I got plenty of responses yesterday to my blog post on Right to Work laws. My friend Loren Smith wrote up a clear and thoughtful retort -- in which he marshalls F.A. Hayek to his side -- and so I'm posting it below.

In short, the strongest argument for Right to Work laws seems to be that federal law so distorts the management-labor relationship that RTW is the best a state government can do to counterbalance the federal intrusion. Below the fold is Smith's argument:

Right to Work Legitimacy: A Response to Tim Carney

The Indiana legislature is engaged in a fierce confrontation to determine if the Hoosier State will become the 23rd Right to Work state. Essentially, a Right to Work (RTW) law allows workers in a unionized shop to opt out of both dues-paying and membership in the union, although even under such a law the federal government still considers the union the collective bargaining agent for that worker. Republican legislators pushing the Indiana proposal argue that the current regulatory framework is an impediment to prosperity for both employees and employers. Meanwhile, unions argue that workers do better under their aegis, and the GOP is simply doing the bidding of their corporate paymasters to gut the unions. Tim Carney wrote a provocative blog post yesterday in the Examiner. He asserted that even though the mainstream of self-identified free-market conservatives support RTW laws, the opt-out afforded to workers constitutes a government regulation on companies prohibiting them from reaching exclusivity arrangements with a union, and thus RTW laws are contrary to the free market.

Under the National Labor Relations Act of 1935, also called the Wagner Act, unions operate effectively as government-sponsored enterprises. Unlike normal private organizations, unions are empowered by the government to compel a company to form an association with them if a majority of employees vote to join the union.

Early on, opponents of the NLRA felt that it violated the First Amendment right of free association, as the corollary has long been established that one not only has the right to free association with another party under the Constitution, but also has the right not to associate with a given party. In this case, the company is compelled to form a contract arrangement with the victorious union, supervised by the National Labor Relations Board. The Supreme Court implicitly acknowledged the First Amendment critique of the NLRA by promulgating a compartmentalization of labor law that effectively insulated it from judicial review, a state of affairs that continues to this day.

With companies required under law to do business with the union, contracts can take months and even sometimes years to hammer out, but do eventually come into force, at which point the company and the union have an association that is essentially permanent, with union decertifications extremely difficult for workers or employers to force.

Perhaps also of interest to readers of a free-market bent, no less a figure than Friedrich von Hayek endorsed Right to Work laws in his 1960 work, The Constitution of Liberty (page 279, and reprinted on page 92 of A Tiger by the Tail: The Keynesian Legacy of Inflation, where I located the full quote):

If legislation, jurisdiction, and the tolerance of executive agencies had not created privileges for the unions, the need for special legislation concerning them would probably not have arisen in common-law countries. But, once special privileges have become part of the law of the land, they can be removed only by special legislation. Though there ought to be no need for special 'right-to-work laws,' it is difficult to deny that the situation created in the United States by legislation and by the decisions of the Supreme Court may make special legislation the only practicable way of restoring the principles of freedom. Footnote: Such legislation, to be consistent with our principles, should not go beyond declaring certain contracts invalid, which is sufficient for removing all pretext to action to obtain them. It should not, as the title of the 'right-to-work laws' may suggest, give individuals a claim to a particular job, or even (as some of the laws in force in certain American states do) confer a right to damages for having denied a particular job, when the denial is not illegal on other grounds. The objections against such provisions are the same as those which apply to 'fair employment practices' laws. [Emphasis added in bold. Reference link here.]

Carney and others have commented elsewhere that the proper free-market solution might be to simply repeal the entire NLRA. This is an interesting idea, if presently unworkable given the composition of Congress, but it begs the question of what state legislatures are to do. They are not empowered to undo federal laws; but they are empowered to allow workers to opt out of union membership and the dues that go with it.

Loren A. Smith, Jr. is an analyst for Capital Alpha Partners, LLC, and previously served as Special Assistant for Public Affairs at the U.S. Department of Labor.