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.
___________________________
Thomas J. DiLorenzo is the author of How Capitalism Saved America (2004) and senior scholar of the Mises Institute (tomd@mises.org).
Actually we wouldn't for several reasons. Market pressure from consumers boycotting such companies, not to mention the companies themselves desire to produce the best product and gain the most market share. Capitalism would control the wage market just as any other market. Children could not, and would not in some instances, be able to compete with skilled workers
His book on capitalism is well worth the read not to mention his meticulous and truthful assessment of the 16th President
Yes and thank you Bill!
Everything in DiLorenzo's article is true.
Just because we got a different version in school doesn't prove otherwise! The rotten SOB's - 98% of them anyway.
Uh...children weren't hired for skilled labor. It's not like they were hiring 7 year old craftsmen. There is and always will be a market for jobs that can be done by anyone.
Owen finally became ashamed of his self and his wealth, all accrued by child labor, as young as 9 years old.
Painting capitalism as the savior of the world is a tad disingenuous. All of the past and current purveyors of socialism are capitalists.
There are just too many "born losers" in the world for it [idealism?] to ever work. They won't go away.
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.
Yep, Sad as it may be, I too see that this may be the wisest course.
-- The Fair Tax idea may be the best way we could 'Constitutionalize' a born loser welfare scheme..
Give everyone in the USA a tax 'prebate'; and let the non-achievers use it to exist on, three hots & a cot style..
The rest of us would then be free to ignore them.
No they weren't. And in many instances today in mills, jobs children would do have been automated. The market has replaced them with a more efficient means of production. Not out of necessity as much as for a company to stay on top of the
There is and always will be a market for jobs that can be done by anyone.
So you have a problem with a young person getting a job? What's the limit? Currently it is 16. However, I would say that today many of the jobs held by 16 year olds could be done by 14 year olds. Are you going to prohibit a young entrepreneur from getting a job because you 'feel' they should enjoy their childhood, or some other nonsense?
Actually, I think credit for The Weekend goes to God.
Of course The Union Movement is twice as good as God because God only gave us one day off.
That being said, Unions suck.
Certainly those who take adavantage of others should be ashamed. Persons of conscience would pay employees enough to retain them surely, or else it's coercion.
Capitalism is not the saviour - Freedom is, capitalism is just one of it's necessary ingredients - it consists of property rights and the rule of law to protect them, freedom of choice and the whole BofR, which rights we were not limited to because Govt was to be limited, not us.
Is it any wonder that one of the freest market economies in the world is also the richest? It is solely due to the fact that Americans have more capital invested per person than other countries who appropriated more of the earnings of their taxpayers. It's a simple concept - less Govt, more freedom and wealth for all.
Think of every dollar wasted by Govt over the last hundred years. The ones that wouldn't have been wasted if Govt had stayed it's constitutional size. The kickbacks and scams. The elected's abuse of travel privileges and expense accounts say, or Ted's Big Dig in Mass, or the other Ted's bridge to nowhere. Now let's say that money was instead continuously put in an account to compound at market rates. We are talkin some huge numbers of opportunity cost to generations of Americans.
If America does not work to reverse our socialist trend and reverse the Genl Welfare, Equal Protection & Commerce clauses back to the Founder's intent, the "golden goose" will be cooked. Never fear for the elites though, their assets are safely tucked away from the IRS, and their "philanthropies" will continue lulling Americans into the tyranny socialism always begets. And they'll still be in charge while the middle and lower classes, who will continue paying for it, merge into homogeniety.
Most socialists today are unadmitted communists. Socialism is THE step to totalitarianism, remember Hitler & Stalin, Mao & Pol Pot? Those failures of utopian propaganda? Those master murderers of many tens of MILLIONS?
The Democrat Socialists of the USA don't know the definition of capitalism, nor care to admit the economic truths that put the lie to them.
Capitalist was Marx's derogation of free markets. He is perhaps the most despicable human being there ever was. Responsible for more deaths than any human in history.
Your view disappoints me.
Thanks Bill
As I've gotten older, I think my viewpoint is closer to what used to be called a very conservative Democrat. In other words, it doesn't hurt to throw the average "working Joe" a bone now and then, it doesn't hurt to help poor people get a leg up, and sometimes a limited government can be the best way to accomplish these things. I'm pretty sure that you will disagree with me on that, and at one time I would have as well. That's okay, people change, opinions change. I come back to human nature, and the fact that ALL people will never be achievers, bad things do happen to good people sometimes, they WILL need help from someone. Unfortunately, history also shows that religious institutions, capitalism, and all of the other entities out there just won't step up to the plate to do the job. A prime example is slavery and the institutional racism that followed. It took government (truly following the Constitution), to step in and accomplish what capitalism wouldn't. Human nature at work again. I know that "promoting the general welfare" has been vastly abused by those in power, but the fact remains that the founders DID put that in the Constitution, and they probably knew there would be a lot of disagreement at some point as to it's limitations.
I'll be honest with you, I think that if everyone in this nation were a Christian, you could strip the government down to just defense and basic law enforcement, and I for one would be thrilled to live in a libertarian Utopia. Since that's not the case, I can see a role for government now and then to step in and do what it can to help people and alleviate suffering and unfairness.
Anyway, I've probably strayed away from the subject of unions, but I do agree that unions have outlived their usefulness to a great extent. We'll probably just have to agree to disagree about whether they were ever necessary or not. You seen to want to roll back the current "unholy alliance" of government and corporations, and I'm with you 100% on that! Best of luck to you.
The bottom line is that the state, or government, is the negation of freedom.
Or, freedom is the negation of Govt to the maximum extent possible, IE, the Founder's vision.
Another old sage said: "Harm no man, then do as you will" as the best form of Govt.
Our own Founders witnessed this among native Americans - no formal Govt, but yet a code of conduct, breakers of which met with the hostitlity of the community.
On another note, prices in free markets are all we need to prosper, each man invisibly helping others by his own industry and self interest. As soon as Govt enters the mix, perverse incentives ensue, Govt grows and crowds out capital from private enterprise and slows economic growth.
The only purpose of Govt was First to ensure our rights and Second to provide security, and very little else, for the Founders understood man's corruptibility as evidenced in the Limited Govt they designed.
The Founders ideas are based on the sovereignty of the individual - anything less values the collective more, and leads to statism, oppression and tyranny.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.