Simple, because a corporation has market-driven incentives, such as the profit incentive, which force it to perform at least some sort of useful task. (This may not always be a very good incentive, and there may be other bad incentives too, but there's generally SOME impetus which forces a corporation to perform SOME actions which are generally useful to the market at large).
The only incentive unions have, as far as I can tell, is to gain power &milk as many fees as possible. Sure, this involves maximizing membership and wages, but it doesn't necessarily require any useful progress to be made. A union can act as a protection racket, holding the strike gun to employers' heads as a means to increase their power &income without necessarily increasing the quality of work or involving any kind of fair balance wrt. their members' treatment.
That isn't to say that unions DON'T do anything good.. without them employers do abuse employees, and I buy many of the "unions are good" arguments. But I think they fundamentally lack many useful market incentives (just like governments) which tend to drive towards efficiency.
I don't know if that was 100 words or less.. but maybe that helps? Oh and if someone can think of an incentive a union has to drive overall productivity/efficiency that I've missed, please let me know.. I could simply be unaware of it.
(My distaste for unions mainly derives from situations like the US automobile manufacturers are in, where the unions have effectively strangled the businesses to death and will soon have succeeded in making themselves obsolete, and the people they're supposed to protect jobless. But what do I know, maybe most unions aren't quite so bad as those...)
Since when do unions NOT serve a function in the market? They've been around for thousands of years in the form of trade guilds and such. The difference with the corporation is that it's a much more modern invention--an interesting and mostly-successful experiment in public policy by the government.
Unions serve the economic interests of their members. Corporations serve the economic interests of their shareholders. What's the difference?
And if unions exist only to "gain power &milk as many fees as possible," how is that different from corporations, which exist only to gain power and milk as much profit as possible for their shareholders? Why is that behavior inherently good somehow, but unions doing the same thing is inherently bad?
I can tell you what incentive unions have to innovate and drive up efficiency and productivity: the worst of them fail to do that, and, just like a corporation that fails to do that, the end result is usually economically damaging to the union. The employers start being less and less successful, and the result is layoffs, bankruptcies, and more.
Still, I don't buy that this is the norm. I have been hearing since the 1970s that the United Auto Workers is destroying the U.S. automotive industry. Seriously, I don't remember a time when I WASN'T hearing that. Yet the auto companies are still in business here, and nowadays companies like Toyota and Honda manufacture many cars here.
Of course, those companies are not unionized, and are slightly more profitable. Yet they have the constant pressure of knowing that if they start treating their workers like crap, their workers will have the right to unionize. That's a useful incentive to keep treating employees right.
This is why I say unions need to modernize and change their attitudes and strategies.
Corporations don't have the ability to force all of your vendors to belong to them if 50%+1 of the vendors vote that way. Unions can legally enforce membership.
Unions are basically corporations + that power, therefore they're more statist.
Guilds can be similar, because in order to take part in a trade you must belong to that guild, whereas there's never really been a requirement to form a corporation to do business, though of course corporations are usually more advantageous to the business person. Hence guilds are corporations + that power, and are therefore more statist.
Your question is a bit too complicated for 100 or fewer words. I also suggest narrowing it a bit. Are we talking about corporations historically, or the modern corporation? Unions historically, or the modern union?
This is an important distinction, particularly for corporations. If you look at something like the Dutch East India Company, for example, you're looking at a corporation that was established with a state-sanctioned monopoly (though of limited duration) to carry out a prescribed economic activity.
That corporation is a different animal from, say, Standard Oil, which began as a partnership and eventually established a dominant market position through ruthless tactics.
Perhaps a seasoned antitrust attorney could enlighten us?
Unions, guilds, and corporations are all fine and dandy in my eyes unless the government grants them coercive powers.
Under current law, use of intimidation by unions during strikes is tolerated, and unionized businesses are forbidden to refuse to deal with unions and union members. This is bad.
Medieval guilds routinely used violence against non-guild members performing guild trades. This was very bad.
Modern guilds (AMA, etc) are often granted regulatory powers by the government. The utility of this is debatable, but it does make them statist.
And if unions exist only to "gain power &milk as many fees as possible," how is that different from corporations, which exist only to gain power and milk as much profit as possible for their shareholders?
Exactly, but my point is, in doing the latter, corporations tend to do something useful - that is, in order to maximize profits, typically they must provide products and/or services that people need, otherwise they wouldn't make that profit. Unless they are a monopoly (which is bad), they have to compete with other corporations also trying to maximize profit, which tends to mean they have to provide more &better goods and services.
Unions, on the other hand.. is there any competition? What positive effects occur when they attempt to maximize their membership and the amount of dues they are raking in? In a sense I guess what I'm saying is that the incentives of a corporation tend to lead to a better situation for the market, whereas the incentives of a union tend to lead to a better situation for their members (which may not actually be much better) but worse for just about everyone else (more expensive products, which aren't necessarily any better, and may in fact be worse, etc.)
So I guess in a sense it's the side-effects of the incentives that differ - one is more broadly positive than the other.
Of course, those companies are not unionized, and are slightly more profitable. Yet they have the constant pressure of knowing that if they start treating their workers like crap, their workers will have the right to unionize. That's a useful incentive to keep treating employees right.
