Sunday, February 14, 2010

Why do Unions Over-bargain?

Tyler Cowen at Marginal Revolution links to this New York Times article about the acrimonious negotiations between the NBA team owners and the players union in the months leading up to the expiration of their current agreement.
First, why the hell does the NBA have a player's union? Why isn't there a union for investment bankers too? [Is there?]
Second, why do unions always seem to over-bargain? The auto-worker's union(s) also had the quixotic habit of negotiating deals that were not in the long-term interests of their members. What are the dynamics that produce this behavior? Is it a lack of business knowledge on the part of the unions? Are they forced to negotiate the best short-term deal because they're feigning ignorance of the actual business conditions? Is this ultimately a result of the ignorance of the workers / union members?
Why isn't the nature of unions, and the legal protections they enjoy, more frightening to people? They're essentially employment agencies with a legal monopoly granted (in perpetuity?) for any companies they successfully organize – an employment agency that you can't quit save by finding another career, or being lucky enough to live in a right-to-work state (such as my home state, Florida).

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