A Libertarian Alternative to the EFCA
by Dan Clore
The EFCA (Employee Freedom of Choice Act) would allow workers to immediately unionize a workplace where 50+% of the workers have signed union cards, a process known as "card check".
Employers and their front groups have waged a massive campaign against the EFCA in the mass media, claiming that it would eliminate secret ballots. This is not true: under the EFCA, while workers would no longer be required to hold a secret election after 50+% have signed union cards, they can still do so if they want to. But their employers would not have the power to require that they do so. They also fail to note that employers frequently abuse the election procedure, using it to buy time in which to fire workers likely to vote in favor of unionization and put other pressure on the workers against unionizing.
More principled critics, free-market advocates, have objected to the EFCA on the grounds that it represents government interference in the marketplace. While factually accurate, by itself this ignores the great amount of government interference in the market on behalf of employers. And that suggests a libertarian alternative to the EFCA.
I propose that any company that refuses to allow its workers to unionize be made ineligible to receive any benefits from government interference in the market on its behalf.
But for my purposes here, I'll ignore the vast majority of such government interference on behalf of employers, such as various forms of corporate welfare, protectionism, regulation that eliminates competitors, etc. etc. etc., and focus on a form of government interference that (1) benefits nearly all traditional companies; and (2) is directly relevant to the issue at hand, unionization.
The form of government interference in the marketplace on behalf of employers that I speak of is incorporation. When a government grants a charter of incorporation to companies, it creates by fiat a "collectivist legal entity", or corporation. Among other things, this allows the many owners and investors in the company to be legally considered a single collective entity for business purposes when this is to their benefit, while at the same time granting them "limited liability" that considers them separate from the company when this helps them avoid responsibility for it.
This creates an asymmetrical situation in which employers enjoy the benefits of collective organization and representation, but can deny these benefits to their employees. Unionization, with its collective organization and representation for employees, makes this situation more symmetrical and thus fairer.
So, my suggestion for a libertarian alternative to the EFCA is simply this:
Any employer (company) that refuses to allow its employees to unionize, should be disallowed the charter of incorporation and its consequent benefits.
This would decrease, rather than increase, government interference in the marketplace (granting corporate charters constitutes such interference, while failing to do so does not), and therefore should please advocates of the free market.
It would also most likely lead to a much greater rate of unionization, as most employers would probably choose to recognize their workers' unions rather than forego the benefits of incorporation, and therefore should please union advocates.
Employers could not complain about being forced to recognize unions if this suggestion were instituted, as they could avoid the requirement by organizing as unincorporated businesses, such as single proprietorships and partnerships. (Worker-owned-and-controlled businesses, such as workers collectives and workers cooperatives, would also be exempt, as the workers are themselves their own employers.)
I don't expect this proposal to gain much traction, but it should at least serve to make readers think about the issues in a way more productive than the typical fare.
Additional note: Readers might like to use this column to check out the remarkable job that GoogleAds does matching advertisements to content. As I view them now, eight of twelve ads are either for sites promoting misinformation about the EFCA or for union-busting companies.
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©2009 Dan Clore, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Saturday, February 28, 2009
Last modified: Sunday, March 15, 2009
The views expressed in this article are those of Dan Clore only and do not represent the views of Nolan Chart, LLC or its affiliates. Dan Clore is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
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Reader Comments:
Posted By: gene
Date: 2009-02-28 09:31:44
Hi Dan, You need to be seriously commended for two things: looking at both sides of the issue, not just regurgitating some free market stand that would actually limit freedoms. and, your mention of incorporation, the single biggest restriction on a truly free market other than the government. great job!
Posted By: Less Antman
Date: 2009-03-01 12:44:34
I also commend you for reminding everyone how often advocates of a "free market" only object when the government intervenes against the interests of employers, and not when it intervenes on their behalf. Bravo!
