Tuesday, November 29, 2011

Self-Destruction

A scorpion met a frog on a bank of the Suez Canal and asked "May I ride to the other side on your back?"
The frog replied, "Of course not. If I agreed you would sting me and I'd drown."
The scorpion argued, "We'd both drown, so of course I won't sting you."
The frog finally agreed and, in the middle of the canal, was stung by the scorpion.
As they both sank below the water the frog asked, "Why did you kill both of us?
Shrugging, the scorpion replied, "It's the Middle East."

Labor unions behave in ways that cause their industries to fail. During times of little or no competition, unions develop a mindset that says we get to demand what we want and they will give it to us.

When competition arrives, the unions will not (perhaps cannot) permit the "legacy" firms to become competitive in wages, hours, and working conditions. As a result, the firms typically go through bankruptcy, perhaps even out of business.

Examples of this phenomenon include two of the "big three" U.S. auto makers and the U.S. legacy airlines, another one of which (American Airlines) today announced Ch. 11 bankruptcy.

Labor relations scholars might wish to research what it is about this situation that leads unions members to behave in ways that are destructive to the very firms that employ them. Perhaps, like the scorpion, they enjoy killing their firm so much they are willing to have their jobs die as a consequence.