Tech Companies Worried About Unions

from the recession-time... dept

It never fails. As the economy collapses, someone thinks that the answer is greater unionization. It happened back in 2000 when the tech bubble collapsed, and it's happening again today, in part due to recently proposed legislation that would make it easier to unionize. Apparently, the tech industry is especially worried about this -- and they should be. I'm very much a student of the economics of unions (I do have a degree in labor relations, after all, which included more classes than I'd care to remember on both labor history and labor economics) and while I recognize the tremendous value that collective bargaining provided a century ago to workers who were helpless to fight back against abusive management, that's not the situation we're in today. Unionizing the tech industry would be a disaster for the economy and innovation.

Collective bargaining is one thing, but unions tend to be more focused on protectionism, rather than just getting workers together to bargain a deal. And much of our innovative environment is encouraged by a dynamic workforce with increased job mobility, allowing for a cross-pollination of ideas, as opposed to a stagnant and limited workforce. Unionization takes away the necessary flexibility of both workers and employers, greatly slowing down the pace of innovation. It could make sense in a static, totally mature environment, but it's difficult to think of many of those. These days, almost every industry needs to be innovating, and you don't do that with a unionized structure. Just the very nature of building a structure that encourages an antagonistic relationship between "workers" and "management" misses the point, these days. A friend mentioned the other day that workers today are more likely to be shareholders than union members, so perhaps they'll recognize this and not go down a bad path that leads to fewer jobs, less innovation and more economic toil. Unions are the last thing that the tech industry needs right now.

Filed Under: economy, innovation, tech, unions

Spectacularly Bad Ideas In Response To The Financial Crisis

from the wow dept

The financial crisis is certainly the result of a series of rather complex situations, and with many people rushing to try to understand what happened, plenty of totally incorrect, but very simplified, explanations are being proffered: it was the Republicans fault! It was the Democrats fault! Free market economics doesn't work! Poor people are to blame! None of these are even close to accurate, but it leads people to come up with positively nutty suggestions for how we should react -- and what's more troubling is that some of these suggestions come from well-respected individuals who should know better. In the past few days, we've seen two absolutely ridiculous suggestions, which would make problems much, much worse, but are apparently suggested in all seriousness.

The first is apparently in the latest issue of the Harvard Business Review, where two business school professors suggest that business managers should be licensed, similar to doctors and lawyers. That's a fantastic idea if you want to basically destroy business growth. In fact, we've already examined how these sorts of "professional unions" often are really designed to simply inflate prices for services by limiting the supply of service providers. These sorts of licensing systems often do little to actually "protect" consumers, but do plenty to make them pay more. If you added the same situation to business managers, you'd make running any kind of business significantly more expensive, while removing from the pool of potential managers plenty of people who would excel at the job. While you can at least understand some of the reasoning for licensing some professions, management is one where it's hard to see any rationale, as creativity and out-of-the-box thinking is often what managers need the most.

The second also seems to come from the medical profession, and it would be to purposely slow down innovation by forcing all new financial instruments to go through a complex approval process similar to what it takes for drugs to be approved. I can't think of a better way to kill the economy than that. I've been meaning to dig into some of the problems with the health care system for a few months (though, the whole financial crisis has pushed that back), and one of the biggest problems with it right now is the process for approving drugs, which often does more harm than good. Extending that broken process to other businesses, such as the financial industry, would basically ensure that money would quickly flow out of the US and into other countries that have more reasonable financial systems.

I can understand the desire to come up with big solutions to "fix" the problems that created this financial mess, but suggestions like these are simply scary overreactions by people who don't seem to understand what really caused the problems. Both of these suggestions would make things significantly worse, based on the false belief that you can somehow have some body (government or licensing body) that can decide what's "good" and what's "bad" for business.

Filed Under: approval process, bad ideas, financial crisis, licenses, professional associations, unions

Like Clockwork: Question Raised About Techies Unionizing

from the yeah,-it's-not-gonna-happen dept

Pretty much every two years or so, the press suddenly starts asking if techies should unionize. We first saw such articles around 2000, then again in 2002. We must have missed the 2004 one, but there was yet another in 2006. And, now that it's 2008, we've got another one, asking if techies should unionize.

It's all a bit silly. The reason for organizing labor is because the employers have unchecked power to set working conditions and wages -- meaning that there's not enough bargaining power by the employees as individuals. However, that's hardly the case in the tech industry, where there's tons of competition, and good tech employees have many options for where to work and under what conditions. It seems like all of the stories about unionizing seem to be planted by unions themselves looking to boost ranks, but without offering any serious reason why tech workers should even think about organizing.

