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This is a really out of touch answer akin to how globalists and economists argued for off-shoring because “competitve advantage.” The reality is far more nuanced. For example, one could argue wage growth stagnated in the US and instead we had tremendous growth in developing countries. For many Americans, globalization was a tax that further exacerbated income inequality. Congratulations: this is Pareto optimal! Some company’s bottom line is improving, some shareholder is profiting, and wages stagnant—so society is “better off as a whole” definitionally… but is it really?

The same can be said about unions and market power. Sure deadweight loss exists. Someone will absorb the cost, but it’s not necessarily “the people”.

Companies cannot pass costs onto consumers as easily as economists claim, so often profits take the brunt of the deadweight loss. Think of it this way: if companies could just pass on the cost, why go through the expense of fighting the union when they could do just that?

Mind you, I’m talking about unions in general: it’s nuanced. I honestly don’t know enough about the specific demands here to have an opinion, but I encourage everyone to listen to an interview with the longshoremen.

>Someone is going to absorb the cost, and at times, corporations cannot pass that cost onto consumers, so shareholders take the brunt of the deadweight loss.

Why can't they pass it on? It's not like consumers would have other options, because you know, globalization just got killed.

Because more often than economists realize consumers can and will reject a higher price. There’s A LOT of substitutes for most things outside of commodities.

Try selling products on Amazon, and you’ll experience this. There’s a clearing price for your product, your costs be damned. If you try to “pass it on” some other product—-probably in a different category—-will out compete you, so you must forgo profit to stay competitive.

It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost.

As a concrete example, I sell a card game on Amazon. If I shift the price up and down, I can see supply and demand in action: there’s an optimal price for my product where I maximize units sold. If I try to raise my price customers will go buy another card game. If we all raise our prices, customers will switch to some other toy. If all toy prices go up too far, people will send their kids to the park.

My point is that unions are a nuanced topic. I disagree with the terms of this strike, but if you listen to the longshoremen you can hear their anxiety.

There’s some middle ground we need to find, and throwing supply and demand curves around in absolutist terms won’t do that.

> Because sometimes consumers can and will reject a higher price

Often times this is because they don't have enough money because some jackoff keeps cutting their wages.

I think the ports will just pass along the cost. Whatever bargain the union strikes will be uniform across all of the ports and so they won't be able to undercut one another.

>It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost.

What do you think will happen if globalization was killed? Given how interlinked economies are right now and how much US imports, widespread price rises like you described is almost inevitable.

This is a really out of touch answer because it goes off for a paragraph on an unrelated economics topic that also makes the writer similarly uncomfortable to the reality that unions are often bad before finally bringing it back around to relevance in the last sentence, which misses the point. Of course someone is going to have the cost somewhere. That it can be shareholders in the situation where there is monopsony without causing other pricing ripple effects is entirely the point of why a union may be doing good in that situation. In pretty much every other situation that could apply to the specific dock workers situation from the article, a union is doing zero good to actively doing harm via price manipulation on labor costs.

>Of course someone is going to have the cost somewhere.

unions also exist because employees are almost always where the cost goes if corporations have a choice. lower wages, less hours, or straight up cutting staff while forcing remaining staff to work harder under duress.

you can cynically call unions "blame shifting", but everyone is simply playing their best cards, since loyalty is not longer a center ideal for a modern company.

Of course everyone is playing their best cards. The question is which cards are good and which cards are bad for society and the union card is clearly bad because it is exercising market power (by withholding all labor) to artificially push labor prices higher. You guys act like corporate abuses are bad and labor abuses are virtuous when you should be against both because both are the same damn thing: Market power abuse.

Well if we consider the government as "managers of society", they require an educated populace stimulating the economy that they collect taxes from. They have to balance it with company taxes, but at the extreme of all automation, "society" suffers in this lens.

Previous means of automation managed to create jobs and boost productivity to unseen levels, but I think we're approaching the physical version of "speed of light" on how productive we can get in manufacturing by vertically optimizing. So automation will soon start to remove jobs instead of add them.

>You guys act like corporate abuses are bad and labor abuses are virtuous

In a general concept, yes. Because corporate abuses always benefit the people who need the money the least for survival. That's a pretty hard notion to shake.

Likewise, you can consider civil disobedience (which strikes are) "bad", but we only get there due to the former happening for too long. When it's easier to collectively walk out than to petition your representatives to give society a living wage, that's says a lot about "society"

> Unions by definition are exercising market power to withhold labor and force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case.

Well, everyone except the people who work for money.

> Then one has to ask themselves in which situations could a union pushing up labor prices make things better?

