Monday, July 25, 2005

Market Power & Government

"With the new year under way, there was little time for brooding, seldom time enough for anything. A steel strike loomed, threatening the whole economy. Hurried meetings were held. Official cars came and went in the White House drive. '1946 is our year of decision,' [President] Truman had told the country in a radio broadcast. 'This year we lay the foundation for our economic structure which will have to serve for generations.'

The steel workers' union, headed by Phil Murray, called for a wage increase of 19 1/2 cents an hour. The steel companies, represented by Benjamin Fairless of U.S. Steel, offered 15 cents. At the conclusion of a long, arduous session at the White House on January 12, Truman was able to announce that Murray had agreed to postpone the strike for one week. After another session on the 17th, and still no agreement, Truman proposed that the steel companies grant an increase of 18 1/2 cents. Both sides wanted time to consider and were told that they had until noon the following day.

Murray accepted the President's proposal, but Fairless refused. On January 19, 1946, at more than 1,000 mills across the country, 800,000 steel workers walked off the job in the biggest strike in history.

[ . . . ]

Pressed for a statement about the steel strike at his next press conference, Truman replied, 'I personally think there is too much power on each side, and I think it is necessary that the government assert the fact that it is the power of the people.'"

David McCullough, Truman, p. 480-481
Interesting, eh? Both sides have too much power. What is interesting to me is that the President is involved in labor negotiations between two entities that seem to me to have considerable monopoly power. The President is negotiating what seems to me to amount to the way the extra profits of monopoly power will be distributed between a producer monopoly and a union or labor monopoly. Further, the losers in this dispute will really not be either big labor or big steel, but rather "we the consumers." If the government is going to be involved in such a situation, shouldn't its policy be to work to end the monopoly profits, and not to determine the distribution of monopoly profits?

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