The Crisis of the Blue Model

The Supreme Court deadlock giving public unions officials "the ability ... to collect fees from workers who chose not to join and did not want to pay for the unions’ collective bargaining activities" was touted by the New York Times as a "victory for unions".  However it stands in stark contrast to other developments in the industrial relation front.  The NYT said of the decision:

It was the starkest illustration yet of how the sudden death of Justice Antonin Scalia last month has blocked the power of the court’s four remaining conservatives to move the law to the right. ...

When the case was argued in January, the court’s conservative majority seemed ready to say that forcing public workers to support unions they had declined to join violates the First Amendment. Justice Scalia’s questions were consistently hostile to the unions.

His death changed the balance of power in this case, and most likely in many others, although 4-4 decisions mean an issue remains open and could return to the court in short order. In the case of Tuesday’s ruling, which set no precedent, unions recognized that their victory was only provisional.

But in the larger context the public unions greatest enemy isn't the ghost of Antonin Scalia but the onslaught of technology.  Recently, the mighty International Longshore and Warehouse Union (ILWU) was forced to let giant robots handle cargo in the port of Los Angeles.  "At one of the busiest shipping terminals in the U.S., more than two dozen giant red robots wheeled cargo containers along the docks on a recent morning, handing the boxes off to another set of androids gliding along long rows of stacked containers before smoothly setting the boxes down in precise spots," wrote the Wall Street Journal. "'We have to do it for productivity purposes, to stay relevant and to be able to service these large ships,' said Peter Stone, a member of TraPac’s board."

The robots were admitted despite the extreme political strength of the ILWU. "The port workers — who still queue up at hiring halls daily for work and spend years earning full membership — stand guard over a crucial chokepoint in the global economy."  A Los Angeles Times story explained the factors which made the port workers seemingly unassailable:

The same forces that have pulverized private sector unions in other industries — overseas manufacturing, lower transportation costs, global markets — have strengthened the hand of the ILWU, said economists who study global trade. ...

"Every day, ship owners have to pay a lot of money for a ship. The cranes are very expensive, and if they're not being used, that's wasted money," said Marc Levinson, an economist and author of "The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger." "Containerization made the shipping industry very capital-intensive, and that effectively gave power to the union."

In the end, even those advantages proved insufficient to stop automation. There will be pressure to deploy more robots.  The "TraPac site is one of only four cargo terminals in the U.S. using the technology. That is fewer automated terminals than there are at the Port of Rotterdam in the Netherlands alone." The ILWU is fighting a rearguard action; its members are training on automated terminals "to ensure there's a future for the workers".  And probably to keep alive the possibility of paralyzing the docks via strike by console operators.

None of this can disguise the fact is that the glory days of union crane jobs are over. The CEO of Carl’s Jr, a hamburger chain, predicts that fast food restaurants of the near-future will have no human employees. A special report in the New York Times says “the robots are coming to Wall Street."

Within a decade ... between a third and a half of the current employees in finance will lose their jobs to … automation software. It began with the lower-paid clerks ... It has moved on to research and analysis, as software ... has become capable of parsing enormous data sets far more quickly and reliably than humans ever could. The next 'tranche' ... will come from the employees who deal with clients: Soon, sophisticated interfaces will mean that clients no longer feel they need or even want to work through a human being.

An indication of just how potent technological change might is Navy Secretary Ray Mabus' belief that the F-35 Joint Strike Fighter “should be, and almost certainly will be, the last manned strike fighter aircraft the Department of the Navy will ever buy or fly.”  Technology that can replace Maverick Mitchell in Top Gun  can probably replace Terry Malloy in On the Waterfront.

For the moment the fiction that government workers are the only category of labor that is irreplaceable can still be maintained. Yet even a liberal Supreme Court may find it can no more prevail against the tide than King Canute. In a world where a student from Calcutta, India can homeschool himself sufficiently well with online courses to enter MIT suggests the California union may find itself like the dispensers of New York Taxi medallions in the age of Uber.

Owners of New York City's taxi "medallions" filed a lawsuit (PDF) against city regulators today, saying their business has been devastated by the decision to allow companies like Uber to compete using "E-hail" services.

A medallion is required to operate a New York City yellow taxicab, the only type of vehicle allowed to accept passengers who hail cabs on the street. Until recently, those medallions could sell for over $1 million. Companies like White & Blue Group, one of the plaintiffs in the case, managed fleets of licensed taxicabs by leasing out the medallions.

Michael Belfiore of the Guardian believes that in the end, the small minority of humans who are creative enough to remain employed may become the new 1%.  They will in any case be comparatively few in proportion to the population.  For reasons of social peace these must be taxed at a tremendously high rates to provide a basic income for the other 99% whose labor will no longer be economically in demand. “Basic income isn't a conditional welfare program — rather, it's a check that's paid to individual adults instead of households, regardless of other sources of income and with no requirement for work.”

Some governments have already proposed it as a serious possibility. Switzerland came the closest in recent history to passing a law for basic income, but even though the Swiss Federal Counsel voted down the measure, the issue is now spreading to government representatives in Finland. Now American activists and futurists are taking notice.

The idea of a universal, base income provided to all people without conditions is as old as the enlightenment, and even Martin Luther King Jr. once said that a "guaranteed income" could be a simple solution to permanently abolish poverty.

This creates an interesting opportunity to simply pay unnecessary bureaucrats to go home and do nothing. But who will be taxed, and who shall tax them? The atmospherics of the 2016 US presidential elections suggests there will be opposition to providing a “basic income” to people who simply hop over a border. The same resentments will eventually extend at any group of people, wherever domiciled, who seek payments from income streams they have no connection to.

These developments present a serious challenge to nation states which since the end of the Second World War have progressively divorced themselves from any basis in race, religion, culture or even history. In the modern liberal state citizenship no longer means anything beyond legal relationship the between the government and a constituencies.  When Loretta Lynch says illegal aliens have just as much right to work as American citizens, she's affirming that citizenship has stopped being a cultural connection  and transformed itself into a financial swap.

For the poor the citizenship deal is votes in exchange for welfare or sinecures. For the financially better off it is campaign contributions in exchange for crony capitalist opportunities. The Friedrichs vs California Teachers Association is an example of the latter, with the Supreme Court unable to reject a transaction that is ultimately unsustainable.

Technology may have changed the debate around closed union shops, quotas, identity politics and mandatory minimum wages from one of ideology to economics. What's the use of ideological policies, if they're can't deliver the goods? If the public employee's unions can do no better at protecting their fiefdom than the ILWU, if immigrants from Mexico can find no employment because robots are doing all the work then what will the politicians promise?

The multicultural concept of citizenship as a purely legal and political relationship cannot survive a long term decline in the value of labor.  In a real knowledge based economy the state will have fewer and fewer sinecures to hand out as patronage. It can hand out "basic income", but then everybody gets that.

The technological revolution is going to pose increasingly serious challenges to nearly every Western social democratic society.  People are either going to be really angry when they discover there's no patronage or angrier still when they discover they have to provide the "basic income" for everybody else. Only one thing is relatively certain: the solution to these problems won't be found in the ideologies of the early 20th century.

Follow Wretchard on Twitter.


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