Thread: Why do technocrats swoon over mechanistic policies like the EITC but almost ignore unions as an anti-poverty tool? Because technocrats don’t actually trust poor people. The EITC protects workers from themselves. Incentivized them to work. As if survival weren’t enough.

Unions require actually trusting workers. Giving them voice in the governance of the firm. In politics. But the technocrat doesn’t trust them to do that. What about unintended consequences? They’ll push the wage above the competitive level. There will be unemployment!

The incentives just aren’t right. Unions don’t have the profit motive. They aren’t interested in investment orgrowth. No, it’s the shareholders we trust. There the incentives are aligned. They make the tough decisions that lead to growth because all they care about is profit.

That’s the standard technocrat story. But it just isn’t borne out by the history. The peak of unions coincided with the most impressive period of economic growth in US history while achieving the highest degree of equality. Equity-efficiency tradeoff? Hardly.

Unions were very invested in the fight for employment. Stable employment opportunities were complementary to well-functioning unions. It allowed them to focus on bread and butter issues like wages and dignity.

Despite fear-mongering over free enterprise (which somehow in the case of unions actually means the government intervening in the economy to forbid freedom of contract to a closed shop) the economy kept humming along.

Firms back then did reinvest profits. Capital kept on accumulating. And they invested in workers and human capital too. You could start at a low level employee and work your way up accumulating skills and knowledge along the way.

Unions gave workers a stake in the company. Seniority ensured stability. This along with the pipeline up the job ladder gave workers the incentive to invest in themselves bc they’d see the return. All this is endogenous. But that’s the point. The pieces all worked together.

Politically, unions formed the backbone of the New Deal Coalition which advanced investment in education, infrastructure, science and technology, regional development, the civil rights act. The voting rights act. They safeguarded our prosperity and democracy

Needless to say, things have changed. Companies like amazon and Walmart thrive on turnover. It’s the cost of doing business if your goal is a subservient and cheap workforce. Investing in workers and allowing them to thrive and realize their potential is expensive.

Milton Friedman got his wish. The shareholder is king. Funny though. They aren’t investing that money back in the company. Productivity growth has slowed to a crawl. Whole regions have been left behind. But we have seen plenty of stock buybacks. Outrageous executive compensation.

Worker power gave us the new deal coalition.
Economic growth. Social mobility. Equality.
Technocrats and the neoliberal consensus they fought for have given us stagnation, plutocracy, and looming environmental catastrophe. I know who I’m betting on.