Excellent point, and the longshoremen are an excellent example. I might alter Varian's phrasing a bit, though. Instead of saying that the union wanted to make sure that "the gains from productivity increases accrued to its members," I might say that they wanted to make sure that the new people in the new tech-heavy positions had union protections. It's not just a matter of protecting those already in unions, it's a matter of preventing union-busting management from taking advantage of the change in their requirements to replace union positions (with all the protections) with non-union positions.

Thank you,
-Vardibidian.

God bless, Harry Bridges, even though he (God) doesn't exist. Harry is currently busy rearranging his carbon molecules now.

Actually looking this over again, the statement that, if anyone loses out, it is a bad deal, rankles a bit. This is to restate the Pareto criterion for market exchanges, a dubious measure of overall economic welfare and one almost impossible to implement without extremely individualistic assumptions about the operations of markets, which do not realistically apply, and are largely irrelevant for the collective organization involved in the sphere of production. To rectify the short-comings of the Pareto criterion, the Kaldor-Hicks neo-Pareto criterion was proposed, which stated that an economic exchange was beneficial, if the winner from the exchange could compensate the loser from the exchange and still remain better off from it. This would allow both for inequalities of wealth and redistributions of wealth, but both within limits. In general, an economic change is socially beneficial in principle, if it results in a net increase in the overall surplus product (the part of the total product that is not consumed in the process of production) of a society/economy, but how this net surplus is distributed determines in good measure the actual nature of the benefit as well as its impact on the further economic development of the society in question. A further point is that one of the functions of markets is to seek out and discover net surplus gains through their capacity to organize information, which would perhaps remain unknown, undeveloped, or unimplemented were it not for the operations of markets. So the functionning and operations of markets are not wholely dispensible, and some of the inequities they generate must be considered a trade-off for the ignorance and contingency they overcome. That said, I think one of the most clearly beneficial policies, to both offset market based inequities and ensure the most salutary and equitable effects from net surplus gains, is higher and progressive taxes of higher incomes and, perhaps especially, profits. Revenues from such taxes can be used to fund higher levels of general welfare provisions to cushion the impact of economic changes on workers and thus render them more readliy acceptible and beneficial in their distributuve effects. Further, high gains in productivity are going to have structural implications as employment and production levels (in monetary cost terms) decrease in particular economic sectors and thus, to ensure continued employment and economic growth, new sectors of employment and production must be developed and established. Increased public spending on such things as infrastructure, education and retraining, and social repair and amelioration would seem to fit the bill in the absence of market-directed new investment or as a complement to this latter. Unfortunately, we in the U.S.A. have been moving in the opposite direction from such policies for quite some time now.