Is the Dockworkers Union a Corporate Tool?

This article was originally published by Thomas J. DiLorenzo at the Mises Institute. 

Labor unions are exempted from federal antitrust laws including the Sherman Antitrust Act, which outlaws “conspiracies in restraint of trade.” This is not a bad thing: Everyone should be exempted from antitrust laws. They are an assault on property rights and because their rulings are so arbitrary they are incompatible with justice and fairness.

They are also a tool of rent-seeking businesses who practice “lawfare” by routinely suing their superior competitors for dropping their prices, improving their products, and serving their customers better than they do. When they can’t (or won’t) compete in the marketplace they resort to antitrust lawsuits to harass their competitors instead of better serving their customers. They have been a drag on the American economy for more than 130 years.

A strike by a labor union is nothing if not a restraint of trade. The media are all in a huff today about the dockworkers’ strike that has shut down all of the ports on the east coast from Maine to Texas. Billions of dollars of foreign imports of just about everything are sitting there, restraining trade! And when supply is reduced the effect is to make prices higher than they would otherwise be. It is essentially the same effect of a giant price-fixing conspiracy by American merchants. There is no such price-fixing conspiracy, but we will be observing the effects of one in some industries!

The economic effects of the dockworkers’ strike are essentially the same as some of the effects of protectionist tariffs. The purpose of all protectionism is to restrain trade that comes from other countries, which is exactly what the dockworkers’ strike is doing. The purpose of the strike is to acquire higher wages (and to eliminate automation) and not protectionism, but it will have the effects of protectionism while it lasts.

Ironically, many of the same people who praise Trump’s threats to impose higher tariffs on imports are whining and complaining about the possible dire effects of the dockworkers’ strike! They apparently think that the restraint of trade with tariffs is “good for America” but the restraint of trade with a dockworkers’ strike is bad for America. They are happy to pay higher prices for some items if the higher prices are caused by protectionist tariffs, but not if they are caused by a dockworkers’ strike.

On top of all this the dockworkers’ union, the International Longshoremen’s Association, is practicing nineteenth-century economic superstition by demanding not only big pay raises but an end to automation of dock work. They are “neo-Luddites” in this regard. When nineteenth-century British textile workers protested the introduction of machinery by destroying it in the middle of the night they left proclamations in the name of the mythical King Ludd of Sherwood Forest and hence became known as “Luddites.” What actually occurred, however, was that automation reduced the cost of manufacturing woolen coats and other items so much that the market for them expanded tremendously so that more textile workers became employed and at higher wages.

Direct dialing telephone services did the same thing after threats and protests by the communication workers union that feared unemployment of telephone “operators.” Telecommunication became so inexpensive that AT&T grew by leaps and bounds and employed far more communications workers (in different jobs) and at better pay thanks to the increased profitability its capital investments created.

So it appears that no, the dockworkers’ union is not a corporate tool, but the strike may nevertheless inadvertently cause a short-term increase in corporate profits for some businesses. And no corporate tool would be so foolish as to ignore the industry- and efficiency-expanding potential of automation.