It is worth noting, though, that a free market would permit contracts that limited the liability of either or both parties, and that there is a valid dispute as to whether shareholders are benefiting unjustly, or benefiting at all, from a statutory limitation on tort liability. California didn't offer statutory protection from liability to shareholders until 1931, and there is no evidence that it made any difference (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=244333). The share prices of publicly traded California corporations had no significant changes after limited liability was created there. In practice, shareholders were never held liable for torts unless there was evidence they had participated in their commission. The same law of incorporation that limits their liability limits their powers: shareholders qua shareholders cannot make any business decisions affecting the corporation, and can only vote on representation on the board of directors, which directors cannot be bound by the shareholders in any way on their actions. Yes, they help finance the business, but so do creditors and customers, neither of whom are held liable for the corporation's actions.
Additionally, I think it interferes with worker rights to force them into collective bargaining just because a majority of other workers choose it, so we are simply changing coercers by making majority-vote unionization easier. And given the far greater propensity of unionized businesses to close or move out of the country (which has reduced private sector union membership from 36% to 8% over the past half century or so), workers will probably be less secure in their jobs if the current form of unionization is made easier.
The true free market answer is to repeal Taft-Hartley and Wagner, allow any workers to form a union without it being an all-or-nothing deal based on majority vote, and allow them all the weapons of negotiation, including wildcat and secondary strikes., while eliminating government-mandated "cooling off" periods and other tools that artificially help employers. Frankly, I'd bet employers would like that even less than the EFCA.
I'm not worked up one way or the other about EFCA, except that I think it distracts from far more useful pro-worker reforms. As I said, though, I think we need more libertarians to make the distinction between free markets and pro-business interventionist policies, and your proposal is, at a minimum, one that inspires useful thinking on the subject. Finally, if I'm correct about the irrelevance of statutory limited liability protection, I can have no objection to your proposal to eliminate it.
Posted By: Jahfre Fire Eater
Date: 2009-03-10 07:19:18
The Dole = Control. Unions could have some beneficial influence on business but in the real-world, the lure of political power is too great and unions end up as nothing more than a very specialized application of social welfare program.
As a conservative, I think it is immoral to use political and economic leverage to impose controls on others. (Otherwise known as social engineering legislation...) Therefore, ideas that pit one segment of society against another based on what "benefits" they receive as the result of various forms of government force are all tools of the enemies of liberty...no matter how libertarian the person currently using that tool may claim to be or how libertarian their intentions, using the tools of the enemy benefits the enemy, always.
Opposing corporatism is a worthy conservative cause as is fighting against legislation that allows employees to damage business prospects, but tying the two together in a scheme that rationalizes the increased use of force to dole out "consequences", arbitrary controls stipulated by social engineering legislation, Is plainly an immoral use of force.
The fundamental problem buried deep within the realm of corporatism is the mechanism whereby a corporation is treated under the law as having (all, any, more?) rights that are best left to humans. That is bad enough, however, coroprate law goes way beyond bad by also unhinging corporations from the responsibilities that are inherent in exercising those rights.
One simple change in corporate law, making the principles in a corporation and shareholders in public corporations personally liable for the consequences of actions taken by a corporation. This simple reinstatement of the natural connection between action, consequence and responsibility would go a long way towards enabling a sane, sustainable and profitable corporate landscape.
-Jahfre Fire Eater
Posted By: Frank Valdez
Date: 2009-04-30 10:35:03
While I do not oppose your position, I must say that modern day employers (especially large corporations) are concerned about one thing and one thing only; PROFITS! Thus we have the classic struggle between those who have (corporate bosses) and those who do not (workers, most of us)I would take the position that it is the capitalist that has encouraged class struggle in our country more so than any left wing political party or labor union. Workers when pushed into a corner will do one of three things: 1)Become even more complacent and docile, 2) quit their jobs and go elsewhere, or 3) Resist and organize a union! I opt for number three, because it is the right thing to do and it is our right under law! The National Labor Relations Act and the Constitution protect our right to organize and it is the only courageous thing to do.