STRIKES

We asked economists whether strikes really work

The most important questions seem to be: who’s on side, and how much power do they have?

McDonald’s workers went on strike this week in the latest of a series of strikes by low-wage workers in recent months. It’s a tried and tested method to express your dissatisfaction with the way you’re being treated at work – but is it effective?

We asked Melanie Simms and Alfred Crossman, two professors in the UK who specialise in the economics of work, to explain some of the theories behind strikes, and whether they really pan out.

Why do people go on strike?

“Strikes are always the last resort. Everyone from to HR managers pretty much agrees on that,” says Simms. “You only do it if you’ve tried everything to get the other side to understand, and they either can’t, or they just won’t. Obviously there’s an imbalance of power, so unions are always in a weaker position, and individual employees even more so.”

Often, strikers just feel they’re being expected to do more than they’re being paid for. But recently, says Professor Crossman, it’s been about more than that – people’s pay isn’t rising, but inflation is, and executive salaries are going up too. So people end up feeling like they’re being unfairly treated, and the money they’re earning is buying them less because prices are going up.

Another big issue is flexible working. It’s good for some, but others feel like it’s been imposed on them by big companies making it the norm. Not knowing how many hours work you’ll have means your income stream is unpredictable, and that’s a real problem for people.

“Most of us have regular bills – we know what the outflows of cash from our account are looking like,” Crossman points out. “We want to make sure the inflows match.”

“The basic ‘economics’ idea is that we have the right to decide how we use our labour,” says Simms. “If we didn’t, we’d be slaves, literally. But if we’re freely making the choice to exchange our work for pay, and other benefits, then in principle we have the right to withdraw it, too.”

What makes or breaks a strike?

It depends on a few things: One, how much it’s going to affect the employer’s business in the short term; two, how replaceable the workers are; and three, to what extent the strikers have the public and the government on their side.

“I work at a university,” says Simms. “If I decide not to work today, not much happens to my employer’s business. But if I were a train driver, and I decided not to do my job, it would obviously have an immediate effect.”

If workers can easily be replaced by other workers, their ‘bargaining power’ is pretty low. If there is what economists call ‘surplus labour’ – i.e., people available and willing to do the job in the current conditions – then companies can just fire unhappy staff and call on a bank of new workers. When public sector workers go on strike, there are often private companies happy to do the work instead.

And then there’s . “Advances in technology are really reducing the power of workers to fight their corner,” says Crossman. In low-wage, manufacturing jobs, people can just be replaced by obedient robots, and that’s the end of that.

If the government and the public take a stand against the way workers are being treated – regardless of whether they could be replaced by other workers, or by robots – all this changes. Customers could simply boycott a product or service, and governments could launch official inquiries as to whether people’s rights are being breached. That puts companies in a vulnerable place, which workers can’t do.

Aren’t strikes a bit unfair to customers or service users?

“Trade unions would say customers are secondary,” says Simms. “The workers have decided it’s necessary, because someone isn’t listening to them.”

According to Crossman, it’s a matter of opinion. “If you look at the train strike [in the UK], customers were angry about the fact they couldn’t get to work, but they knew the service was bad before. So they tend to blame government and management, not unions. But there’s only so much they’ll take before they start turning on staff.”

What’s the role of governments in all this?

“Governments have got to try and help the parties reach an agreement – a bit like a marriage counselor,” says Simms. Whether they’ve got an obligation to get involved varies country to country – in the UK, it’s optional, bu in other places, it’s mandatory.

The other option is setting rules to avoid the things that cause strikes to kick off in the first place from happening. But, as Crossman points out, companies tend to find a way around them.”When companies were supposed to regulate how much they could increase executive pay in the 1970s, they just started handing out company cars. It’s like a computer virus: the virus comes after the computer has been created, so you’re always playing catch up.”

Governments can do the opposite, too: make it harder for unions to go on strike, by doing things like requiring a minimum vote among union members to allow industrial action. You can also make votes secret, to avoid any kind of peer pressure.

How else could workers express their dissatisfaction with the way they’re being treated?

Simms suggests some simple things: “Pull a sickie! It’s definitely not legal for your union to ask you to do that, but..”

Another simple act of protest, especially in hospitality, is just getting really grumpy. “There was a smile strike at Disneyland about 20 years ago,” says Simms. “Which at Disneyland is obviously a seriously huge thing”

You can also only agree to do things strictly outlined in your contract - that’s called a Work To Rule, and is often really annoying for employers. Plus, as Crossman pointed out, you still get paid.

