Marginal Revolution: Mobsters, Unions, and Feds

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Mobsters, Unions, and Feds

My family [Genovese] made a lot of money from gambling and the numbers rackets. We got money from gambling, but our real power, our real strength, came from the unions [emphasis added]. With the unions behind us, we could shut down the city, or the country for that matter, if we needed to get our way. Our brugad [crime family] controlled a number of different unions, some of which I personally dealt with, some of which I knew about from other amico nostra. In some cases, we got money from our dealings with the unions, in some cases we got favors such as jobs for friends and relatives -- but most importantly, in all cases, we got power over every businessman in New York. With the unions behind us, we could make or break the construction industry, the garment business, the docks, to name but a few.

That is mobster Vincent Cafaro, cited in James B. Jacobs's excellent Mobsters, Unions, and Feds: The Mafia and the American Labor Movement. This book, which is avowedly left-wing and pro-union, chronicles the grisly and underrecorded history of mob influence over unions. Today the mob's presence in the Teamsters, the Laborers, the Hotel and Restaurant workers and the Longshoreman's union has largely dissipated, but keep in mind why. Our government has spent the last twenty years busting these unions, using arrests, RICO, and federal monitoring and control. That should not be forgotten the next time you hear talk of new legal privileges for unions.

Posted by Tyler Cowen on March 30, 2007 at 07:07 AM in Economics | Permalink

Comments

Has anyone studied the costs/benefits of subjecting unions to federal anti-trust law?

Posted by: Chris at Mar 30, 2007 9:46:41 AM

"Now we have the unions, we have the gambling; and they're the best things to have."
--The Godfather

Posted by: KipEsquire at Mar 30, 2007 9:48:24 AM

I don't understand why unions are not subject to anti-trust laws. Perhaps someone will be good enough to explain this.

Posted by: Methinks at Mar 30, 2007 9:53:18 AM

Good thing there was no criminal activity at oh, say, corporations during this period...

Posted by: m. at Mar 30, 2007 9:54:59 AM

But on the other hand the Mafia is a pure example of libertarian economics.

So which is worse?

Posted by: spencer at Mar 30, 2007 10:17:35 AM

This is obviously true; but I've never understood why. I know why the mob ends up controlling industries that are illegal/ black market. But what's the value of the mob to unions, or unions to the mob, compared with any other part of society or the economy? Is it that the mob could threaten violence against recalcitrant employers and scabs? Is it some ethnic affinity/ overlap of social class and networks? The fact that union wages are above-market rents and so there's something to skim off?

We take it as just a background social fact that the mob and unions are connected, but the reason for it just isn't as obvious to me as the reason for the mob to run illegal gambling/ moonshine/ drugs/ prostitution/ etc.

Posted by: Jacob T. Levy at Mar 30, 2007 10:20:21 AM

I don't really know what it could mean to apply antitrust laws to unions, but a lot of things that you might consider to fall in that category (e.g., "secondary boycotts," where union X refuses to deal with a business because of its dispute with union Y) are unfair labor practices under the Taft Hartley Act.

Posted by: alkali at Mar 30, 2007 10:22:22 AM

Unions have a lot of power to affect a business and to increase the costs of a business or project, with all of the increased cost accruing to the union (or the mob in control of it). Just like in the Sopranos where the different families negotiate who will get jobs and "no-show" jobs from a contractor in order to guarantee labor peace on a project. Those jobs are high-priced and low productivity (especially the no-shows!).

Mob presence also guarantees higher prices for the involved service providers. The cost of waste removal in NY City and NJ was always way above what the cost was. But no companies were going to move in on another companies customers and compete for the business because the consequences were too great.

So the mob uses criminal threats and/or union control in order to exact their own taxes on businesses and the public.

Posted by: AvnerUWS at Mar 30, 2007 10:41:37 AM

"Is it that the mob could threaten violence against recalcitrant employers and scabs?"

Yes.

Posted by: Rob at Mar 30, 2007 10:45:59 AM

For most of recent history, not a yard of concrete or a pane of glass moved
in New York City without mob permission or influence.

I doubt if it has changed.

This allows control of jobs, politicians, pricing and etc.

This model never worked in smaller cities or rural areas, mostly a large
deal.

Posted by: save_the-rustbelt at Mar 30, 2007 10:54:33 AM

Let's not forget why unions made the deals they did with the mobsters. Union orginizers were getting their ass kicked by the police, falsely arrested, imprisoned and exectuted by judges, and killed by police. The early history of how unions came into being in this country is filled with violence, most of it from the anti-union side. Union busting didn't come into existence after the unions were created - no, unions were fought tooth and nail for decades prior to the first successful union being created.

The unions knew what they were getting into, a devils bargin where the unions would insure their survival at the cost of becoming an arm of a horrible criminal enterprize. It was their only choice given the situation they faced. The other choice was to allow their members to be illegally targeted by police as the enforcment arm of business owners.

After the alliance between
unions and gangs (lets not glorify they with the term mobs), they were able to fight back.

Then of course, what everyone knew was going to happen, happened. They became part of the gangs. A weapon to be used by people who were criminals.

Does this excuse the fact that today many unions still are corrupt and associated with gangs? No.

Posted by: mickslam at Mar 30, 2007 11:00:42 AM

"Good thing there was no criminal activity at oh, say, corporations during this period..."

This makes the crimes of the unions and gansters a good thing?

Posted by: Methinks at Mar 30, 2007 11:01:36 AM

The smart gangsters have abandoned unions and have moved into government. The great thing about taking over the government is that then your acts of theft and extortion don't have to be illegal any more!

Posted by: eddie at Mar 30, 2007 11:31:20 AM

Mickslam makes the relevant point: Criminal activity on the part of the corporations came first -- the response was criminality on the part of the unions. Yet, surprisingly, Tyler doesn't use corporate criminality as a argument for "busting" corporations.