Filed Under: organized labor, techies, unions

How Professional Licensing Groups Distort The Market

from the the-new-unions dept

Nearly a year ago we wrote about how "professional" groups and organizations where professionals are required to obtain a license and abide by certain rules are really a new type of anti-competitive union, hidden beneath the veneer of public interest. I should be clear up front, as someone who actually has a degree in this stuff, and spent plenty of time with unions that I have no problem with the concept of collective bargaining. The problem is that many union activities are less about collective bargaining and more about anti-competitiveness. It appears that Forbes has now stepped up to the plate with a very similar article to ours, noting that professional organizations are the new unions, not only hiding behind bogus claims of public interest, but also doing a lot more harm than good in many cases. As the article notes, these professional licensing organizations raise fees, shrink the labor pool and often make things less safe -- by encouraging people to do dangerous things they might otherwise hire a professional to do, if that professional weren't kept artificially expensive. In effect, the arguments in favor of these types of licenses are similar to the arguments in favor of DRM or other limitations on a market. While they may sound good upfront to those in a position to leverage the monopoly power granted by them, the unintended consequences over the long term harm everyone.

Filed Under: anti-competitive behavior, guilds, professional organizations, unions

I Wonder If The Blogger's Union Will Deem Me A 'Workhorse'

from the silly-ideas dept

Chris Mooney's proposal for unionizing bloggers is pretty silly to begin with. There are absolutely no barriers to entry for blogging, so if a writer feels he's not being fairly compensated, he always has the option to jump to a new blog, or to start one of his own. And because a lot of bloggers work out of their homes, some common union concerns, such as workplace safety, just don't apply. But the thing that really irritates me about Mooney's proposal is the idea that the bloggers' union will "set up a structure that separates the workhorse bloggers from the pure hobbyists." It seems to me that this totally misses the point of blogging. Bloggers blog first and foremost because they enjoy it and are passionate about the subjects they're writing about. Some of us are lucky enough to make some money in the process. Many of us are not. But nobody is entitled to be paid for blogging. And we certainly don't need an official bureaucracy in charge of deciding whose blogging is "professional" enough to merit compensation. There's no reason to think that union's process for determining who gets a paycheck would be any less arbitrary than the system we've got now, but it would be guaranteed to generate a lot of needless bitterness and resentment.

Filed Under: bloggers, unions

Unions Make Ridiculous Arguments Against Patent Reform

from the a-little-economics-would-be-good-here dept

Ronald J. Riley runs an organization called the Professional Inventors Alliance, which fights vehemently against any kind of patent reform that might make life harder for patent trolls or those who obtain horribly obvious or broad patents. He has been known to show up here at Techdirt to argue with us in the comments, but his arguments are based on the faulty assumption that pretty much all patents are good and anyone accused of patent infringement has clearly "stolen" the hard work of someone else. The fact is that that's very rarely the case. As we've seen repeatedly, many patents should never have been issued as they don't qualify as non-obvious or they're too broad. In those cases, patents are clearly an economic hardship, and there's plenty of research to back that up. Also, most cases of patent infringement occur when multiple companies come up with the same type of solution independently, which is hardly "stealing." No matter though. By focusing on the false idea that all patent infringement is stealing, it can be a very compelling case for those who don't delve into the details.

The latest news is that Riley has convinced the AFL-CIO to come out against the latest attempt at patent reform. Now there's a lot to dislike in the latest attempt at patent reform, and we'd be upset if it passed as is. But the two specific things that the unions are complaining about are the two most reasonable things in the reform package. The first would change how damages are calculated, so that if the infringing component is only a small piece of a larger product, the damages shouldn't be based on the value of the larger product, but the value of that small piece. That seems completely fair. Why shouldn't the damages be reflective of the actual value? It's hard to see why that's controversial, but it is if you hold completely irrelevant patents and you want to hold up those companies that are actually making useful technologies. The second complaint is with making it easier to contest a patent after it's been issued. This is also a no-brainer. Given how little review goes into a current patent, along with the fact that patent examiners are given incentives to approve, rather than reject -- combined with the length of time it currently takes to get a patent reviewed, the incredibly arcane rules that everyone is required to go through to contest a patent and the quick draw of some courts who refuse to wait for the patent office to review patents, it makes sense to have a better system to make sure a patent is valid. Why would anyone be opposed to improving the quality of patents... unless they hold questionable patents?

Unfortunately, Riley's organization appears to have blinded the AFL-CIO to what's really happening. In convincing them that this is about stopping theft, he apparently left out all the economic research showing that it would actually do plenty of harm to the industries that most employ AFL-CIO workers. That's because it would limit their ability to innovate, make it more expensive to do research, and open up opportunities for foreign companies to do a much better job innovating and beating us in the market. Of course, given the history of the AFL-CIO, they must be used to that kind of effect, because that's been the result of previous policies in previous decades. In the meantime, Riley is hoping that by getting the support of unions, Democrats will feel compelled to vote against patent reform -- and, in fact, a Wall Street Journal article on this same subject suggests that the AFL-CIO's letter has been effective in slowing the reform effort. Hopefully, though, someone will explain to both the unions and the politicians the basic economics of monopolies and how they slow competition and innovation. If the folks at the AFL-CIO would like a detailed explanation for why their letter actually goes against the best interests of the people they supposedly represent, they should give us a call.

Filed Under: congress, patents, unions
Companies: congress