The LA grocery strike is getting to be a real pain. I rely on our neighborhood Ralph's for staples. Oddly enough, it also houses the only branch of my bank in our neighborhood. My problem is that, contrary to what I bet you suspect, I will not cross picket lines. Why not?
First, I come from a long line of union members. Second, Catholic Social Teaching emphasizes that workers have a natural right both to form unions and to strike. As I read the relevant encyclicals and pastoral letters, this teaching is not a matter of prudential judgment, but rather an authoritative teaching to which faithful Catholics must give religious assent. Finally, unions potentially are an important way of minimizing transaction costs.
Labor contracts are subject to moral hazard problems on both sides. Workers shirk—providing less effort than that to which they have agreed. Owners behave opportunistically—providing fewer rewards than promised. Preventing such shirking is one of the principal functions, in economic terms, of any labor relations system. Hence, at least among lawyer-economists in the transaction costs branch of law and economics, the once widely-held view that unions exist to capture monopoly rents for workers in the form of higher wages and superior benefits has given way to an understanding that unions play an important role in reducing transactions costs by constraining strategic behavior by management. Because workers value job security, firms can obtain lower labor costs if they can credibly promise to refrain from opportunistic conduct. One way of bonding that promise is to sign a collective bargaining agreement with a union. Collective bargaining transforms the decisionmaking process from unconstrained management prerogative to limited managerial discretion bounded by claims of right sounding under the agreement. The seniority system, with its ports of entry, internal promotion ladders, and protection from lay-offs, offers job security. Union monitoring helps ensure compliance by the firm with its contractual obligations. Grievance procedures allow for dispute resolution. Collective bargaining thus becomes a burden on the enterprise, in that it raises the transaction costs associated with decisionmaking processes and limits management discretion. Yet, because that burden serves to make the firm’s promises to its employees more credible, it is one rational managers would accept. (Putting the theory into practice, of course, has been a problem. Unions have been plagued by internal agency costs and been a source of social costs.) For a more detailed explanation see my articles Employee Involvement in Workplace Governance Post-Collective Bargaining and Corporate Decisionmaking and the Moral Rights of Employees.
Update re decisionmaking heuristics: One of my colleagues dropped by the office this afternoon to object that, whatever merit my arguments may have, I have not made a case for refusing to cross all picket lines. Good point. Neither efficiency or morality compels the result that every strike is worth respecting. My rule against crossing crossing picket lines, however, is economically justified as a transaction cost minimizing decisionmaking heuristic. Bounded rationality is a neo institutional economics concept capturing the idea that we all have inherently limited memories, computational skills, and other mental tools. These limitations become a significant constraint on decisionmaking under conditions of complexity and uncertainty. Under those conditions, we can reduce decisionmaking costs by adopting a heuristic -- a rule of thumb -- for making judgments. Yes, the rule of the thumb inevitably produces errors, but the benefit in time and effort saved may outweigh error costs. A rule of thumb of not crossing any picket line saves me the time and effort necessary to figure out whether a given strike is morally and economically justified.
