Via, a piece from one of today\’s Nobel Laureates in economics:
Here is his 2003 paper praising British labor market policy:
Unemployment in Britain has fallen from high European-style levels to US levels. I argue that the key reasons are first the reform of monetary policy, in 1993 with the adoption of inflation targeting and in 1997 with the establishment of the independent Monetary Policy Committee, and second the decline of trade union power. I interpret the reform of monetary policy as an institutional change that reduced inflationary expectations in the face of falling unemployment. The decline of trade union power contributed to the control of wage inflation.
Fewer trade unions, less unemployment. An interesting point, eh?
Oh, and as Alex Tabarrok points out:
The 2010 Nobel Prize awarded to Peter A. Diamond, Dale T. Mortensen, Christopher A. Pissarides can be thought of as a prize for unemployment theory.
A key breakthrough was to realize that the problem was not how to explain unemployment per se but rather how to explain hiring, firing, quits, vacancies and job search and to think of unemployment as the result of all of this underlying microeconomic behavior.
It really ain\’t just all about how much money the government is spending as various crude Keynesians would have it.
It really does depend upon all that microeconomics….you know, the neo-classical economists\’ tool kit stuff you need to be able to do micro?
Unions don’t care about unemployment, they care about extracting maximum benefit for their members, who by definition are employed. The fact that this behaviour leads to the unemployment if their members seems to have passed them by, because their Marxist leaders do not believe in the realities of the market.
“The decline of trade union power contributed to the control of wage inflation” –
They give you a Nobel for this? Sheesh.
While one can only imagine the raptures with which bloggers might type ‘Fuck The Unions!’, and mouthfart about ‘Marxist leaders’, one also recalls that there is one union that seems to be untouchable, and whose leaders sometimes even seem to be invited to join the government. That union is the CBI, the most powerful and pernicious union this country has ever seen.
Are they to get fucked as well, Tim?
There are good leaders in the union but there are also union honchos that saunter around the assembly plant and pay lip service to all the frontline workers and do absolutely fuck all and are not team players. They say that they empathise with what you’re going through, but in reality it’s a complete crock. If the shoe was on the other foot and I got to parade around an assembly plant and don on a CAW kit and press the flesh and pretend to be chums with everybody I came into contact with like a well seasoned politician of any political stripe then I would probably be a much happier individual.