By Sara Scarlett
March 14th, 2014 at 11:23 am
| | Posted in Economics
Mark Steel fundamentally fails to understand how competition works, or in that regard where Bob Crow got his power from – the absence of competition in London for fast travel.
Suppose as Mark wishes the Pret-A-Manger and Starbucks baristas organised like the RMT, shutting down their respective chains on the public grounds that the steamed milk dispensers represented a serious health and safety threat to their members, while negotiating behind the scenes for more pay and pensions. Their employers might give in from time to time, and wages would rise.
Their employers would also stop investing in new shops. Practically because free cash was now going into current staff benefits and pragmatically as their London outfits were now less cost effective than stores elsewhere. Why invest in jobs in London if you can make better returns for shareholders investing in Birmingham or France? Prices in turn, in London would rise, leading to customer defections to Costa Coffee and Eat. That is those customers prepared to remain loyal despite the shops being closed for large parts of the year.
In time there would closures and headcount reductions. Presumably followed by more strikes and vocal denunciations of the boss class on the BBC. Campaigns would be launched urging consumers to pay more for their coffee and sandwiches in solidarity with staff already earning 2-3 times what they do. The campaigns would be ignored. Labour MPs would claim the Government has betrayed the barista community leading to the destruction of a once great British service industry.
On the Underground meanwhile none of these levers are available. Buses are not a practical alternative for many routes, nor do they have capacity to cope with the increase in trade during a network strike. Cars and taxis are even less useful, the conflation of all three leading to gridlock. In the long-run automation is an alternative to over-paid staff.
Bob Crow’s success then was to note the power imbalance between tube workers and their customers and extract rent from them for as long as possible before the inevitable, much like a mafia boss pending the end of prohibition.
That model happily cannot work in many areas of life, not even many public services, where alternatives can exist. What does work is what most of the working world has which is the free movement of labour from bad employers to good, and the facility to be rewarded for the effort you make using the skills you have, through negotiation and reason, and without strife.