[Akula2ssn]

Originally Posted by horatio

First, unionization has always been highest in the second sector so it is natural that union membership is declining while services are becoming more important than industry.

Why? It only makes sense to organize yourself in a union if companies are large which is often the case in the second sector whereas the third one is more of a mixed bag, i.e. there are large companies like banks and insurance companies and so on but e.g. a barber or server do not work in large companies.
Furthermore I guess that monopoly rents have been higher in industry back in the days than today (globalization; there is more competition nowadays on output markets) and higher than in the service sector. When there is a profit based on market power it has to be distributed between labour and capital so unionization makes sense to get "a piece of the action". While there is also a lack of competition in the service sector, e.g. in finance, employees directly bargain for a part of these rents as it is hard to imagine unionized financial engineers or traders due to ideological reasons.

And last but not least capital has become more powerful since the eighties and tried to crush organized labour. Just take a look at what Thatcher did in the eighties or what Scott Walker, the henchman of the Koch brothers, did in Wisconsin last year.

So in my opinion unionization has declined partly because of economic fundamentals and partly because of political economical reasons.

So would it be accurate to say that in addition to the politics where big business has become more powerful over the years, that in places such as the US where the economy has shifted away from being industrial to more of a service based economy, unions that essentially were established under an industrial economy are struggling as a result?

I recall in the 90s around the time Boeing moved its headquarters from Seattle to Chicago, there was a large push by the new Boeing leadership to move away being and aircraft designer and manufacturer. I think the term that was used was that Boeing would become an "integrator". All the engineering work would be done else where such as in Russia. Manufacturing of major components of the plane would done in places like China, Japan, or by other companies in the US (not simple things like wires, buttons, etc but the actual wings major parts) and then all would be shipped to the Seattle area for final assembly. I know it had engineers up in arms, not just because of the attack on their livelihood but also the fact that designing and building aircraft is a lot different than building a car. It's difficult enough to do even when everything is done in house. While Boeing never did implement such a plan to the extent they had intended, a lot less stuff is done in house and the realities of aircraft designing and manufacturing has pretty much come back to bite them in the butt. I think there was even an attempt to also implement just in time manufacturing on top of it all, which was laughable.

[horatio]

Originally Posted by Akula2ssn

So would it be accurate to say that in addition to the politics where big business has become more powerful over the years, that in places such as the US where the economy has shifted away from being industrial to more of a service based economy, unions that essentially were established under an industrial economy are struggling as a result?

Yep. I know too little about unions, sectorial shifts and how monopoly rents are distributed between capital and labour to tell which factor is more important but the typical progressive story about the decline of unionization being merely caused by the rise of big business is clearly wrong.
Economic fundamentals always matter and caring about them doesn't imply that you cannot advocate the guillotine for the Koch brothers.

[Akula2ssn]

So then the problem facing unions isn't simply staving off the tide of increased influence of big business, but also adapting themselves to "stay relevant" (not sure that's the best way to put it maybe "viable"?) in a changing economy.

[horatio]

Indeed. It is easy to become romantic-nostalgic about unions, they fought to end sweatshop labour and in general for the moderation of capitalism. I think that a society without strong unions is doomed to regress back to the Gilded Age but I totally agree that unions have to adapt. I know nothing about it but I think there are academic folks who apply evolutionary logic onto human institutions so I'd say adapt is a good choice of words.

[Akula2ssn]

I wonder if it might be a bit of a challenge for unions to adapt. In order to adapt, generally people need to be able to not necessarily give up things but they have to step outside of the established norms at the very least. So there's a certain degree of instability or volatility associated with adapting.

It seems to me that businesses usually don't have too much of a problem with adapting. That's a gross generalization but I think it's accurate to say that businesses or business minded people are always looking for an edge and thus already have that mindset to adapt. I'm not sure if some of the unions here in the US have that mindset. I mean part of joining a union is seeking out the better wages, benefits, fairness, etc and the stability associated with those things. When we're forced to adapt to things, stability kind of goes out the window although not necessarily permanently.

[horatio]

Actually plenty of businesses fail at adapting. Most of the time you can blame managerial error (or liquidity issues like right now) for the demise of an enterprise. But yeah, you can tell a survival of the fittest story and evolutionary economics, following in the steps of Schumpeter. is an important research area (especially in a discipline with an equilibrium fetish).
Of course unions do are ideologically, just like me, social democratic and thus for the moderation of capitalist excesses, for the smoothing of the business cycle, for employment stability and so on.
Yet I don't think that this stands in contrast to economic adaptation but actually enhances it. Scandinavian countries feature e.g. extremely liberal hire&fire labour markets with a broad welfare state that eases the costs of frequent employment changes.

On the other hand you are of course correct that workers value employment stability and unions fight for things like the auto bailout (which did make some economic sense as there are network effects / negative externalities , i.e. an automobile company is a bit like a bank, when it goes down many other companies go down ... but of course one still has to ask whether companies like Chrysler who produced crap for years will magically start to improve right now), i.e. for a lack of adaption.

[Akula2ssn]

Going to your very first point, no doubt there's plenty of examples of managerial error and I've witnessed quite a few myself, but on a larger note do you think that as businesses grow larger and more influential, they start to lose the flexibility needed to adapt? It would seem to me that when big businesses hold a lot of clout, adaptability goes out the window because they're in a position that they can more or less stack the deck in their favor.

[horatio]

Large companies can gain advantages because of three reasons. First, there are economics of scale, they are simply more efficient then their smaller brethren. Second, they have market power and make extra profits based on that. Third, they lobby aka use their money and power to buy political outcomes.
I don't see how this is related to adaptability. Sure, you can claim that based on these three advantages they are not forced to adapt much or that they are such large sclerotic bureaucratic monsters but I see e.g. a lot of adaptability in investment banks. They were already well-off but have changed to become even more efficient. As a teenager I worked for some time for a very small IT company and compared to these large innovative IT companies it was incredibly static.

[Akula2ssn]

I see what you mean. On another note, we hear claims or stories fairly regularly about the board of directors of companies hiring CEOs that have fairly consistent track records of running businesses into the ground and cashing out. Do you have insight as to how prevalent this actually is and why anyone would hire such individuals to run a company?

[horatio]

That's a corporate governance issue and I know too little about it to give a qualified answer. But when incompetent CEOs are hired it is obvious that shareholders have too little power while management, following its own interests, has too much.