But there’s not much you can do. “It feels like these days, the power is just really imbalanced,” says Crossman. “Because no-one in their right mind is going to put their house in jeopardy, or not be able to pay rent, so they’ll ultimately go back, because they need to, economically. Employers suffer financial damage, but evidence suggests it doesn’t take too long to recoup the losses. But once an employee has lost their wage, they can’t get that back without working overtime.”

Is there an ideal set-up anywhere in the world?

“Germany was in a really unusual situation after the Second World War,” Simms says. “They literally had a blank piece of paper to figure out a new system. Everyone else is constrained by their history, but they got to redesign the whole thing. And they designed something really sensible, with lots of checks and balances and responsibility on both sides.”

Crossman votes for the Netherlands. “They’ve got workers councils within organisations. You involve people in decision-making, you let them voice their concerns, rather than leaving them to find out all the big decisions from the comms department. It’s not confrontational, and it tends to work.”

Have you ever been on, or considered going on, strike?

“I went on strike in my first ever week of proper, professional work,” said Simms. “It’s painful - people going on strike end up shouting at the ones who aren’t, it’s tense. People are quite scared to be seen, because you’re obviously not doing your job. You lose money, you lose pay. I’ve been on strike that hasn’t actually offset the cost because of the pay we lost.”

Crossman hasn’t been on strike, but considered it: “It was when we were concerned about our pensions. So we had a ballot, but the turnout was pretty low. People decided not to take part in the ballot, and that’s their right. But I didn’t feel like the union had a mandate, so I couldn’t bring myself to take part. I was criticised quite a lot for it, but the reforms ended up going ahead.”

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  • Macrocompassion

    Look to who owns the land of Greece and why they are not using it properly!

    Discover how much the value of the land is being speculated in by holding it unused and the resulting lack of opportunity. Why can’t small scale farmers begin their own production of farm produce and the selling of it to local suppliers for domestic consumption?

    Adam Smith (“Wealth of Nations”,
    1776) says that land is one of the 3 factors of production (the other 2 being
    labor and durable capital goods). The usefulness of land is in the price that
    tenants pay as rent, for access rights to the particular site in question. Land
    is often considered as being a form of capital, since it is traded similarly to
    other durable capital goods items. However it is not actually man-made, so rightly
    it does not fall within this category. The land was originally a gift of nature
    (if not of God) for which all people should be free to share in its use. But its
    site-value greatly depends on location and is related to the community density
    in that region, as well as the natural resources such as rivers, minerals,
    animals or plants of specific use or beauty, when or after it is possible to reach them. Consequently,
    most of the land value is created by man within his society and therefore its
    advantage should logically and ethically be returned to the community for its
    general use, as explained by Martin Adams (in “LAND”, 2015).

    However, due to our existing laws, land is owned and formally registered and its
    value is traded, even though it can’t be moved to another place, like other
    kinds of capital goods. This right of ownership gives the landlord a big
    advantage over the rest of the community because he determines how it may be
    used, or if it is to be held out of use, until the city grows and the site
    becomes more valuable. Thus speculation in land values is encouraged by the law,
    in treating a site of land as personal or private property—as if it were an
    item of capital goods, although it is not (Mason Gaffney and Fred Harrison:
    “The Corruption of Economics”, 2005).

    Regarding taxation and local community spending, the municipal taxes we pay are
    partly used for improving the infrastructure. This means that the land becomes
    more useful and valuable without the landlord doing anything—he/she will always
    benefit from our present tax regime. This also applies when the status of unused
    land is upgraded and it becomes fit for community development. Then when this
    news is leaked, after landlords and banks corruptly pay for this information,
    speculation in land values is rife. There are many advantages if the land
    values were taxed instead of the many different kinds of production-based
    activities such as earnings, purchases, capital gains, home and foreign company
    investments, etc., (with all their regulations, complications and loop-holes).
    The only people due to lose from this are those who exploit the growing values
    of the land over the past years, when “mere” land ownership confers a financial
    benefit, without the owner doing a scrap of work. Consequently, for a truly
    socially just kind of taxation to apply there can only be one
    method–Land-Value Taxation.

    Consider how land becomes
    valuable. New settlers in a region begin to specialize and this improves their
    efficiency in producing specific goods. The central land is the most valuable
    due to easy availability and least transport needed. This distribution in land
    values is created by the community and (after an initial start), not by the
    natural resources. As the city expands, speculators in land values will
    deliberately hold potentially useful sites out of use, until planning and
    development have permitted their values to grow. Meanwhile there is fierce
    competition for access to the most suitable sites for housing, agriculture and
    manufacturing industries. The limited availability of useful land means that the
    high rents paid by tenants make their residence more costly and the provision
    of goods and services more expensive. It also creates unemployment, causing
    wages to be lowered by the monopolists, who control the big producing
    organizations, and whose land was already obtained when it was cheap. Consequently
    this basic structure of our current macroeconomics system, works to limit
    opportunity and to create poverty, see above reference.

