Ethan Winters

…This is structurally the same problem faced by the United Auto Workers vis-à-vis factories in “right to work” states. I think the classic postwar American dynamic of an economy with a large minority of the workforce unionized is fundamentally unstable. In the long-run the two equilibria are toward a non-union economy or else toward the Nordic model where virtually everyone is in a union. In the latter case, I think the unions become organizations of a more political character than anything else. In theory, Swedish labor unions could use their dominant labor market position to increase workers’ compensation by making Swedish firms less profitable than non-Swedish ones, but that would be bad for everyone. What you get instead is a kind of Mirror Universe version of the Chamber of Commerce, a politically powerful institution interested in maximizing the income growth of the median Swede rather than the median Swedish CEO.