Posted on 12/21/2005 9:16:01 AM PST by Marxbites
The Union Myth Thomas J. DiLorenzo
In Human Action, Ludwig von Mises wrote that labor unions have always been the primary source of anticapitalistic propaganda. I was reminded of this recently when I saw a bumper sticker proclaiming one of the bedrock tenets of unionism: "The Union Movement: The People Who Brought You the Weekend."
Well, not exactly. In the US, the average work week was 61 hours in 1870, compared to 34 hours today, and this near doubling of leisure time for American workers was caused by capitalism, not unionism.
As Mises explained, "In the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested. . . . Consequently, the marginal productivity of labor, wage rates, and the wager earners’ standard of living tend to rise continually."
Of course, this is only true of a capitalist economy where private property, free markets, and entrepreneurship prevail. The steady rise in living standards in (predominantly) capitalist countries is due to the benefits of private capital investment, entrepreneurship,technological advance, and a better educated workforce (no thanks to the government school monopoly, which has only served to dumb down the population). Labor unions routinely take credit for all of this while pursuing policies which impede the very institutions of capitalism that are the cause of their own prosperity.
The shorter work week is entirely a capitalist invention. As capital investment caused the marginal productivity of labor to increase over time, less labor was required to produce the same levels of output. As competition became more intense, many employers competed for the best employees by offering both better pay and shorter hours. Those who did not offer shorter work weeks were compelled by the forces of competition to offer higher compensating wages or become uncompetitive in the labor market.
Capitalistic competition is also why "child labor" has all but disappeared, despite unionist claims to the contrary. Young people originally left the farms to work in harsh factory conditions because it was a matter of survival for them and their families. But as workers became better paid—thanks to capital investment and subsequent productivity improvements—more and more people could afford to keep their children at home and in school.
Union-backed legislation prohibiting child labor came after the decline in child labor had already begun. Moreover, child labor laws have always been protectionist and aimed at depriving young people of the opportunity to work. Since child labor sometimes competes with unionized labor, unions have long sought to use the power of the state to deprive young people of the right to work.
In the Third World today, the alternative to "child labor" is all too often begging, prostitution, crime, or starvation. Unions absurdly proclaim to be taking the moral high road by advocating protectionist policies that inevitably lead to these consequences.
Unions also boast of having championed safety regulation by the Occupational Safety and Health Administration (OSHA) over the past three decades. The American workplace has indeed become safer over the past century, but this was also due to the forces of competitive capitalism, not union-backed regulation.
An unsafe or dangerous workplace is costly to employers because they must pay a compensating difference (higher wage) to attract workers. Employers therefore have a powerful financial interest in improving workplace safety, especially in manufacturing industries where wages often comprise the majority of total costs. In addition, employers must bear the costs of lost work, retraining new employees, and government-imposed workman’s compensation whenever there is an accident on the job. Not to mention the threat of lawsuits.
Investments in technology, from air-conditioned farm tractors to the robots used in automobile factories, have also made the American workplace safer. But unions have often opposed such technology with the Luddite argument that it "destroys jobs."
Mises was right that unions have always been a primary source of anti-capitalistic propaganda. But since he wrote Human Action, American unions have also been at the forefront of lobbying efforts on behalf of the regulation and taxation of business—of capital—that has severely hampered the market economy, making everyone, including unionists, worse off economically. The regulation of business by the EPA, OSHA, FTC, DOE, and hundreds of other federal, state, and local government bureaucracies constitutes an effective tax on capital investment that makes such investment less profitable. Less capital investment causes a decline in the growth of labor productivity, which in turn slows down the growth of wages and living standards.
In addition, slower productivity leads to a slower growth of output in the economy, which causes prices to be higher than they otherwise would be; and fewer new products are invented and marketed. All of these things are harmful to the economic well-being of the very people labor unions claim to "represent." (Incredibly, there are some economists who argue that unions are good for productivity. But if that were true, corporations would be recruiting them instead of spending millions trying to avoid unionization.)
Mises also pointed out that as business becomes more heavily regulated, business decisions are based more and more on compliance with governmental edicts than on profit-making. American labor unions continue to call for more regulation of business because, in order for them to survive, they must convince workers—and society—that "the company is the enemy." That’s why, as Mises noted, union propaganda has always been anticapitalistic. Workers supposedly need to be protected from "the enemy" by labor unions.
