Tumultuous combinations

“Nathan Newman”:http://www.nathannewman.org/laborblog/archive/002986.shtml writes about union-busting cartels.

bq. For folks who remember the southern California grocery chain strike last year, a key to the grocers breaking the strike was a revenue sharing deal between the big chains– thereby preventing the unions from easily reaching settlement with any of the firms individually.

The L.A. Times “story”:http://www.latimes.com/business/la-fi-supers26may26,0,6124770.story?coll=la-home-business that he links to has more.

bq. The chains initially refused to disclose the pact’s details and sought to have them sealed after Lockyer sued. But King unsealed the documents in February. They showed that the companies used a formula based on their sales, before and during the dispute, and their regional market shares to figure out what Kroger should pay the others. Kroger later revealed in securities filings that it paid a combined $148 million to Safeway and Albertsons, and Albertsons said it received $63 million of that. That would have left $85 million for Safeway.

Those who have read Adam Smith will remember “his observations”:http://geolib.com/smith.adam/won1-08.html on the tendency of business owners to gang up together against workers.

bq. We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.

(Funnily enough, Smith’s self-appointed intellectual heirs at the Adam Smith Institute don’t seem all that interested in his ideas on combinations of masters, despite their eagerness to “smash trade unions”:http://www.adamsmith.org/80ideas/idea/26.htm. An oversight that I’m sure they’ll be rushing to rectify.)