Posted by: Steve at Mar 30, 2007 12:38:38 PM

"The smart gangsters have abandoned unions and have moved into government. The great thing about taking over the government is that then your acts of theft and extortion don't have to be illegal any more!"

Godfather 1 to Godfather 2!

Posted by: josh at Mar 30, 2007 2:17:39 PM

My father-in-law, the head of the Chicago Musicians Union, inherited a completely bullet-proof fortified office that was designed to allow him to make a fighting retreat from his office, to his ante-room, to his bathroom. His predecessor, Petrillo, had warred in the 1930s with Capone's gang when they tried to take over his musician's union. They twice put bombs in Petrillo's car.

Unfortunately, the solid steel 1500 pound front door to his office was so heavy that it fell off its hinges one day. So, my father-in-law had it replaced with a wooden one.

Posted by: Steve Sailer at Mar 30, 2007 3:09:29 PM

lets not glorify they with the term mobs

"Mob" is a euphemism?

Posted by: Chris Conway at Mar 30, 2007 3:17:27 PM

Yeah, I have to agree with mickslam and others. This line of reasoning seems pretty bogus to me. There's plenty of crime associated with business. Does this mean Tyler thinks we should get rid of limited liability corporations? No. But he doesn't like unions, so this is a great argument to latch onto.

Posted by: mpowell at Mar 30, 2007 5:11:26 PM

"That should not be forgotten the next time you hear talk of new legal privileges for unions."

It would be nice to hear talk of enforcement of currently existing rights to unionize. New privileges would not be needed.

On the other hand, we hear endlessly about new privileges for corporations. Maybe we should ask them to pay a fair share of taxes first.

Posted by: Mike Huben at Mar 30, 2007 5:15:33 PM

Spencer: Given that libertarian philosophy starts with the abandonment of the initiation of use of force, how could it be that the mafia are a "pure example" of libertarian economics?

Libertarian economics by definition eschews threats and intimidation of the sort that define mafia interactions.

Mpowell: Please make your connection more explicit. In what way is the existence of limited liability for the stockholders or operators of a corporation correspond to legal privileges for unions-qua-unions?

What sort of crimes are enabled by the existence of LLCs? It is, last I knew, still actively illegal for an LLC to break the law, and the operators are still liable if they actually order illegal acts, no?

Are there some exceptions I'm unaware of you'd like to share?

Posted by: Sigivald at Mar 30, 2007 7:08:43 PM

But wait...immigrant communities tend to be one of the biggest incubators for organized criminal activity, as with the Italian mob last century and the Mexican mob this century. So is that an argument for decreasing immigration?

Methinks Dr. Cowen has some ulterior motive in making this argument, and methinks me has a pretty good idea of what that motive is...

Posted by: Mr. Noah at Mar 30, 2007 8:15:24 PM

That was beyond stupid, Mr. Noah. I want my two minutes back.

Posted by: josh at Mar 30, 2007 10:55:19 PM

"Libertarian economics by definition eschews threats and intimidation of the sort that define mafia interactions."
Yes, let's wish for a society where those with power don't seek to maintain it, those who are without power don't seek to get it... and a pony!

Posted by: p.a. at Mar 30, 2007 11:00:05 PM

"Libertarian economics by definition eschews threats and intimidation of the sort that define mafia interactions."

Libertarian economics eschews any form of coercion unless it is abundantly necessary. We just don't discriminate between the IRS and Tony Soprano knocking on your door.

Posted by: Matthew at Mar 31, 2007 1:55:07 AM

Wow, criticize unions and the union members sure show up in force! Ya think this was orchestrated much?? Ya think?

Posted by: Russell Nelson at Mar 31, 2007 2:24:36 AM

Property rights come out of the barrel of a gun.

Posted by: Steve Sailer at Mar 31, 2007 4:35:05 AM

I agree with josh, Mr. Noah.

Posted by: Klug at Mar 31, 2007 3:20:42 PM

"But on the other hand the Mafia is a pure example of libertarian economics."

You = idiot.

Posted by: Francois Tremblay at Mar 31, 2007 3:28:43 PM

In answer to Jacob's question: unions are a prime source of legal coercive power. That makes them naturally attractive to the Mob, whose business is the application of coercive power.

Unions more generally are a helpful base for cartels precisely because of that, even without any criminal element.

Posted by: Lorenzo at Mar 31, 2007 4:47:09 PM

The Teamsters benefit funds were a major source of investment capital for the development of Las Vegas casinos. One insurance executive linked to the Teamster Fund was gunned down in the late '60s or early '70s on a Chicago golf course, reportadly because he was about to reveal irregularities.

Interestingly, in Wisconsin, the Teachers Union operates a trust which handles most of the teachers' benefit money.

Posted by: triticale at Mar 31, 2007 7:56:59 PM

Unions are useful to the mafia because they allow it to exert its force without exposing itself. Assassinating or burning the offices of every real estate developer in New York city will create a huge backlash. Get control of the union and you don't need to do that anymore.

Posted by: Joey Zaza at Mar 31, 2007 9:05:01 PM

"The electronics retailer, facing larger competitors and falling sales, said Wednesday that it would lay off about 3,400 store workers. The laid-off workers, about 8 percent of the company's total work force, would get a severance package and a chance to reapply for their former jobs, at lower pay, after a 10-week delay, the company said."

The Mob is small time compared by comparison to big capital, and of course the mob is cheaper! Honest unions do a better job of representing workers. And big capital knows that (and of course so do you)

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And in the same time period, the United States Army practiced both racial apartheid and almost complete exclusion of women. This should not be forgotten next time you hear talk of new funding of the United States military.

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