However, the substitution of bureaucratic compliance for profit-making decisions reduces profitability, usually with little or no benefit to anyone from the regulations being complied with. The end result is once again a reduction in the profitability of investment, and subsequently less investment takes place. Wages are stunted, thanks to self-defeating unionist propaganda. The well-paid union officials may keep their jobs and their perks by perpetuating such propaganda, but they are harming the very people who pay the dues which are used to pay their own salaries.
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Thomas J. DiLorenzo is the author of How Capitalism Saved America (2004) and senior scholar of the Mises Institute (tomd@mises.org).
It was management's fault - period.
Nothing whatsoever to do with self protectionist unions.
Unions deserve credit for nothing but the infringment of the rights of the individual via extortion, corruption, political cronyism and violence, the growth of Govt and theft from taxpayers.
In a free market corporations are free to spend their profits any way they wish so long as they do so legally.
It is legal for corporations and cooperatives to spend their money to lobby congress and the executive branch to look the other way when illegals are crossing the border.
Corporations and cooperatives have spent such money on lobbying efforts.
The congress and the president are looking the other way.
Pure free market capitalism has created a condition where there is a glut of labor which can be had at a lower wage rate and more dangerous work conditions.
Everything is working as planned except that potential terrorists are also getting in, our nation's food supply is suspect because a huge percentage of the people involved are unwilling to report any wrongdoings, and average joes who have no real chance of getting a college education are expected to compete with quasi-slave labor.
Whoopee!
If in a free market it is ok for corporations to freely associate to lobby congress for their needs, why is it wrong for labor to do likewise?
Corporations often ask for silly things like corporate welfare, so it is no surprise that unions also ask for silly things.
Unless you are in favor of limiting the right of free association, then we have to deal with the fact that some idiots are going to be able to succeed in combining their efforts to cause government to support their stupidity.
The only real way to fight this is to decrease the overall size of government so there is less incentive for anyone, corporate or union, to bribe them into agreement.
Neither the Democrats or Republicans seems keen on this idea since big government is good for all politicians.
In a free market, the government is just one more thing that can be bought or sold to aid one competitor vis-a-vis another.
Not likely. Ask any employer who has had to deal with teenagers. Most don't want to work and we don't want to hire them. The age range for productive employment has moved up beyond the child labor restrictions.
The child labor sweatshops in textiles and other dangerous industries are gone. Now those jobs are being done in other places by children of another color. They cannot return. The new sweatshops are burger joints and retail stores; places that give a kid a chance to build job skills and a work ethic.
Look at the nature of the child labor violations being prosecuted. Wal-Mart: because they work a kid 26 instead of 20 hours or because they kept someone until 11:00 pm instead letting them off at 9:00 pm. Six hours of work or two hours out of the day is a pretty marginal gain for society for interfering with a willing employer and a willing employee. Maybe we need more midnight basketball instead of midnight shifts but I don't think so.
And what is the cost of this marginal gain? A generation of kids who have never done anything difficult. A generation who can't mow lawns, drive a tractor or stock shelves. It may be the natural evolution into a higher plane of social development but kids are becoming fundimentally, definitionally, different from previous generations. I keep looking for the positive aspects of this but I just can't see them. These kids are weaker, less mature, less responsible and less capable. Society at large is less free and less dynamic than it could be.
For no better reason than that Corps deserve NO special consideration from Govt anymore so than unions do.
Just as Corps wield more political influence than the individual due to the 10's of thousands they shower on pols for special treatment.
Both are dead wrong and totally conflict with the Founder's intent. Since when did Corps have a vote? They never have and never should.
We are a country of individuals, with Govt's role being specifically to protect the rights of individuals and nothing else or it wouldn't exist.
That we could have digressed so badly, the Founders well expected, and they took precautions which have since been trashed by judicial fiat and power mongering politicians.
Truer words were never spoken! Well done.
Mines gone too. He worked for Bethleham Steel in his late teens, joined the Navy on subs at the war's end and became a carpenter. I believe he had a card until we moved to Miami in 1960 where cards weren't a work requirement.
He never said anything nice about unions at all, just the opposite. Eventually he got a job with Boeing as an estimator during Apollo on the pad construction end of things, one being the abatoir for the returned space monkeys.
It's roof was designed to withstand Alaskan snowloads. He was incredulous at the Govt waste, fraud and abuse he saw - particularly from the subs of Boeing, all union of course.
