Saturday, August 11, 2012


Are Labor Unions like Corporations?

The Supreme Court last year decided that both labor unions and corporations are entitled to spend as much money as they please in support of or opposition to political candidates and issues.  [I can't resist mentioning the French writer Anatole France, who said that the law in its impartial majesty prohibits both the rich and the poor from sleeping under bridges.]  In fairness, the Supreme Court was not original in its classification of labor unions and corporations as deserving similar similar treatment in law.  In the act that the Court threw out the same comparison was made by precluding excess expenditures by either corporations or labor unions.

I ask myself, why do we make such an equivalence?  It seems to me that labor unions and corporations are not alike at all.  Their objectives are different and not always in conflict.  The ways they are created and organized are different.  If you want to create and organize a corporation you obtain a charter from a State, often Delaware.  You announce the work or program that the corporation is going to undertake, such as building a toll bridge or a railroad.  You make a deal with an investment bank or a stock brokerage house to sell an initial offering of shares of stock.  You use your share of the proceeds of the stock sale (the brokerage house or bank takes its cut) to buy the real estate and equipment needed for the project.  You hire workers and you proceed with the work.

If you want to create a labor union, you find workers who are dissatisfied with the pay and the relations they have with their employers.  You get enough workers to sign a petition to impress the National Labor Relations Board.  The Board calls for an election of the workers.  If enough vote in favor, the union is certified and the employer now must negotiate with union representatives rather than with individual employees.

In the corporation, stockholders "own" the corporation.  In theory they control the corporation through annual stockholders meetings.  In practice the shareholders regard the money invested in their shares as investments. They are interested in income, either in the form of dividends or of capital gains.  The corporation is like a savings bank that pays good interest.

In the union, the members do not receive income.  Instead, they pay dues.  Union membership is not regarded as a source of additional revenue but as a means of dealing with representatives of their employer.  In some cases it represents an assertion of one's calling or trade, such as carpenter, plumber, or electrician.

Looking at and comparing labor unions and corporations amounts to a two-dimensional view of them.  They are like two lines that either meet or are parallel.  In the two-dimensional view we think of them as parallel vectors going in opposite directions and actually pushing against each other.  In three or more dimensions we see that the vectors are often skewed.  No matter how far extended, they never meet, regardless of orientation or direction.

This equivalence between corporations and labor unions is a concept that has been foisted on to us by persons, often conservative in political thought, who take the two-dimensional view of government and society.  Their belief is that "they're either for us or against us."  The notion that labor unions and corporations might have completely different and unrelated objectives is a nuance that does not fit two-dimensional thinking.

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