Yes, interesting that the best effect that the unions seem to have, along the lines that were originally intended by their creation, is for those companies that are non-union.
No, US auto companies aren't out of business yet, but they can't compete on the global marketplace (yes, including Japanese companies that produce cars using non-union labor in the US). I own an American car and it's not too bad, but I wouldn't buy another one. They just don't make cars that people want. They're low-tech compared to Japanese and European cars, mostly in terms of engine and power train as well as suspension, and as such they are inefficient fuel-wise, handle badly, and are often ugly and poorly put together. I KNOW Americans can build good products. Other US-made products I have bought are good. Why is it so hard for auto manufacturers to make cars with a really wide appeal like, say, Toyota?
Maybe it isn't the unions, maybe it's the idiot executives of those companies, I don't know. But it's awfully suspicious.
It depends upon what unions are actually allowed to do as opposed to what they can legally do.
The union premise must be to somehow improve the workforce performance. Otherwise why would an employer deal with a union?
Corporations are constrained legally. They cannot use force or sabotage to hinder competitors. They cannot intimidate or seize property. They cannot withhold product solely to damage others.
When unions do those things the law seldom acts. Usually only outright physical assault or major property damage endangering life draws the attention of authorities.
Guilds are different. They promote their product as greatly superior. Often they insist it is to be learned only by long ritual. They ask the law to stop non-members - usually by arguing that only the guild can judge quality and prevent dangerous outcomes.
Others have touched on it. Unions can say "You must join, and pay us, or you can't work here." If a corporation did, or were even able to do, anything equivalent to this the government would come down on them hard. Yet not only do unions regularly do this, and not only doesn't the government stop them, the government actually enables them; it's almost the raison d'etre of union actually... if I argue for taking away this power, I'm considered to be "against unions" right?
It's certainly arguable that this state empowerment of unions (in a true free market people could still join together to form unions, they just wouldn't be able to do most of the things people seem to think unions should be allowed to do) is a necessary counterbalance against the power of corporations. Even if so, however, the powers vested in unions by the state are typically greater and of a different sort than the powers vested in corporations by the state (to the extent that there even are any). Let's just say, however statist they might otherwise be, I've never known a corporation to be able to coerce me into giving them money.
If a corporation decides to withdraw its product from me as a current customer, I'm not required to negotiate with it, rather than go find another supplier. Unions can so require, by law.
A corporation cannot ban other companies from entering its business. Guilds, such as the AMA or Bar Associations, can, by law.
Modern corporations, other than utilities, aren't endowed by law with monopolies over their businesses. Both guilds and unions are.
The main benefit of the corporation is limited liability. Try suing a union or a guild and getting into the pockets of the members. No difference.
The toyota and honda plants in the US are not unionized, and are located in states where unions are weak.
The main reason that modern US labor unions are so evil is because they got so completely in bed with organized crime back in the day that it is impossible to tell where one starts and the other ends.
2.25.2007 12:51am
Commenting on Dean's World is a privilege, not a right. Dean is your host, you are his guest, and you should behave in that fashion. Dean is not your babysitter, nor is he your punching bag. Please remember this. In general, you are free to disagree with anyone on any subject you wish, but abusive behavior will not be tolerated.
Of course we all lose our tempers now and then. Dean freely admits to being imperfect in this regard, which is why regulars to this establishment will generally be cut more slack than people who we don't know very well.
Still: behave like an adult, or go find somewhere else to play. Thanks.
The only incentive unions have, as far as I can tell, is to gain power &milk as many fees as possible. Sure, this involves maximizing membership and wages, but it doesn't necessarily require any useful progress to be made. A union can act as a protection racket, holding the strike gun to employers' heads as a means to increase their power &income without necessarily increasing the quality of work or involving any kind of fair balance wrt. their members' treatment.
That isn't to say that unions DON'T do anything good.. without them employers do abuse employees, and I buy many of the "unions are good" arguments. But I think they fundamentally lack many useful market incentives (just like governments) which tend to drive towards efficiency.
I don't know if that was 100 words or less.. but maybe that helps? Oh and if someone can think of an incentive a union has to drive overall productivity/efficiency that I've missed, please let me know.. I could simply be unaware of it.
(My distaste for unions mainly derives from situations like the US automobile manufacturers are in, where the unions have effectively strangled the businesses to death and will soon have succeeded in making themselves obsolete, and the people they're supposed to protect jobless. But what do I know, maybe most unions aren't quite so bad as those...)
Unions serve the economic interests of their members. Corporations serve the economic interests of their shareholders. What's the difference?
And if unions exist only to "gain power &milk as many fees as possible," how is that different from corporations, which exist only to gain power and milk as much profit as possible for their shareholders? Why is that behavior inherently good somehow, but unions doing the same thing is inherently bad?
I can tell you what incentive unions have to innovate and drive up efficiency and productivity: the worst of them fail to do that, and, just like a corporation that fails to do that, the end result is usually economically damaging to the union. The employers start being less and less successful, and the result is layoffs, bankruptcies, and more.
