China, labor…and labour

The fur is flying in the United States over the Permanent Normal Trade Relations bill, which seeks to free up trade relations with China, or, more accurately, make China’s year by year renewal of quota terms with the U.S. a permanent deal that doesn’t have to be renewed.

We’ve heard the hooting and hollering about freeing–or not freeing–trade with China for years. There’s seemingly no end to this squabble. This week it’s dominating headlines in both the economic and political realms, and you know what a horrific mix economics and politics can be.

Organized labor has steadfastly opposed the bill, with its usual knee jerk reaction that free (or, in this case, freer) trade is, somehow, a losing proposition for American workers. Unions were vehemently anti-NAFTA, but the years since NAFTA’s passage have seen unrivaled prosperity and famously low unemployment rates in the United States.

The problem with these hot political/economic arguments is that the real economic arguments get buried in rhetorical garbage. Away from all the heated sound bites and scare tactics, a good labor economist would size up the issue by looking at whether or not labor in China is allowed to organize and collectively bargain.
That is, whether labor suppliers can band together and use “oligopoly” power to offset the bargaining muscle, or “oligopsony” power, of certain industries. If you try, you can demonstrate that collective bargaining, in certain types of cases, moves markets closer to theoretical optimum (and don’t even get me started on the “optimum,” you’ll just have to take my word for it). Of course, there are other cases in which collective bargaining moves markets away from theoretical optimum.
This is an entirely different case than the political muscle that unions wield; I’m merely referring to the market forces behind collective supplies of, and collective demands for, labor.

Which is an interesting can of worms, but I’ve seldom seen unions use valid economic analysis to wage campaigns. Consequently, they’re ignoring the very evidence that would allow them some hope of presenting an interesting case to economists. Which brings us to this: although the issue is economics, the battle is political, and in politics, emotion and perception are far more important than cooly objective economic analysis. The economics gets relegated to the dirty corner of greed, envy, jealousy, and fear, which is the emotional scrap heap for losers, and which is also what drives most decision making in the masses.

What many cool heads find disconcerting is how organized labor in the U.S. seems to want to follow the garden path of European “Labour,” which is merely a polite word for socialism. I’ve got news for Americans: Europe, economically speaking, pretty much sucks. If you lived there, you wouldn’t be able to afford your two cars, your SUV, your Winnebago, your bass boat, and your 2,400 square foot home. If you lived in Europe, instead of going duck hunting on weekends, you’d go to spectator events where people with bad teeth kick each other in the shins (it’s called “soccer”), while boozed up white trash pukes on each other in the stands. On weekdays you’d be content to feed the pigeons in the park and watch them crap on the statues. Yeah, what a life.

Nobody, least of all me, wants to see American workers get short shrift. At least in the broad based media, the unions haven’t made any compelling arguments against freeing up trade with China. Absent such arguments, it looks like freer trade with China is on its way, which will probably increase economic productivity on both sides of the Pacific.