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Economists on Strike?

Mises Daily: Monday, August 31, 2009 by

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A recent teachers' union strike that included economists and other business faculty members at my university — ironically and yet unsurprisingly led by an economics lecturer — has motivated me to consider the intended consequences of these strike actions.

Economists are prone to call the consequences of many decisions "unintended," and thus assume the actors are genuinely ignorant of these effects or would otherwise not choose the actions that cause them. However, I must give these economists qua economists credit for a minimum knowledge of the effects of unions and strikes, and assume they knew the likely outcomes of their actions. If they did not understand these consequences, they surely cannot be worthy of what some consider a noble title: economist.

In the union's political self-interest, these economists are making nearly everyone else worse off by going on strike. They went on strike to request, inter alia, higher wages and more paid leave.

Cui bono? It is obvious these union members would directly benefit if their demands were met. So, who would not benefit, and how? Let's have a look at what these economists must have intended. The money has to be taken from somewhere.

The unionized economists must have understood that their actions could cause the administration to raise tuition prices in order to fund the union's requested increase in pay. Yet not all students pay equally in Australia. International students make up a lot of the revenue and pay much higher fees. Hence, the union is essentially asking foreign students to give them more money — more money so these union members can go on vacation.

Or perhaps union members intended their increased salaries to come as a result of other employees losing their jobs. Even if nonunionized lecturers benefit in some ways from the union's actions, other university staff members will most likely not. Maybe they will be fired, falling prey to the common consequence of unions: unemployment. Maybe some individuals who would have been hired will simply no longer be considered, since the funds that would pay their wages will be going into union pockets. Thus, union members were in a way just telling university management to not expand and grow.

Admittedly, the union members could have been asking merely for others' benefits to be reduced or eliminated: other staff members could have fewer benefits so the union could have more. Either way, with more paid leave, the marginal productivity of all union workers would be lowered, thus consumers — the students — would be worse off. (Although a case could probably be made for paying union members to do nothing, rather than teach young minds.)

"The common consequence of unions: unemployment."

Thus, overall, these unionized economists intended for some combination of increased tuition fees, lower employee benefits for some staff, and more unemployment. Perhaps Murray Rothbard would be shocked (although I doubt it) that presumably well-informed economists would make such decisions, given what he wrote in Man, Economy, and State:

It is certain that knowledge of these various consequences of union activity would greatly weaken the voluntary adherence of many workers and others to the mystique of unionism. (p. 714)

The degree to which these union members qualify as economists is the degree to which they must knowingly intend the consequences of their actions and therefore be culpable for them. The phrase "unintended consequences" all too easily attributes ignorance to the actions of union members. In large part, for many, including these unionized economists, the consequences must be intended.