Brink Lindsey eviscerates the notion that our economy was so much better back in the old days when workers had good union jobs and there weren’t so many rich people.
The Treaty of Detroit was built on extensive cartelization of markets, limiting competition to favor producers over consumers. The restrictions on competition were buttressed by racial prejudice, sexual discrimination, and postwar conformism, which combined to limit the choices available to workers and potential workers alike. Those illiberal social norms were finally swept aside in the cultural tumults of the 1960s and ’70s. And then, in the 1970s and ’80s, restraints on competition were substantially reduced as well, to the applause of economists across the ideological spectrum. At least until now.
I don’t understand the thinking that says we can go back to an economic system built on racism, sexism and monopolies without the racism, sexism and monopolies. The reason union jobs were so good was because women and minorities were kept out, most other countries were dirt poor and the companies were gouging the shit out of the consumer. Without those things, no company could afford such ridiculous pensions as the Big Three have. And indeed, they can’t.
The Big Union jobs were completely dependent on having no imports, little domestic competition (thanks to high marginal tax rates) and no foreign competition — which is why they’ve been in a slow 30-year freefall. Unless we’re planning to unleash an airborne strain of ebola on China and India, that isn’t going to change back. Ever. And that’s a good thing. Especially if you’re Chinese or Indian but even if you’re an American.
Read the whole thing.