Economist’s Advice to Obama Carries a Union Label

Krugman photoPaul Krugman has become to print media what Keith Olbermann is to television:  a Left-leaning prince of darkness.  A professor of economics and international affairs at Princeton this decade, Krugman, now 56, has cultivated a recognizably caustic style of scoring points against free-market economics in theory and practice, especially in his New York Times op-ed and blog columns.  The problem is that as he’s become a public figure, he’s shed, or at least has kept well-hidden, his empirical sense.      

 

There’s no denying the fact of Krugman’s smashing resume, the capstone of which is his Nobel Prize in economics last year for research on the effects of economies of scale on global trade and the location of industry.  Let’s hope the Nobel committee doesn’t hand out any awards for his advice on labor policy.  Case in point:  his lengthy open letter to Barack Obama appearing in the January 22, 2009 issue of Rolling Stone magazine (“What Obama Must Do”) outlining the ways in which the incoming president can restore America to previous state of goodness. 

 

Included in Krugman’s checklist was retooling unions as engines of the nation’s prosperity.  He argues that unions, in demanding and getting higher wages, were key to creating the post-World War II “Great Compression,” which dramatically reduced inequality and raised living standards in this country.  This process, he insists, “was reversed starting in the 1970s, as American workers once again lost their bargaining power.”  The anti-labor policies of the Reagan and both Bush administrations, Krugman asserts, virtually demolished the middle class.  He instructs Obama:

 

You can make a start in reversing that process (by) laying the groundwork to pass the Employee Free Choice Act, which would make it much harder for employers to intimidate workers who want to join a union.  I know it probably won’t happen in your first year, but if and when it does, the legislation will enable America to take a huge step toward recapturing the middle-class society we’ve lost.

 

This, of course, is how labor officials explain things.  And it’s highly misleading. 

 

It’s been illegal for more than 70 years for an employer to intimidate employees out of organizing or joining a labor union.  The purpose of the deceptively named Employee Free Choice Act (EFCA), re-introduced on March 10 by Rep. George Miller, D-Calif., and Sens. Ted Kennedy, D-Mass., and Tom Harkin, D-Iowa (H.R.1409, S.560), is to give union organizers free reign to pressure workers at nonunion worksites to sign cards indicating a desire to join.  Under present law, an employer has the option to recognize the results of a card-check campaign that generates signatures of at least 50 percent of all potentially affected employees.  EFCA would mandate rather than simply authorize recognition in such instances.  What’s more, it would require employer neutrality (i.e., non-intervention), despite well-documented evidence of organizers bullying reluctant workers.  The law also would trigger a National Labor Relations Board-supervised arbitration process skewed in favor of newly-certified unions in the absence of a settlement.  Passage of the measure – a similar bill stalled in the Senate in 2007 – would all but end the secret ballot as a means of employee choice of representation.       

 

More broadly, Professor Krugman’s advice assumes that the American middle class owes its size and prosperity to union collective bargaining power.  The evidence doesn’t support that claim.  In 1970, when the nation’s economic fortunes supposedly were at their zenith, per capita money income was less than $3,200.  By the end of 2007, it had increased to about $38,500.  And Census Bureau data show overall improvement in living standards.  Just among “poor” households, for example, the portion of dwelling units with air conditioning rose from 36 percent to 80 percent during 1970-2005.  What has been falling, and for a half century or more, is union membership.  In 1953, 36 percent of all non-farm private-sector workers in the U.S. belonged to a union.  The figure dropped to 22 percent in 1980 and eventually to about 7.5 percent, where it has stood for the past few years.  This long-term trend speaks volumes about organized labor’s motives for pushing mandatory card check recognition.      

         

Paul Krugman’s advice on labor policy, if nothing else, makes an unwitting case for maintaining the division of labor.  The good professor should check his indignation at the door and go back to doing the kind of work that made him a Nobel laureate.  Rolling Stone should stick to covering the music scene.  Don’t hold your breath on either count.  (Rolling Stone, 1/22/09; The Heritage Foundation, 8/27/07).