    The most basic cause of our continuing poverty is the lack of properly paid
    work and the reason for this is the lack of opportunity of access to the land
    on which the work must be done. The useful land is monopolized by a landlord
    who either holds it out of use (for speculation in its rising value), or
    charges the tenant heavily for its right of access. In the case when the
    landlord is also the producer, he/she has a monopolistic control of the land
    and of the produce too, and can charge more for this access right than what an
    entrepreneur, who seeks greater opportunity, normally would be able to afford.

    A wise and sensible government would recognize that this problem derives from
    lack of opportunity to work and earn. It can be solved by the use of a tax
    system which encourages the proper use of land and which stops penalizing
    everything and everybody else. Such a tax system was proposed 136 years ago by
    Henry George, a (North) American economist, but somehow most macro-economists
    seem never to have heard of him, in common with a whole lot of other experts.
    (I would guess that they don’t want to know, which is worse!) In “Progress and
    Poverty” 1879, Henry George proposed a single tax on land values without other
    kinds of tax on produce, services, capital gains etc. This regime of land value
    tax (LVT) has 17 features which benefit almost everyone in the economy, except
    for landlords and banks, who/which do nothing productive and find that land
    dominance has its own reward.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and
    Ethics

    Four Aspects for Government:

    1. LVT, adds to the national
    income as do other taxation systems, but it replaces them.

    2. The cost of collecting the LVT is less than for all of the production-related
    taxes–tax avoidance becomes impossible because the sites are visible to all.

    3. Consumers pay less for their
    purchases due to lower production costs (see below). This creates greater
    satisfaction with the management of national affairs.

    4. The national economy
    stabilizes—it no longer experiences the 18 year business boom/bust cycle, due
    to periodic speculation in land values (see below).

    Six Aspects Affecting Land Owners:

    5. LVT is progressive–owners of
    the most potentially productive sites pay the most tax.

    6. The land owner pays his LVT regardless of how his site is used. A large
    proportion of the ground-rent from tenants becomes the LVT, with the result
    that land has less sales-value but a significant “rental”-value (even
    when it is not used).

    7. LVT stops speculation in land prices and
    the withholding of land from proper use is not worthwhile.

    8. The introduction of LVT initially reduces the sales price of sites, even
    though their rental value can still grow over a longer term. As more sites
    become available, the competition for them is less fierce.

    9. With LVT, land owners are unable to pass the tax on to their tenants as rent
    hikes, due to the reduced competition for access to the additional sites that
    come into use.

    10. With LVT, land prices will
    initially drop. Speculators in land values will want to foreclose on their
    mortgages and withdraw their money for reinvestment. Therefore LVT should be
    introduced gradually, to allow these speculators sufficient time to transfer
    their money to company-shares etc., and simultaneously to meet the increased
    demand for produce (see below).

    Three Aspects Regarding Communities:

    11. With LVT, there is an
    incentive to use land for production or residence, rather than it being unused.

    12. With LVT, greater working opportunities exist due to cheaper land and a
    greater number of available sites. Consumer goods become cheaper too, because
    entrepreneurs have less difficulty in starting-up their businesses and because
    they pay less ground-rent–demand grows, unemployment decreases.

    13. Investment money is withdrawn from land and placed in durable capital
    goods. This means more advances in technology and cheaper goods too.

    Four Aspects About Ethics:

    14. The collection of taxes from
    productive effort and commerce is socially unjust. LVT replaces this extortion
    by gathering the surplus rental income, which comes without any exertion from
    the land owner or by the banks–LVT is a natural system of national income-gathering.

    15. Bribery and corruption on information
    about land cease. Before, this was due
    to the leaking of news of municipal plans for housing and industrial
    development, causing shock-waves in local land prices (and municipal workers’ and
    lawyers’ bank balances).

    16. The improved use of the more
    central land reduces the environmental damage due to a) unused sites
    being dumping-grounds, and b) the smaller amount of fossil-fuel use, when
    traveling between home and workplace.

    17. Because the LVT eliminates
    the advantage that landlords currently hold over our society, LVT provides a
    greater equality of opportunity to earn a living. Entrepreneurs can operate in
    a natural way– to provide more jobs. Then earnings will correspond to the
    value that the labor puts into the product or service. Consequently, after LVT
    has been properly introduced it will eliminate poverty and improve business
    ethics.