Our National Industrial Policy

United States CapitalDid you know that the United States has a National Industrial Policy?  If you don’t, take a look at the Web site of the National Labor Relations Board.

In 1932 after Roosevelt’s election, Congress passed the Norris-LaGuardia Act, which removed the legal basis for the use of court injunctions in labor disputes.  In 1936, Congress passed the Wagner Act, which provided a legal framework for the oganization of workers into unions, workers’ election of unions to represent them, collective bargaining between unions and employers over labor contracts, and arbitration of labor disputes when collective bargaining failed and strikes ocurred.  The Act included the creation of the National Labor Relations Board, which enforces compliance with the Act’s terms and provides arbitration services.

By promoting the Wagner Act, Roosevelt gained organized labor’s vote in his successful bid for a second term as President.  Since then organized labor has been a reliable and powerful supporter of the Democratic Party.  Its clout increased when public employees gained the right to unionize, starting with an executive order issued by President Kennedy, apparently to reward the AFL-CIO for succesfully supporting his 1960 Presidential campaign.  Since then the political power of public employee unions has become enormous.

Restraint of trade, otherwise known as monopoly power, has been illegal under the common law for centuries. The Sherman Act, which predates the Wagner Act by several decades and remains very much alive and well today, follows the common law by explicitly prohibiting restraint of trade by business monopolies. Labor unions essentially restrain trade in labor and therefore represent labor monopolies, which explains the courts’ hostility to unions and strikes prior to the New Deal.  It also suggests our National Industrial Policy may be less than sacrosanct.

If prohibiting business monopolies by the Sherman Act, while legalizing labor monopolies by the Wagner Act, strikes you as logically inconsistent, you’re right.  However, without unions labor was felt to be powerless in the face of big business.  Whether that feeling continues to be justified in the face of hyper-competitive globalization is debatable.  Business monopolies are harder to come by today than they were 100 years ago.  Closer to home, the political power held by public employee unions at local, state, and federal levels appears increasingly counter-productive and unjustifiable.  Perhaps the common law was right after all, across the board.  We’ll see.

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Stan Prowse


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