The Democrats who ruled both houses of Congress for 44 of the 48 years between 1932-80 have wrought such damage to our nation's intellect, it at times seems we can never recover from the years of pro-Govt propaganda and indoctrination by the self interested teaching in public schools.
It wasn't until I took and econ 101 class at the time of RWR's campaign speeches, after a four year hitch in the USCG to avoid Nam, that at 28 I finally began to see the light.
If Democrats are Progressives, and Progressives brought us socialism, then Democrats are socialists. And being there is little difference freedom-wise between socialism, fascism and communism.......well, I now know to be true what I before only guessed.
Which party instituted in the US the socialism/fascism they so admired in 30's Europe under Adolf, Benito and Uncle Joe?
Which party had communists in it's elite circles and highest offices of Govt?
Which party do the leftists in Media & Academe gravitate to?
Which party got us in to WWI after promising not to? (Which scholars say we did not have to enter as the warring countries had just about petered themselves out anyway & remembering that w/o WWI, Hitler would never have risen)
Oh, I don't disagree entirely with what you're saying at all. I'm just aware that the actual core of these problems is human nature. I'm leery of anybody saying that it's "one side's" fault, and that the "other side" has no fault in it. Life doesn't happen in a vacuum. A LOT of bad things (socialism, communism, etc.) have come about as a reaction to other bad things (unbridled greed, ego, hunger for power). Which comes first~it all depends upon who's holding the power. I'm old and jaded enough to have seen it in everyone - including myself.
Not to get too philosophical on you, but the Golden Rule truly IS the only solution to all of these things. The fact that it is so rarely practiced is one reason you have such polarity in America. Everyone is either an Ayn Rand freak, or a communist. Like many other things in life, the answer to the labor/management problem is: Balance.
Nice article. I'll have to read more of this guys writing.
The Golden rule yes.
Employers are able to decided who to hire or not, just as employees have their right to choose who to work for or not.
Anything more or less infringes the rights of one side of the equation.
If you've ever heard the horror stories of union abuse in public contracting you might reconsider. They never served a useful purpose and still do not beyond union protectionism, the very reason they exist at all.
In a nutshell it boils down to the free choice of individuals - and whether employee or employer, unions prevent it. Not to mention the burying of merit, the foundation of free markets and the innovation that raises ALL our standards of living.
If you are a non-union tradesman, who moves to a non-right-to-work state - you will join the union or not work.
If our pathetic education system isn't enough to convince you of the folly of non-merit employment, I don't know what would.
He is very good, you won't be disappointed!
Here's a good one - and I voted for W twice myself. Boy do I miss RWR.
http://www.mises.org/freemarket_detail.asp?control=557&sortorder=authorlast
Associations?? Heck yeah - let them form all manner of them, just don't let them buy off politicians.
Last I checked we are a nation of individuals whose Govt's only purpose was the protection of our rights.
We are the voters, not corps and unions who should NOT be able to buy favor for THEIR special interests with their greater ability to influence versus the individual.
I heartily agree that if Govt had remained it's limited constitutional self these issues would not exist.
Instead we have a system of the most perverse incentives imaginable that work directly against growth and free market incentive. Examples: 1) The employer deduction for health insurance - it enriches insurance co's. The employee might rather have the cash, but then will pay the taxes. MSA's solve this and remove the middleman. 2) Allowing illegal alien's babies automatic citizenship (the anchor for the whole family) - it incentivses exactly the opposite of what we want as do mandatory hospital services they get but we pay for. 3) Foreign aid to despots who work against the US. 4) Corporate subsidy 5) Welfare 6) Home mortgage deduction - it hurts renters but helps banks - and on and on.
Freedom is the negation of Govt as the Founders well understood who put the limits in we once enjoyed - on that we surely agree.
History is the big revealer, read up on the ICC, Rockefeller/Std Oil and his kickback scheme with the railroads. The railroad subsidy that led to malinvestment and the inability it created in competing with the fresh crop of small competitors. Which led Big Biz to beg for regulation and prices controls from it's bought Pols to the consumer's detriment.
This is good to know:
http://praxeology.net/RC-BRS.htm
You might want to watch a documentary called "The Corporation". It details how corporations have used the 14th amendment dozens more times than minorities to get rights for a pile of documents sitting in some safe.
The ability of corporate and/or union leaders to milk profits and union dues for their own gain with government certification and support is abominable.
