In the Middle Ages, guilds sought to protect their members through a rigorous process of professional self-improvement that ultimately led to an unmistakable guarantee in quality of craftsmanship. That seal of excellence would, in turn, lead to higher earnings.
Modern trade unions originated around the period of the English Industrial Revolution, but, unlike their predecessors, they seek to improve the livelihood of their members through the process of collective bargaining. When no agreement is reached, the invisible gun of prolonged strikes is held at the employer's head in the hope that he will eventually surrender.
One could perhaps go along with the methodology, if one did not pause to think. Once one begins to dwell on the foundations of the matter, one comes to a quite different conclusion. The whole concept is heavily flawed.
The three presumptions on which the modern movement lies are nothing but pillars of clay that have not stood the test of time. Yet, stubbornly, they continue to be held sacred in some parts of the globe.
The first flaw that one can find is that trade unions assume that labour is not part of the business equation. They take it for granted that, just because two employees have the same job description, they should earn the same wage. On the surface, it seems just. However, invariably, one of those workers will achieve better levels of productivity than the other. By exacting equal rates, unions are hiding economic inefficiencies that will impact the balance sheet of the business. Furthermore, constant demands for higher wages will, in the end, lead to a loss competitiveness. Labour is an input like all the other inputs. Instead of protecting jobs, unions are active agents in the destruction of those same jobs.
Then, they ignore the existence of economic cycles. For them, the law of supply and demand does not exist. When the latter slackens, all inputs of the business equation have to shrink too. Labour is no exception. If, by legislation, it becomes difficult to fire labour, unless the employer is prepared to pay ridiculous amounts of severance pay, he will be less likely to hire and, if, during the expansion phase of the cycle, he was imprudent and he hired too many workers, his only option is bankruptcy.
Finally, the last presumption of trade unions is that employers will not get tired of the process and go elsewhere in search of less troublesome conditions. Stability is an essential element of confidence.
Although, in many parts of the world, people have realised that the Industrial Revolution is over, in others, they are still living in the 19th century. The reason for it is that they have been hijacked by political parties that wish to achieve that which their meagre public support does not allow them to accomplish in national parliaments. In some countries, trade unions are nothing but the Communist Party at prayer.
So, I'm not sure what President Obama means when he says he supports trade unions.