Still, I don't buy that this is the norm. I have been hearing since the 1970s that the United Auto Workers is destroying the U.S. automotive industry. Seriously, I don't remember a time when I WASN'T hearing that. Yet the auto companies are still in business here, and nowadays companies like Toyota and Honda manufacture many cars here.
Of course, those companies are not unionized, and are slightly more profitable. Yet they have the constant pressure of knowing that if they start treating their workers like crap, their workers will have the right to unionize. That's a useful incentive to keep treating employees right.
This is why I say unions need to modernize and change their attitudes and strategies.
Unions are basically corporations + that power, therefore they're more statist.
Guilds can be similar, because in order to take part in a trade you must belong to that guild, whereas there's never really been a requirement to form a corporation to do business, though of course corporations are usually more advantageous to the business person. Hence guilds are corporations + that power, and are therefore more statist.
Your question is a bit too complicated for 100 or fewer words. I also suggest narrowing it a bit. Are we talking about corporations historically, or the modern corporation? Unions historically, or the modern union?
This is an important distinction, particularly for corporations. If you look at something like the Dutch East India Company, for example, you're looking at a corporation that was established with a state-sanctioned monopoly (though of limited duration) to carry out a prescribed economic activity.
That corporation is a different animal from, say, Standard Oil, which began as a partnership and eventually established a dominant market position through ruthless tactics.
Perhaps a seasoned antitrust attorney could enlighten us?
--|PW|--
Would it have anything to do with shoelaces?
<ducks>
--|PW|--
Under current law, use of intimidation by unions during strikes is tolerated, and unionized businesses are forbidden to refuse to deal with unions and union members. This is bad.
Medieval guilds routinely used violence against non-guild members performing guild trades. This was very bad.
Modern guilds (AMA, etc) are often granted regulatory powers by the government. The utility of this is debatable, but it does make them statist.
[93 words, including the word count]
Exactly, but my point is, in doing the latter, corporations tend to do something useful - that is, in order to maximize profits, typically they must provide products and/or services that people need, otherwise they wouldn't make that profit. Unless they are a monopoly (which is bad), they have to compete with other corporations also trying to maximize profit, which tends to mean they have to provide more &better goods and services.
Unions, on the other hand.. is there any competition? What positive effects occur when they attempt to maximize their membership and the amount of dues they are raking in? In a sense I guess what I'm saying is that the incentives of a corporation tend to lead to a better situation for the market, whereas the incentives of a union tend to lead to a better situation for their members (which may not actually be much better) but worse for just about everyone else (more expensive products, which aren't necessarily any better, and may in fact be worse, etc.)
So I guess in a sense it's the side-effects of the incentives that differ - one is more broadly positive than the other.
Yes, interesting that the best effect that the unions seem to have, along the lines that were originally intended by their creation, is for those companies that are non-union.
No, US auto companies aren't out of business yet, but they can't compete on the global marketplace (yes, including Japanese companies that produce cars using non-union labor in the US). I own an American car and it's not too bad, but I wouldn't buy another one. They just don't make cars that people want. They're low-tech compared to Japanese and European cars, mostly in terms of engine and power train as well as suspension, and as such they are inefficient fuel-wise, handle badly, and are often ugly and poorly put together. I KNOW Americans can build good products. Other US-made products I have bought are good. Why is it so hard for auto manufacturers to make cars with a really wide appeal like, say, Toyota?
Maybe it isn't the unions, maybe it's the idiot executives of those companies, I don't know. But it's awfully suspicious.
The union premise must be to somehow improve the workforce performance. Otherwise why would an employer deal with a union?
Corporations are constrained legally. They cannot use force or sabotage to hinder competitors. They cannot intimidate or seize property. They cannot withhold product solely to damage others.
When unions do those things the law seldom acts. Usually only outright physical assault or major property damage endangering life draws the attention of authorities.
Guilds are different. They promote their product as greatly superior. Often they insist it is to be learned only by long ritual. They ask the law to stop non-members - usually by arguing that only the guild can judge quality and prevent dangerous outcomes.
It's certainly arguable that this state empowerment of unions (in a true free market people could still join together to form unions, they just wouldn't be able to do most of the things people seem to think unions should be allowed to do) is a necessary counterbalance against the power of corporations. Even if so, however, the powers vested in unions by the state are typically greater and of a different sort than the powers vested in corporations by the state (to the extent that there even are any). Let's just say, however statist they might otherwise be, I've never known a corporation to be able to coerce me into giving them money.
A corporation cannot ban other companies from entering its business. Guilds, such as the AMA or Bar Associations, can, by law.
Modern corporations, other than utilities, aren't endowed by law with monopolies over their businesses. Both guilds and unions are.
The main benefit of the corporation is limited liability. Try suing a union or a guild and getting into the pockets of the members. No difference.
100.
The main reason that modern US labor unions are so evil is because they got so completely in bed with organized crime back in the day that it is impossible to tell where one starts and the other ends.
Of course we all lose our tempers now and then. Dean freely admits to being imperfect in this regard, which is why regulars to this establishment will generally be cut more slack than people who we don't know very well.
Still: behave like an adult, or go find somewhere else to play. Thanks.