Wednesday, February 20, 2008

Government Regulation Gone Amuck - Case No. 7: Labor

This little program of mine--the finding of cases of well-meaning but poorly-functioning government regulation--is gaining momentum.

Today's example is union control of the construction business in New York, facilitated by state laws that provide the Mafia and mob-controlled corporations with the means to obtain a monopoly of hiring in construction firms.

[Thanks to for the photo.]

In passing, I'll mention that I'm embarrassed to admit that I thought mob control of labor in New York went out with Giulani. I've seen Marlon Brando's movie, "On The Waterfront," and The Sopranos, which I thought was a period piece; but no. The Mafia's still with us, thanks to government corruption and misfiring legislation.

According to Steve Malanga of the City Journal in this article:

"[E]ven after decades of intensive investigation by law enforcement, organized crime remains a powerful force within the city’s construction industry and in related businesses—like trucking—that are particularly susceptible to mob corruption.
"[I]n construction [...], labor law permits contracts between builders and unions in which unions effectively have power over hiring. They enlist workers in their organizations first and then send them out on jobs."

State government officials tried to handle the situation, but unsound reasoning--to give them the benefit of the doubt--got the better of them:

"New York State’s laws and policies add to the industry’s problems by snuffing out competition. The state decrees that on all public construction projects—representing a huge chunk of the industry’s revenue pie—government must pay even nonunionized workers a 'prevailing' wage that in most cases is equal to the highest union worker’s wage. The law sharply reduces the ability of non-union contractors to get government work, since they lose any pricing advantage that lower wages would give them. Thus, many don’t even bother to bid on government contracts, which the construction unions inevitably win. That’s the kind of monopoly that mobsters love.
"The state’s Wicks Law further aids the wise guys by requiring government to carve up public construction projects into at least four separate bidding packages, multiplying the number of contractors and subcontractors involved in any project and adding layers of complexity that encourage fraud, bribery, and bid rigging.... [T]he unions love the bureaucracy, inefficiency, and extra work (and workers) that Wicks requires."

France also has plenty of examples of union abuse and monopoly privilege. See this article for an example of their power, and this article at giving some background information.

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