Will the recent economic turmoil be remembered by the history books as "the panic of 2008?" If Democrats actually adopt the policies they have advocated on the campaign trail, they will be repeating with eerie precision the mistakes made by both parties that gave us the Great Depression
Economists generally have concluded that, in addition to woefully misguided Federal Reserve actions, two policy errors worsened and prolonged the Great Depression: the Smoot-Hawley Tariff Act of 1930 and the rapid expansion of unionization and cartelization that followed the National Industrial Recovery Act (NIRA) and the National Labor Relations Act (NLRA).
But perhaps the key negative component was the massive increase in unionization, from 13 percent of the workforce in 1935 to 29 percent in 1939, explains Hassett:
- Then, greater unionization led to a doubling of the number of strikes and an increase in their effectiveness because new rules let workers use "sit-down" tactics that shut plants;
- The key labor policy parallel to the 1930s is "card- check" -- union organizers can forgo standard secret ballot procedures when they receive signed union-authorization cards from a majority of employees.
- Although card-check procedures are legal, current law lets employers reject card-check petitions and require secret- ballot elections instead.
Supporters of card-check are presumably willing to accept the possibility of coercion because they believe the end -- a large increase in unionization -- justifies the means. But if that end is achieved, then it likely will lead to a surge in labor costs and reduction in competitiveness for U.S. companies at just the wrong time.
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