In the situation where people get paid that higher labor price, those people are better off.

yes, but everyone else is worse off by a greater amount because that higher price causes other reactions and repricings in the supply chain. There are some really nice graphs in first year economics that explain this. That we are in a potential situation where there is market power being exercised by the employer is basically the only reason we have to even consider that a union could make things better off is because the person with the monopsony doesn't benefit from decreasing output as the union pushes wages higher if the end result is at or below the efficient price for labor.

> There are some really nice graphs in first year economics that explain this.

Yes, and they’re bullshit, as are the ones that suggest firms price competitively, that markets tend towards competition and not consolidation, that government spending is inherently bad, and all the other Chicago-school Reagan-revolution bullshit that’s left this country with third-world infrastructure, income inequality that would embarrass a Rockefeller, and no industrial base to speak of.

Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101, and thinking they now understand the world.

The basic reason this happens is that people's wages are only worth what they can buy, and in order for them to be able to buy those things they need to be produced and shipped. Sure, you could argue that this doesn't actually matter in practice because the corporations will always have enough excess profit to just pay people higher wages and employ more people to do less when the unions demand it, and that they'll have to do so rather than increasing prices, and that these cuts in profits will somehow always come out of the pockets of unsympathetic billionaires rather than ordinary workers' pension funds. That requires a lot more about the world to work out just right compared to the economics 101 version though.

>There are some really nice graphs in first year economics that explain this.

One of the first things I learned when I started to seriously study economics is that economists never let objective reality interfere with their theories or charts.

I'm not convinced the first principals are so clear. Economics research in the last 30 years has often examined market distortion due to incomplete information (especially information asymmetry) in the marketplace. Given the tendency to hide salary data, labour markets have very incomplete information. It's like having a stockmarket where the stock prices are secret.

In a consumer economy such as the US such inefficiencies are a economic benefit because gains of labor tend to increase the velocity of money in ways gains from capital do not.

That's not really true on any reasonable timeframe because most of the gains actually go to the consumer as competition turns inefficiencies into price decreases on goods and services. I mean it's what some really far out in left field economists want to be true and they certainly goal seek macro data and publish papers on what they want to be true but it just isn't true except in the sense I already talked about where gains to capital were being juiced by market power pushing labor prices below the efficient market clearing rate (which does happen more than we would like to admit, it's just unlikely to be happening here).

On an individual level the marginal value of money exists. The economy is made up of people.

Banning slavery caused dead-weight loss. Market clearing price for commodified labor is minimal sustinence.

Slavery is horrifically evil. Ending it freed 4 million people from daily robbery, abuse, and a life of subsistence poverty.

Banning slavery eliminated massive dead weight loss. Slavery used violence to force labor from people below the clearing price - it compelled them to work for free.

All liberals should oppose slavery. We should want free people, free markets, and a generous social safety net for all.

Social safety net causes deadweight loss.

To be clear: I'm not for minimizing deadweight loss because free markets are horrible for humans. Free markets don't care about human suffering.

Regulated markets can be OK, but then you shouldn't talk about free markets or deadweight losses.

>force a higher than market price on said labor. Thus, they are causing dead weight loss to society and making everyone worse off in the base case.

This seems to make an optimistic implication that "market price" is 1) reasonable and 2) realistic. Of course a business wants skilled labor to be paid peanuts to do 168 hours of highly profitable labor a week. But there's multiple layers of barriers here that stop that reality.

For the former, the rising cost of living everywhere is why strikes are starting to happen more frequently now. If you cannot pay your expenses while giving half your waking hours to a job, you either ask for more money or leave. that CoL may or may not be that Companie's fault, but what was reasonable in 2019 is not reasonable in 2024. Yet compensation has fallen far under inflation, let alone what is "reasonable" to survive now.

unions have flaws, but they are made to make sure workers are "reasonably" compensated and treated well. That's how they make things better.

>when one looks at the contracts being offered it's really hard to say labour prices are being pushed below market clearing rate

What are these contracts, and are they reasonable by 2024 standards?

Are high profits by corporations a dead weight loss for the rest of us?

> making everyone worse off in the base case.

Everyone else. That is the point. But only in a theoretical sense.

The corporations might benefit from stability in the workforce and the owners might benefit from the workers being able to have the faintest possibility to keep the manager class in check.

in the early 1900s this is exactly the argument used by wealthy business owners who didn't want to invest in safety equipment or take care of the workers who died or were crippled.

It's not wrong, it just assumes that business owners are behaving well.

We all know there's a massive accumulation of capital in the hand of a tiny few.

That indisputable, right? You don't disagree with that statement?

Unless you're one of those billionaires, attacking one of the few mechanisms for correcting that imbalance seems counter-productive to sanely discussing this.

A mechanism that programmes are bizarrely hostile to, even though their work is one of the nost exploited.

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

Warren Buffett