I believe that you can see the same type of thing in the history of Russia and the Soviet Union. The autocracy and brutality of the Czars, replaced by the bureaucracy and brutality of the communists. Both sides wrong, but like a pendulum, swinging wildly from one side to the other. In the early days of unions, people had to make harsh choices as to whether they would work in unsafe conditions for very little money, or basically watch their family starve. Now, due to unions, people have to make harsh choices as to whether they can put up with working in a union environment, or do something else. I know exactly what you are talking about when you speak of the union shop and factory. I wouldn't work in one. Having read a fair amount of history, I do kind of understand where it originated from.
To say that pure capitalism would have solved it on it's own, well, I'm just not too sure of that. I'm a little suspicious of "pure" anything anymore. These type of things (unions, communism,etc.) weren't created in a vacuum. They were bad reactions to bad things. If we could travel back in time to see the circumstances of some of the workers back in those days, I believe you might temper your opinion on this a little bit. If the early capitalists hadn't been so greedy and heartless, some of this socialist crap that we live with wouldn't be around. I just want people to understand that there are consequences from having a heartless capitalistic mindset, and one of those consequences is socialism. A capitalist society underpinned by Christian values is the ideal system, in my opinion. For the most part, what I see in corporate America today is not that, and I just want to point out that there will always be consequences to that sort of thing. To say that capitalists had no responsibility in the creation of unions, is to ignore quite a bit of history. I'd like to see this "pendulum swing" find it's center one of these days. The ONLY way that will happen is if both sides learn from history.
Those faced with unsafe working conditions that result in injury have always had the courts to go to for negligence or attractive hazards, etc.
They always had free choice to seek other employment.
Kids in factories versus on the farm, was a pay raise they were willing to take. Like Nike workers making more than their fellows in rice paddies.
As long as it's all voluntary, we are free to choose.
The horror stories we were all fed in school by those interested in the Big Govt that benefits them, not all but most, was mostly propaganda to infuse socialism.
Like the iconic photo by David Duncan of the Vietnamese being shot in the head point blank, the little girl in the textile mill is also ingrained in the American pysche.
It gave the impression that all factories were manned by children slave laborers with no free choice.
Govt created the Great Depression and further interventions of perverse incentives kept it alive for a decade, while the concurrent European depression ended much sooner. Keynes came here from there, and our Govt drank heartily from his poison well, as many still do!
WE raised taxes and killed off thousands of cattle & hog to "support" prices for ranchers. No matter that the 25% unemployed were near starvation.
FDR was the biggest traitor and abuser of our Constitution. Rockefeller & their socialist foundation - even worse, the inventors of Corp subsidy along with the railroads and utilities.
Read this for some real valuable perspective:
http://praxeology.net/RC-BRS.htm
I have this theory that a certain amount of money and effort is spent by the "achievers" in life to buy off the "non-achievers". This is done so that they don't have to spend all of their time fighting the non-achievers to keep what they've earned. Sad as it is, I also believe that there is the possibility that it may be the wisest course. Otherwise, it's a constant battle, and the achievers are in jeopardy of being devoured by the non-achievers. Of course, when they take over, the non-achievers will implode afterward, then some achiever will resurrect and the cycle begins anew (think of Czarist Russia and the Soviet Union as a relatively recent example of one cycle).
As it stands now, if a true free market were to emerge somehow, human nature would take over again, and the mess that you see now would eventually re-emerge. The pendulum keeps swinging, collectivists versus individualists. To me, an achiever, I have a hard time understanding the non-achiever mentality, but I see many of them that appear to be just born that way. I'm starting to think that God just put them here for us to take care of. If we do that, then we'll be rewarded by not having them try to take over and take everything we've worked for. Maybe that's the lesson the Czarists never learned. I really don't know. All of the great theories and intellectual discussions I've seen on the subject never seem to account for human nature, i.e. some people are just no d@mn good, and being in a collective "hive" (or union) is the only way they can make it.
Let's redefine "child labor," because the image of the coal-sooted 10-year old boy just isn't working.
Under pure capitalism, most companies wouldn't have an incentive to recruit kids to work because of their lower production value. Those that foolishly do would face the wrath of angry consumers who believe that pre-teens shouldn't be out toiling in factories. But child labor laws restrict high school teens from working at fast-food jobs or order-entry jobs where they can gain valuable experience. So these kids are more likely to be in the streets than working.
This is a great article and thread. Definetly bookmarking.
Yep, they rather play their new Xboxes instead of learning skills. Today's kids can't even replace the oil filter on cars. But they'll eagerly show you how to get to Level II on Doom.
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