Monday, April 25, 2011

Labor Union Folklore

I leave it to the labor unions to tell you about their virtues and their successes.  They are quite willing and able to do so.  I take it as my task simply to tell you about their weaknesses and shortcomings.  In this case, I want to tell you about union folklore.  I want to tell you about some of the things people think are true concerning unions but are not.

Let’s Play Monopoly
First, labor folklore suppresses the monopolistic tendencies and intentions of the unions themselves.  Unions intend to monopolize the work supply the corporation needs to purchase in order to produce its merchandise.  Unions want to eliminate the competition among prospective workers.  They want to be sure that a union shop hires only union workers, that the shop has no freedom to hire others.  If there’s competition among prospective workers, then the workers have to bid against each other in order to offer their services at the best price for the corporation.  In order to keep their wages artificially high, unions aim to eliminate competition.  They do it in many ways, some moral and legal, some not.
The most common way to keep others from competing for jobs is to pay large sums of money to elect legislators who will pass laws that eliminate worker competition.  Unions want a shop closed to worker competition, a shop wherein the union monopolizes the work supply -- which the elected legislators provide by passing laws toward that end.  It’s a special interest system from Hell:  What the unions want, the politicians provide; what the politicians want, the unions provide -- all others be damned.  Unions strive after, and frequently attain, job sovereignty.  They enclose the labor pool; they assert union fraternity over employer and competitive worker liberty.  In effect, they place “No trespassing" signs in front of the hiring office.  By doing so, unions stage an invasion on managerial prerogatives, by demanding control, or veto, over hiring and firing.
Collective bargaining is not an instrument of liberty, but of control.  Unions wield it precisely in order to restrain trade, namely the trading of money for work and of work for money that occurs freely between company and employees -- absent third party intervention or coercion.  Unions try very hard to prevent companies from dealing directly with free employees and free employees from dealing directly with companies, which is why so much relevant discussion has centered around whether or not antitrust law (law designed to preserve competition) ought to be applied to labor unions.  When unions apply pressure across an industry to drive up their income, unions call it collective bargaining.  When businesses do it, unions call it price fixing.
Perhaps a commonly employed analogy will serve:  Imagine that a homeowner, John, and a prospective buyer, Sam, were negotiating over the purchase of John’s home.  Imagine that Sam were invested with the bargaining privileges now enjoyed by labor unions.  In such a case, Sam would be able to deprive John of all other purchase offers.  Sam would be able to physically isolate John’s home and thereby to cut it of from all deliveries of any sort, even food, as well as to prevent personal movement into and out of John’s home so that, even if John were, say, an ambulance driver, he could not ply his trade or make his living.  Sam could impose at will a virtual boycott, or embargo, of John’s business, even if John did not work at home.  Were you or I to exert such coercive pressures on John, it would be called criminal.  When unions exert them, it’s called collective bargaining.  

Second, despite their monopolistic practices, unions want you to think of them as the victims, not the victimizers.  When non-union forces try to re-assert their liberty, unions portray that re-assertion as fascist tyranny.  Unions want you to forget that just as collective bargaining is a legally protected activity, so also is opposing it.
Unions are not victims.  On the whole, organized labor stands quite well up in the rankings of worker wages and benefits, both here and around the world.  Nevertheless, the perception remains that union workers are downtrodden and oppressed.  This mistaken notion of victimization is not simply a matter of cultural lag or of perceptions not keeping pace with reality, but of propaganda.  Unions purposely portray themselves as the stoop-shouldered cannon fodder of capitalist emperors battling each other over filthy lucre.
The picture is false.  Unions work for consumers.  Unions work for you.  Consumers -- mothers, store clerks, assembly workers, farmers, and dental assistants, not greedy capitalist emperors -- determine who gets and who keeps a job.  They do so with their dollars.  If a product’s price is too high, or if its quality is too low relative to that price, consumers send their money elsewhere.  When they do, they fire not only management, but union workers as well.  The consumer’s dollars, not the owner’s greedy desires, are the rising tide that floats the corporate boat, or else their absence is the torpedo that sinks it to the bottom of the financial sea.
Unions want you to think that they are victims of greedy capitalists when in reality they are simply unable to compete successfully for consumer dollars in the marketplace.  They do not present their failure in this regard as their failure, but as their victimization at the hands of others.
Union folklore says that others are greedy, not union members.  As everyone knows who thinks about it even for a moment, human nature and its manifold weaknesses is fully represented on both sides of the bargaining table.

We are the world
Third, labor folklore asserts that what’s good for unions is good for America.  It’s an old myth, and widely employed by many groups for their own advancement, whether by farmers, retailers, wholesalers, or public servants, that whatever is good for them is good for the nation.  In other words, unions are not the first or the only small group to assert that their interests are identical with the interests of the country.
This myopic self-centeredness  ignores the basic reality that if money is allocated in one direction it cannot be allocated in another at the same time.  When one sector gets a larger share in the consumers’ allocation of money, another sector gets less.  But the whole country is not thereby either diminished or enlarged.  When group A prospers at the expense of group B, the nation is not thereby either richer or poorer.  The gains (and losses) are relative:  They are relative to other groups in the economic equation.  The nation isn’t financially enlarged, just one portion of it.  What one sector gained, others paid.  The benefit is unidirectional, not universal.  What’s described as better off for the nation is simply reallocation.  Reallocation within the system is not the same as increasing the system.  The pie is not magically bigger, just cut up in different proportions.  That’s not good for the country, just good for one sector.  I’m not saying that economics is inescapably a zero sum game; I’m saying that mere reallocation is.
Indeed, one might argue that, because no industry is truly isolated from all others and therefore is impacted by what happens in them, when other companies consent to raise wages because of union pressure, they must also raise their prices in order to absorb the additional labor costs.  That means that the corporations and consumers who wish to purchase that company’s products must pay more, raising everyone else’s costs accordingly, thus making them worse off than before.  Those who are now worse off believe that they must demand more, which raises the price of their products, and drives the cost of living higher in ever-rising circles of upward pressure.  In this way, what’s good for unions is bad for everyone else, despite union folklore to the contrary.

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