Strengthen the unions

To the editor:

A recession is defined as a want of jobs, jobs, jobs, but what causes the want of jobs? The answer is a want of demand for the goods and those services that the jobs create, and not a want of a supply of those goods and services. Investment to produce more of those goods and services would do no good.

The cause for the want of demand for goods and services is the inadequate purchasing power of the consuming public, due in turn to low wages. Classical economists say this is impossible because competition will drive prices down so low as to clear the market of all goods and services.

But in fact competition does not, for as Thorstein Veblen observed,”Competition may be the soul of trade, but monopoly is the aim of every trader.” And in truth, traders everywhere seek to create a monopoly (or at least an oligopoly) by exploiting a brand name by advertising vigorously, by employing aggressive salesmen, in short to do everything but trade freely.

Labor also saw the advantages in organization. They formed unions and the unions joined together in the AFL-CIO. The atomistic economy of individuals bargaining between individuals gave way to large countervailing powers. Committees from large corporations negotiated with committees from large unions. This balance brought great prosperity to America after 1945 by maintaining the purchasing power of consumers. But after 1975, corporate America turned against unions. Right to work laws were passed, first in the south, then in Indiana and now Michigan. Corporate America may even create too large to fail, but workers may not. The balance that brought us prosperity has been broken.

The problem with the Right to Work law is that it weakens the purchasing power of the public needed to keep the economy afloat. The Republicans ignore this fact. When is the last time you heard John Boehner talk about purchasing power? The Republicans always talk about investments as if that were the problem. Corporations today are awash with cash and interest rates are at rock bottom. What corporations and small businesses need are customers and weakening the unions will only reduce the purchasing power of potential consumers. It is the want of consumers that has caused the painful recession from which we now suffer and the way to correct that want is to strengthen unions.