Starting with WWII, industrial owners and unions had a pact;
Nobody had any pact. On average, people act for what they see as their own benefit.
People working for their own benefit works fine -- on average, and over time -- if you have a free market and the rule of law. There, transactions happen only when both parties are willing and perceive benefit, so all transactions are net benefit.
If you don't have that, on average and over time, you have problems. In the case of government mandating transactions, both parties aren't always willing and don't always benefit, so not all transactions are net benefit.
I lived near Detroit for a large part of my life, and Detroit is steeped in unions. I worked for GM for some years. I've had a very thorough view of how Detroit/auto industry unions worked. Even decades ago, that situation was clearly headed for ruin.
I'm not against all aspects of unions, by the way. Unions are fine as long as the government doesn't grant them special rights unavailable except to unions. In a free market, people should be free to organize as they see fit and to negotiate contracts as they see fit; and corporations should be free to propose deals as they see fit, to establish business where they see fit, and to fire people as they see fit -- as long as it doesn't violate any contracts (which is a critical caveat). I'm in favor of rule of law by contracts.
I am against union cronyism, corporate cronyism, and government cronyism. Cronyism exists because government can give out money and favors. As you reduce the ability of government to run people's lives, take money from one person and gift it to another, and regulate everything, you reduce the motivation for cronyism, special interests, lobbying, and corruption.
Back onto the topic of wages, in a free market, everything is worked out in a giant feedback loop. But it works only over time and on average. If productivity increases, the reason prices go down is that one company feels that it then has the margin room to reduce prices a little and sell more product. It then gets more of the market, but then other companies act to do the same. In the end, you have more product being made at a lower price point. The same dynamic happens -- on average and over time -- with respect to wages. If a worker can be more productive, a company will hire him for a little bit more than a less productive worker.
Where you can have these dynamics ruined is when the government decides to control the economy, the market, and industries. You get perverse incentives like have been happening in recent times. Companies can make their stock more valuable not by increasing productivity or even selling product. They can do financial engineering, such as borrowing at near-zero interest rates and buying back stock. They can work out deals with the government for money that doesn't make economic sense and hence is a misallocation of labor and capital. They can appeal to "gee whiz" ideas to boost stock value in a market overheated by injection of printed money. They can create temporary wealth out of synthetic securities and financial games that will completely crash once the government stops printing money or a financial pyramid gets larger than is stable.
The problem of our day -- in my opinion -- is that the people of the world have not yet learned the lesson that centralized control of economies and straying from principles of free markets and rule of law is the wrong way to go. People do not take even 5 hours out of their entire lives to read one simple book -- like Economics in One Lesson, by Hazlitt, or Basic Economics, by Sowell -- and thus are susceptible to egregious lies and falsehoods regarding economic policies.
