Entrepreneurship

Argentina’s union mafias are a warning to America

Date:
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At Net Antonella Marty

Antonella Marty | Associate Director at the Center for Latin American at Atlas Network

This op-ed originally appeared in the Los Angeles Daily News.

Unions may not be front-page news in America, but they are front and center in the lives of many around the world.

My home country, Argentina, is home to over 3,000 unions. Since the 1930s, the General Confederation of Labor (CGT)—the country’s largest union association—has been a force in Argentine politics, receiving government money, expanding its control over the economy and stifling non-union business activity. The CGT claims more than three million union members, representing more than two-thirds of Argentina’s unionized workforce. About 40 percent of the nation’s workforce is unionized.

This means that the free market is practically impossible to find in Argentina. Trade deals are routinely dogged by union grievances, informal pressure tactics and formal strikes. Earlier this year, a nationwide strike by grain carriers halted shipments of soybeans and corn, the main exports of Argentina, which is the world leader in soybean derivatives and the world’s second largest exporter of corn. Because of the transport union strikes, exporters reported losses of more than $1 billion due to four days of lost productivity alone.

Even worse, Argentine unions are synonymous with corruption. In a country where 55 percent of registered workers are government employees and the inflation rate is even higher than that (64 percent), one institution is widely considered the most corrupt in the country: organized labor. More than 80 percent of Argentines believe that unions are the most corrupt institutions in the country, far ahead of the government and the mainstream media.

But even corruption is not the worst. For decades, union leaders have shown utter disregard for the rule of law, resorting to bullying, intimidation and outright violence whenever and wherever those tactics can undermine businesses in their sights. Unión Argentina embraces a militant tradition, exerting influence over business by any means necessary. According to Luisa Montuschi, economist and director of the Department of Business Sciences at the University of CEMA, “there is no competition in Argentine trade unionism, which is organized in a monopolistic way, leading to the accumulation of power and corruption.”

In many ways, organized labor in Argentina is mafia-like, facing accusations of extortion and wielding its power over politicians. In some cases, politicians leave office to appease union officials and stay safe.

Which brings us to Veronica Razzini, who I recently spoke with in my podcast. She is a businesswoman from Rosario (my hometown), who established a pro-business movement called “MEAB” or “Movemento Empresarial Antibloqueo” (the “Anti-Bloqueo Business Movement”), advocating in the name of entrepreneurship to stop the mafia- organized labor style tactics.

As the head of a company that manufactures building materials, Razzini is a prime target of the union leadership. Over the years, she has been forced to bribe different union officials, who block the doors of her business and prevent her staff from working. But, in launching MEAB, Razzini decided to confront union officials and speak his conscience.

The only problem is that Argentine unions do not facilitate dissent. In late July, union officials fired three shots into Razzini’s building, threatening to shut down his company for good. But she continues to fight union threats. In his words, “we are tired of living under extortion.”

Let Razzini’s story be a warning against government-backed union power. As union organizers take on companies like Starbucks, Americans should brace themselves for unintended consequences. Violence may not be imminent as in Argentina, but union interference in the economy is not known to produce lower prices and more harmonious working conditions.

Instead, American consumers can expect layoffs, staff shortages, and higher prices to become more common due to union involvement. Over the past decade, nearly 80,000 unfair labor practice complaints have been filed against union officials, and that’s in the United States. Union bosses play dirty.

So tread carefully or prepare for the consequences. Argentines like Veronica Razzini prepare for them every day of their lives.