Agreeing with this and referencing Peter Thiel, which I do a lot. In Zero to One, Thiel argues that the pure, ideal free markets that politicians and economists dream of drive profits to zero. Think about the math - it's obvious. You see this in high competition markets for effectively identical products, like groceries or gas stations. Razor-thin margins. The only way to profit is via some sort of localized monopoly, which is what "unique value proposition" of any sort actually means. This isn't a defense of old-school robber baron monopolies (which break the math in the other direction), but it's to Thiel's broader ideas about how to build a high profit company.
The need for labor unions is a product of the free market, and a way to build a unique value proposition. With employees that are totally fungible, totally replaceable parts, the marginal value of labor itself is driven to zero. Wages become a race to the bottom, and working becomes unprofitable. But by saying "Only members of the union can work here", the union sharply decreases the available labor pool, thus creating a unique value proposition.
In other words, it's a market response to a market problem.
The people who call for "free markets" and rail against unions basically don't understand what it is they're asking for. They're in love with an ideal, not thinking about how profit actually works in the real world, as a function of economics. It's straight-up ignorance reinforced by puritan idealism.
"Americans mythologize competition and credit it with saving us from socialist bread lines. Actually, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition all profits get competed away. If you want to create and capture lasting value, don't build an undifferentiated commodity business."
The need for labor unions is a product of the free market, and a way to build a unique value proposition. With employees that are totally fungible, totally replaceable parts, the marginal value of labor itself is driven to zero. Wages become a race to the bottom, and working becomes unprofitable. But by saying "Only members of the union can work here", the union sharply decreases the available labor pool, thus creating a unique value proposition.
In other words, it's a market response to a market problem.
The people who call for "free markets" and rail against unions basically don't understand what it is they're asking for. They're in love with an ideal, not thinking about how profit actually works in the real world, as a function of economics. It's straight-up ignorance reinforced by puritan idealism.