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Ashish's Niti

Niti in Sanskrit means policy/strategy/vision. This blog hosts my political views, along with news and commentary. This blog has moved here.

Monday, September 06, 2004

Debunking Labor Unions

This post at Mises Institute's blog, titled Do Capitalists Have Superior Bargaining Power?, explains very clearly why enterpreneurs don't have superior bargaining power over workers. Competition among enterpreneurs ensures that they have to pay to the worker according to his/her marginal productivity. Labor unions mostly harm the workers by forcing the wages above the market rates and thus pricing out some of the workers out of their jobs. This causes wages to fall for non-unionized workers. Less productive workers and highly efficient workers get the same wages and results in mediocrity because of unionized bargaining.

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