Tag Archives: balance of power

Countervailing Power

When I was growing up in Anderson, Indiana, both my parents were passionately anti-union. There was a reason: my father had a small auto-parts business, and frequent strikes in Anderson’s then-dominant automotive plants meant fewer customers. Furthermore, there was a considerable amount of what can only be described as union “thuggery” that occasionally erupted. So I grew up with a very dim view of unionization.

Let’s just say I’ve developed a more nuanced perspective.

What my parents and I failed to recognize “back in the day” was that it’s not good when either unions or management holds vastly superior power. The ideal is balance, or what has been described by scholars as “countervailing power.”

The phrase “countervailing power” was coined in the 1952 book American Capitalism: The Concept of Countervailing Power by the economist and social thinker John Kenneth Galbraith. Galbraith argued that, in a modern technological society, most important markets would be dominated by a few large firms. Their market power and political influence could be checked, however, by countervailing power—both public, in the form of a strong regulatory state, and private, in the form of labor unions and consumer cooperatives. Arguing that measures to strengthen the bargaining power of unions and farmer groups were “among the most important legislative acts of the New Deal, all designed to give a group a marketing power it did not have before,” Galbraith asserted that “the support of countervailing power has become…perhaps the major peacetime function of the Federal Government.”

The equation of the New Deal with government-supported checks and balances in the market may seem surprising today, when many associate the New Deal with social insurance programs like Social Security or Keynesian deficit spending in downturns. But this view was the conventional wisdom (another phrase coined by Galbraith) of many New Dealers. For example, in 1940, the journalist John Chamberlain wrote: “The labor union, the consumers’ or producers’ cooperative, the ‘institute,’ the syndicate—these are the important things in a democracy. If their power is evenly spread, if there are economic checks and balances to parallel the political checks and balances, then society will be democratic.”

When there is no countervailing power–when those sitting on one side of the bargaining table are easily able to dominate or intimidate those on the other side– the result is inevitably negative. The longtime imbalance between management and workers in the auto industry has enriched  managers–obscenely– at the expense of those who make their companies profitable: CEO compensation for 2022 is reportedly  $29 million for GM’s Mary Barra, $21 million for Ford’s Jim Farley and $24.8 million for the CEO of Stellantis (and as the Free Press recently noted,  those weren’t even the highest payouts to an individual last year at the companies).

It’s not difficult to understand why union members– who had agreed to reduced wages and benefits in 2009 when the economy tanked and who still haven’t caught up– would be resentful.

In the more than half century since I left Anderson, the precipitous decline in the power and influence of organized labor has led to a number of unfortunate consequences. As the linked essay notes, one of those consequences has been an “upward shift of political power on the center-left to college-educated progressives,” and a politics that is more   technocratic and top-down. Another has been the captivity of the GOP  to the anti-labor agenda of the party’s libertarian donors.

Technocratic neoliberalism ignores the values and interests of the two core constituencies of the New Deal—the working class and rural Americans. Unrepresented in either party, these groups are drawn to outsider populists, including maverick old-school New Dealers like Sanders and right-wing demagogues like Trump.

I think the above paragraph oversimplifies the reason working and rural folks have flocked to Trump –it overlooks the extent to which his appeal is to a still-potent, still widespread racism. The racist element of his appeal been repeatedly documented.

But it’s also true that when people feel powerless or abandoned, racism that might otherwise be latent rises to the surface, so the observation isn’t entirely wrong.

The bottom line is that bargains made by unions composed of the laborers whose prospects are on the line–the people with “skin in the game”– are infinitely preferable to laws passed by well-meaning elected officials. The parties to any negotiation are privy to the issues particular to that workplace, and an agreement hammered out between employers and workers is unlikely to stoke the same level of resentment as a measure imposed by lawmakers.

The recent rise in union activity may be disruptive, but it’s long overdue.

Term Limits: Another Bumper-Sticker Solution

Americans have very hazy notions of how government actually works. As a result, they tend to embrace “reforms” that sound superficially attractive but would actually make things worse. I call them “bumper sticker” solutions because they are usually short and simple enough to slap on your car’s bumper.

Vox recently addressed one of those “solutions,” term limits, and did a very good job of explaining why this particular “fix” is a terrible idea.

In one recent survey, 75 percent of Americans said they supported term limits, including 65 percent of Democrats.

For that reason, it’s worth spending a few minutes on this point, because it does get to a fundamental problem with how the public views Washington. There is a perennial myth that the problem with Washington is that the longer people spend there, the more corrupt they become. Therefore, the only way to ensure good judgment in politics is to constantly have a bunch of fresh-faced lawmakers who are total rookies and don’t understand how anything in Washington works.

Since 15 states do have term limits, we actually can know something about their effects. And the political science literature here is pretty unequivocal. Term limits are the surest way to weaken the legislative branch and empower the executive branch. Term limits are also a great way to empower special interests and lobbyists. Basically, what term limits do is shift power toward those who are there for the long haul.

For example, here’s the conclusion from a 50-state survey published in 2006: “Term limits weaken the legislative branch relative to the executive. Governors and the executive bureaucracy are reported to be more influential over legislative outcomes in states where term limits are on the books than where they are not.”

This result has been replicated multiple times. In one study, a post-term-limits respondent said that after term limits, “agencies [do] what they want to. [One bureaucrat told me] we were here when you got here, and we’ll be here when you’re gone.” As the authors of this study note, “Legislative oversight is the venue of specialists. A term-limited legislature tends to be populated by generalists, who lack the accumulated knowledge to exercise oversight effectively, if they even recognize it as their responsibility.”

Term limits also strengthen the power of lobbyists and interest groups for the same reason….  But like the executive agencies of the state government, lobbyists and interest groups are also there year after year. They are the true repeat players building long-term relationships and the true keepers of the institutional knowledge. This gives them power.

The truth of the matter is that government operations are complicated, and competent policymaking requires significant substantive and procedural knowledge. At the federal level, congressional (House) terms are two years–just enough time for a neophyte to find the bathroom and figure out the arcane rules of procedure. The first thing every newly elected Representative does is hire staff from among the available pool of political and policy experts with relevant experience, and for at least the first term–and probably the second–a smart Congress-critter will be guided by those staff member, because they’ve  been around long enough to know the ins and outs.

A significant percentage of the people who staff congressional offices are in Washington for the long haul serving consecutive committees and elected officials. If elected folks are term-limited, those faceless staff members will be the ones really making policy decisions. So much for accountability.

We already have a mechanism for limiting legislators’ terms. It’s called voting. The biggest impediments to its effective use are gerrymandering and civic ignorance.