Quote Originally Posted by Dayuhan View Post
If the absence of unions is perceived as a market distortion, what would you call the presence of unions that are capable of shutting down an employer who doesn't give them what they want... perhaps looking at Britain in the late 70s as an example? Is that not an equally distorted market?
You can't really call either a market "distortion"--the term Fuchs is actually grasping for is "inefficiency"--without additional context. We would first need some measure over a nest of transactions to determine how far they deviate from some maximally efficient allocation of goods and services. Given your particular example, we'd have to:

1) determine some wage that is optimal for both employer and employee, and

2) examine how far we stray from the optimum incident to some regime of collective bargaining.

The first step is hard, because calculating maximally efficient allocation of goods and services is an exercise in highly conditional, subjective teeth pulling. The second step is comparatively elegant (provided the math holds up, which is what the folks in Stockholm apparently believe).