One might think from some of my writings here that I’m opposed to unions. In actuality, I think unions are a very complex subject. A labor union is, at its core, a monopoly. Just like corporate monopolies are often undesirable and even abusive towards consumers, labor monopolies can also create very undesirable results. But that doesn’t mean that labor unions are always bad. The NFL referee lockout is a classic case of why labor unions are sometimes necessary.
Labor unions can be beneficial when there’s some economic distortion that weakens the power of workers. Indeed, this was often the case in the United States in the late 19th and early 20th Century. While a lot of historians inaccurately label that era as “laissez-faire”; in actuality, it was quite the opposite. The US was a mercantilist nation, which meant that it enacted trade protections and tariffs to protect domestic industries.
By intervening in the markets to favor domestic companies, the government fattened the profits of capitalists in exporting industries. At the same time, it weakened the purchasing power of the broader American public via trade protections that kept lower cost goods from elsewhere from entering the US. The end result: capitalists get richer while workers get poorer. In affect, trade protections were redistributing wealth and creating a wider chasm between the rich and the poor. In this context, it made sense to form unions in order to force companies that were protected by the government to pay their fair share to employees.