Corporate & Securities Law

Posner, Unions, The UAW and Cartels

By David Fischer

Gary Becker and Richard Posner have a piar of interesting posts about the UAW and costs to American car manufacturers (Posner’s post, Becker’s post).  Posner on unions as a cartel:

Unions, in other words, are worker cartels. Workers threaten to withhold their labor unless paid more than a competitive wage (including benefits and work rules), but unless their union is able to organize all the major competitors in a market, the cartel will be eroded by the entry of nonunionized firms, which by virtue of not being unionized will have lower labor costs. The parallel to producer cartels is exact–workers are producers.

and:

By driving up employers’ costs, unions cause prices to increase, which harms consumers, who are not on average any better off than unionized workers are. 

I suspect it is only a matter of time until an ”enterprising” class action attorney reads this and files a lawsuit against the UAW on behalf of consumers who have purchased an “Big Three” car in the last, oh, 50 years (give or take a statute of limitations or two).

Full post as published by Antitrust Review on December 30, 2008 (boomark / email).