian countries did so well, it’s not because Sweden discovered oil -- that was Norway. Rather, having to pay decently high wages means businesses have to stay on the front of the technological curve.
"Restrictive" policies on certain business strategies make alternative strategies more likely, but may also lead to gaming of the system. What would be the effect, though, of gradually improving workers' rights in this country? Would businesses become more technologically advanced, or would they just move away entirely?

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