Labor Unions Are Not Optional

03/07/2011 04:36 pm ET | Updated May 25, 2011

In the few weeks since conservatives took the U.S. House and numerous state governments, union busting seems like it's become the new national sport. With the departing of William F. Buckley, there was no one with the intellectual heft or journalistic courage on the political right to stop persons like Scott Walker of Wisconsin from setting a 4 alarm populist fire that might not be so easy to extinguish. (Firefighter irony intended.)

Every tin pot politician that could spell Tea Party is now elected to public office. The U.S. House, indirectly, and in addition Wisconsin, Ohio, Indiana and half a dozen other states directly, now lay siege to the American people and their labor unions. It's the showdown between the radical right Bircher mentality and the inexorable force, the sleeping giant, of regular folks who just want to live decently. The victor is a forgone conclusion, but the conservatives keep trying. It may not be obvious to the century old opponents of unions, but unions are not optional to a modern economy. Unions exist for a natural tidal socioeconomic reason in balance to and because of capitalism, and they are an integral part of the success of capitalism.

Economies are measured by what they consume. There is no other measure because there is no other reality. More precisely, it is the value of what they consume that matters. Every economy consumes staple foods and energy, shelter and clothing. Technology and science, entrepreneurship, and the products deriving from them, are consumed by populations that have discretionary spending power after costs of staples are deducted. The highest median consuming publics, the largest economies, are those in which the populations are more highly paid.

Economies are built on the median income of their citizens. It's not rational to believe otherwise. But the combined forces of increasingly irrational capitalism, including a dyspeptic legion of economic hired guns, seem hell bent to prove otherwise. The natural counter balance for capitalist irrationality is unions. That's not to say that in some other epoch that unions will or have not been irrational in their demands, it's just that the balance of economic power has so shifted to capital that unions are, once again, a countervailing force that is prudent and necessary.

Scott Walker, Governor of Wisconsin, is the latest in a long line of anachronistic warriors fighting a battle that capital idolaters have waged for the entirety of the industrial age. To crush unions and to bridle government to serve business (now couched in terms like deregulation) is the goal. But before you took that leap of conservative faith, Governor Walker, it might have served you to think about what lies over the edge of the frying pan from which you yearn to jump.

There are but two means to power an economy. They are wages and taxes. Every business activity derives from what people want to buy with their wages and what people collectively want to do with their taxes. Those who want to make money exclusively don't drive economies at all, they feed off of the needs and desires of peoples. Entrepreneurship can create desires, but it can't bridge the gap to creating needs without boosting the economy enough to power consumption of it's own creations.

It's not really hard to figure out. If people are poor they only buy staples. If governments are poor they can't accomplish collective goals. Commerce is layered on top of these two fundamental behaviors of peoples. You may want to create something wonderful, but without a public sufficiently wealthy to buy it, your iPad will be a street corner vendor's curiosity show instead of a multi-billion dollar market.

It's not like there's no history. The Gilded Age built contemporarily fabulous wealth on the backs of desperately poor immigrants who labored in abhorrent conditions to make products from abundant natural resources that sold into a narrow band of merchant and professional prosperity world wide. To the surprise of the world, America became an economic engine by productivity miracles. High labor input production was replaced by more productive techniques and cheaper production did create demand in a whole new segment of society, the upper middle class. By today's standards, the economic engine was quite small though. In 1890, it's said that 91% of the population made less than $1,200 a year. In today's dollars that would be $28,000. The average income was $380 per year, $9,100 a year in 2010 dollars. So in 1890, industry could not sell to those legions of workers that manned the dreadful factories because they had no money.

The successes of the fabled Gilded Age Barons were peanuts compared to the modern economies that followed. In that age, by maximizing profits through paying poorly, the capitalist barons limited the potential of economies to consume what they sold to a narrow economic band.

China now amazes the world with economic growth as America once did. Unionless and voiceless in interests of labor, China is what America once was. We repeat, there, the mistake capitalists invariably make. Short term profit does not equate to long term gain.

Profits from productivity increases that are shared build on themselves in economies. Profits that are hoarded limit economies. Companies are, shortsightedly, not inclined to share profits, and so the means to get that done are either of taxes or union wage demands.

Government has not always been vigilant in its economic stewardship of seeing to it that profits are shared equitably by raising the minimum wage. Where governments fail, then the collective bargaining of labor equation is exerted. When wages don't surmount, or keep up with, costs of living, unions exert collective bargaining to right the imbalance. No exact formula exists to determine how much of the profit of a given enterprise need be shared. No equation exists to quantify how the U.S. economy would have turned out without unions or progressive government actions. It could be that the gumption of individual workers to increase the value of their individual contributions to the macroeconomic good would have powered an economy as large or larger than what we have. Some people insist on believing that. But given the inexorable pressure from corporations to limit wages, it seems unlikely, as our emerging new normal of un/under/employment seems to verify already.

The most relentless dogma of conservative thought is that profits do not need to be shared to grow the economy. Investment recycles profit into the economy. Therefore lower taxes that increase profit should grow the economy by being invested. But they don't. The reason they don't is that profits are barely invested anymore. They lie fallow in stocks, hedge funds, commodity speculation and now even banks, or are powering the economies of China and India.

The wealthy complain long and loudly that they are saddled with unfair burdens of taxation. But the essential calculation is that in order to have an economy into which new and better products can be sold, either wages go up or taxes redistribute wealth in achieving public interests. You can't have the benefits of selling to a rich society without the costs of maintaining a rich society. It's either the unions or taxes. Take your pick.