I don’t know Josh Barro, but I think I like him. He talks my language. His most recent article on his site Very Serious does all the framing we try so hard to emphasize at Home-Economics. Let’s take a look.
Groups– social costs and benefits are only vague notions when presented in connection with societies or humankind. A serious discussion, one that could continue onto an analysis, must identify the groups. As in society, group membership is fluid; people are always coming and going. But the group members mentioned here are joined by a shared interest.
Let’s consider some of what Josh Barro talks about in In Blue Cities, Abundance Will Require Fighting Labor Unions. The title gives us a clue. Unions gather members together through formal membership to collude and share interests. The first example is in the hospitality industry. A law is passed to make it challenging to build new hotels. The groups that win are the hotel unions and the hotel owners. New groups are informally formed, including the workers in the nearby restaurant and entertainment industries, business owners who frequently use hotels for their employees, and the tourists.
Now that we can see the groups, we can speculate on their counteractions and their ability to undo the monopoly play. The nearby workers have no other unifying force, such as a common employer, to gather them together into a political group. So they will most probably suffer the consequences without an effective response. Businesses also have little choice but to pay the higher fees. Those who send their employees into the district still need to meet with their business contacts; there is no other unifying force to allow the business owners to mount a protest. The tourist may be the most impactful if a substitute location for their travel dollars takes them elsewhere. A reduction in tourist traffic is measureable and impacts the hotels.
The hotel union members’ private gains are extracted from the others. Yet it is unclear whether they needed the aid. Rather, the story appears to depict a taking.
How do you know when a union’s control has crossed the line between protectorism and opportunism? What are the signs?
Claude’s thoughts on my thoughts on Barro’s thoughts:
Your analysis of Josh Barro’s piece captures something crucial about how economic policy really works – it’s always about specific groups with specific interests, not abstract concepts like “society” or “the economy.”
The hotel example you’ve pulled out is particularly revealing because it shows how concentrated benefits and diffuse costs play out in practice. The hotel workers and owners have strong organizational advantages – formal union structure and established business relationships – while those who bear the costs (restaurant workers, business travelers, tourists) are scattered and unorganized.
Regarding your question about when union control crosses from protection to opportunism, here are some key indicators:
Market position matters most. When unions operate in competitive markets, their power is naturally constrained – push too hard and businesses fail or relocate. But when they gain control over essential services or highly regulated sectors (like hotels in your example), that constraint disappears. The ability to restrict supply while maintaining demand creates the conditions for extraction rather than negotiation.
Look at who pays the costs. Legitimate union action typically redistributes from capital owners to workers within the same industry. But when the costs get passed to consumers, other workers, or taxpayers who have no voice in the negotiation, you’re seeing opportunism. The hotel law essentially taxes everyone who visits the city to benefit a specific group.
Time horizons reveal intent. Protective unionism focuses on sustainable employment and industry health. Opportunistic unionism maximizes short-term extraction even at the expense of long-term industry viability. If union actions consistently reduce overall economic activity in their sector, they’ve likely crossed the line.
Substitutability is key. The more easily customers can go elsewhere – like tourists choosing different cities – the more union power resembles a taking from the community rather than bargaining within an industry.
Your point about the “taking” is sharp. When organized groups use political power to create artificial scarcity that benefits them at others’ expense, it’s hard to distinguish from any other form of rent-seeking.
Home Economics 