Question

In a world of perfect information, why do economists view the existence of strikes and lockouts as errors?

Answer 1

The impact of strikes as well as lockouts on organisational activities can be substantial. A labour dispute which results into a strike or a lockout may lead to financial disruptions to an employer's entity. In a unionized environment, the employees are entitled to strike and organisation is also legally entitled to lock out the employees. However in the world of perfect information economists view it is an error because it results to a loss for both - the employer as well the entity. It ruins relationship with the labours thus may adversely affect productivity and motivation of employees. Moreover also leads to a loss of revenue to country because when the companies is no longer continue its activities, thus there will be no wages to labors. Also no sales and production for an entity means there will be no taxation for the company thus resulting to a damage to the nation.