Sunday, March 6, 2011

Monopoly is in the eye of the beholder

I would bet that if you surveyed the protesters that have gathered in Madison in the recent weeks on the question of, "are monopolies a bad thing," you would find broad agreement that they are.

I'd be curious to know, then, what the protesters would make of this entry in the Concise Encyclopedia of Economics from the Center for Economics and Liberty:
Although labor unions have been celebrated in folk songs and stories as fearless champions of the downtrodden working man, this is not how economists see them. Economists who study unions—including some who are avowedly prounion—analyze them as cartels that raise wages above competitive levels by restricting the supply of labor to various firms and industries....
According to Harvard economists Richard Freeman and James Medoff, who look favorably on unions, “Most, if not all, unions have monopoly power, which they can use to raise wages above competitive levels” (1984, p. 6).

1 comment:

Locke said...

That is most certainly true in cases like the UAW and obviously pro sports unions. Those organizations clearly have a de facto monopoly on their respective labor market. In other areas though, it's much less true.