A Bug in the Free Market Ointment: Conservatives Fight VW Factory's Right to Work with Unions

Banners welcome VW to Chattanooga in 2008 (Flickr).The New York Times has a piece about a fascinating development in Tennessee, where management in a privately owned auto company, a VW plant in Chattanooga, appears to be working cooperatively with the UAW to organize the plant.  So, what’s the problem?

I’ve written about this before, but the wrinkle is that “outside agitators” [my words, not the NYT's] are trying to block the union, which is pitting them against both sides — union and management, since the latter thinks organizing the workforce would be helpful.

The business community reacted with…dismay when several Volkswagen officials from Germany visited the plant and hinted that it would be good to have a labor union because that would help establish a German-style works council. Such councils, comprising managers and representatives of white-collar and blue-collar workers, seek to foster collaboration within a factory as they forge policies on plant rules, work hours, vacations and other matters.

It’s a great example of just how thin much conservative support is for “free markets.”  A private firm believes it is in its self-interest not to block the union, and in fact, appears to welcome the opportunity for cooperative “works councils.”

Unlike most companies that confront unionization efforts, Volkswagen — facing a drive by the United Automobile Workers — has not mounted a vigorous campaign to beat back the union; instead VW officials have hinted they might even prefer having a union.

So you have politicians, including the state’s governor and TN senator Bob Corker, along with conservative activist Grover Norquist, trying to block VW management from working with the union.

The anti-U.A.W. forces are making themselves heard, warning that if the U.A.W. succeeds here, that will lend momentum to unionize two other prestigious German-owned plants: the Mercedes-Benz plant in Alabama and the BMW plant in South Carolina.

Now, that may be a legitimate concern for these politicians, but these are private decisions by private actors. As my colleague Dean Baker likes to say in these cases, “Let’s be good, neoclassical economists here” and let market actors join into partnerships they believe to be in their economic interest.

I doubt the outside opposition to management’s support of the union is a surprise to most readers, but it struck me as a classic example of how terribly thin this “free market” ideology really is when it takes its alleged supporters to places they don’t want to go.

The moral of the story: there’s no “free market.” It doesn’t exist outside of beginner textbooks. Instead, there’s a vast array of market arrangements wherein private and public forces interact in ways that create winners and losers. The winners tend to like things the way they are and will yell “free markets!” when challenged. But they don’t really mean it.


Jared Bernstein joined the Center on Budget and Policy Priorities in May of 2011 as a senior fellow. From 2009 to 2011, Bernstein was the chief economist and economic adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Before joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. This has been reposted from Jared Bernstein’s blog On the Economy.

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