This article was received from Project Syndicate, an international not-for-profit association of newspapers dedicated to hosting a global debate on the key issues shaping our world
CAMBRIDGE – Will the political resurgence of labour unions throw a wrench into the wheels of globalization? Or will their growing strength serve to make globalization more sustainable by fostering great equality and fairness? One way or the other, unions stand as a major wild card for the evolution of our economic system in 2008 and beyond.
Unions’ rising influence is evident in many recent events: German Chancellor Angela Merkel’s controversial deal to raise minimum wages for postal employees; several American presidential candidates’ open misgivings about trade and immigration; and the Chinese leadership’s nascent concerns about labour standards.
Along with their political clout, unions’ intellectual respectability is also experiencing a renaissance. After decades of vilification by economists for raising unemployment and strangling growth, the union movement is now receiving backing from thought leaders such as Paul Krugman, who argues that stronger unions are needed to counter globalization’s worst excesses.
The sudden emergence of unions as a political force is particularly surprising in the United States, where private-sector union membership has fallen from 25% in 1975 to 8% today.
From high-tech Google to mass retailer Wal-Mart, US companies have found ways to keep their shops union-free. Only the public sector, where the membership rate is 35%, has remained a union bastion. One of my best friends from childhood married a union organizer who found it so difficult to land a job in the US that he eventually moved his family to strike-happy Canada.
Today, US political leaders such as Congressman Barney Frank want to bring back unions. But there is good reason to be skeptical. For a relatively poor country like China, real unions could help balance employers’ power, bringing quality-of-life benefits that outweigh the growth costs. Factory conditions in parts of China are all too reminiscent of the early twentieth-century, pre-union US. Thousands of Chinese workers die each year in coal mines that sometimes lack basic safety precautions.
But, for the US and rich countries in Europe, the argument that stronger unions would bring more benefits than costs is far more dubious. Nowadays, most workers already have legal and statutory rights that cover the basic protections that unions originally fought for a century ago.
Instead, union influence today all too often serves to promulgate inflexible work practices and flat salary structures that do not adequately reward work effort and skill. It is no surprise that the public sector, where productivity is low and fiscal constraints soft, typically has the greatest union concentration. Teachers’ unions, especially, are a catastrophe, blocking any rationalization or improvement of many countries’ education systems.
Before the modern globalization era, unions could thrive by organizing on a national scale, giving them enormous bargaining power vis-
