Unstoppable? Our Runaway Union Trains

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Libertarians do not agree to the letter on many issues, but our core belief centers around what is known as the Zero AGGRESSION Principle--that physical force against persons or property, the threat of such, or fraud upon persons or their property is wrong.

The ZAP applies to individuals, groups, and nations. That's why you'll find most libertarians ardent non-interventionists in regards to foreign policy and outspoken critics of the Nanny State.

With this axiom in place, I want to assure you that libertarians are not against labor or business, but we are for freedom...the freedom to work and prosper, the freedom to own property and profit from it, and always--the freedom to choose.

First, you own yourself, but you do not own your job. You enter into a contract with business owners, and you are paid for services rendered or skills performed. In other words, you are selling your labor. In a free society, you have a right to sell it to whomever you please. Conversely, buyers have a right to choose what they need from the labor market, and adjust their numbers of workers according to profit/loss.

A job is NOT your right, but the pursuit of one is (if that brings "happiness" and personal gain). As a member of the human community, you should expect a safe working environment, fair hours, and the ability to negotiate for reasonable wages and benefits. Contracts must be mutually beneficial, and entered into devoid of coercion and fraud.

Libertarians are not against unionism; that is, workers banding together for a common cause to improve work conditions and status. Free Association is another important tenet of true liberty. No one should tell you whom you can or cannot associate with in society.

Collectives only become a detriment to freedom when they rise up to assert themselves as superior to other groups, lobby for government intervention (legal rights), buy politicians to improve their status, and resort to strong-arming.

Unfortunately, this bullying behavior is a stubborn stain on union history in America, and the situation in Wisconsin is no exception. Formed on the premise to prevent the big man from taking advantage of the little guy, the roles are now reversed.

But let's discuss the private sector first.

Thomas E. Woods, Jr. tells us how labor laws in this country once operated on the principles of freedom of contract and association.

In the 1920s, a laborer was perfectly free to reject any offer of compensation that an employer might make to him, and an employer was likewise entitled to reject any offer made by a laborer. An employee was free to withhold his labor services if unsatisfied with his employer's terms; likewise, a group of laborers jointly exercising this individual right were permitted to do so. No one, however, was allowed to prevent individuals who wished to work from exercising their right to do so.

Strikers — like anyone else — were forbidden to interfere with consumers' right to shop where they liked. And strikes could not obstruct suppliers from making deliveries, since to do so would again violate the rights of others. Finally, since the employer's plant was private property, the employer had the absolute right to decide who would be permitted to enter, and complete strangers who wished to enter for the purpose of agitating his employees could be lawfully excluded altogether." Read the rest of the "The Forgotten Facts of American Labor History" and discover when things began to change.

 Labor unions would have you believe that their movement brought us shorter workweeks, safer working conditions, and better wages, but not so. Actually, capitalism is responsible for these improvements.

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.

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."

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.)

Ludwig von 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, The Union Myth

Thus, in keeping with the principles of freedom, business owners should be at liberty to employ union and non-union employees at their discretion, and maintain a right to recognize, or refuse to recognize, a union as the collective bargaining agent of some, or all, of its employees.

In principle, an individual should also have the freedom to contract an employment package with the company on his own terms.

Again, in sticking to the principles of freedom, unions should not be allowed to force others on the job into the union (called a closed shop), force dues from non-union employees (agency shop), harass other employees, or attempt to block their access onto company property during a strike.

Workers have the right to organize boycotts. Still, boycotts or strikes do not justify the initiation of violence in any form against anyone. The government should not force employees back to work, either.

No one disputes that labor unions served an important purpose in the burgeoning industrial age in our country, which redefined how we work. Union supporters have perpetrated many myths about oppressive working conditions in factories, but they fail to make an accurate comparison to life before the industrial revolution in a predominately agrarian society--the long, grueling hours for all family members, hardships, and unpredictable returns.

Henry Ford is famous for reforms, such as increased wages and shorter working hours. In 1914, the minimum wage was $2.34 a day. He began to pay workers $5 a day (equivalent to $110 today). Chronic turnover ceased, and the best mechanics in Detroit headed over to Ford. As a result, productivity increased.

Ford also brought us the 40-hour workweek. He explains why it was implemented:

"We have," he said, "decided upon and at once put into effect through all the branches of our industries the five day week. Hereafter there will be no more work with us on Saturdays and Sundays. These will be free days, but the men, according to merit, will receive the same pay equivalent as for a full six day week. A day will continue to be eight hours, with no overtime.

"The country is ready for the five day week. It is bound to come through all industry. In adopting it ourselves, we are putting it into effect in about fifty industries, for we are coal miners, iron miners, lumbermen, and so on. The short week is bound to come, because without it the country will not be able to absorb its production and stay prosperous.

"The harder we crowd business for time, the more efficient it becomes. The more well-paid leisure workmen get, the greater become their wants. These wants soon become needs. Well-managed business pays high wages and sells at low prices. Its workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment.

"The industry of this country could not long exist if factories generally went back to the ten hour day, because the people would not have the time to consume the goods produced. For instance, a workman would have little use for an automobile if he had to be in the shops from dawn until dusk. And that would react in countless directions, for the automobile, by enabling people to get about quickly and easily, gives them a chance to find out what is going on in the world-which leads them to a larger life that requires more food, more and better goods, more books, more music -- more of everything. The benefits of travel are not confined to those who can take an expensive foreign trip. There is more to learn in this country than there is abroad.

"Just as the eight hour day opened our way to prosperity, so the five day week will open our way to a still greater prosperity.

"The eight hour day law to-day only confirms what industry had already discovered, If it were otherwise, then the law would make for poverty instead of for wealth. A man cannot be paid a wage in excess of his production. In the old days, before we had management and power, a man had to work through a long day in order to get a bare living.

"Now the long day would retard both production and consumption. At the present time the fixing by law of a an five day week would be unwise, because industry is not ready for it, but a great part of industry is ready, and within a comparatively short time I believe the practice will be so general in industry that it be made universal.

"It is high time to rid ourselves of the notion that leisure for workmen is either 'lost time' or a class privilege.

"Nature fixed the first limits of labor, need the next, man's inhumanity to man had something to do with it for a long time, but now we may say that economic law will finish the job.

"Management must keep pace with this new demand -- and it will. It is the intersection of power and machinery in the hands of management which has made the shorter day and the shorter week possible. That is a fact which it is well not to forget."

(Source: Henry Ford: "Why I Favor Five Days' Work With Six Days' Pay", by Samuel Crowther, World's Work, October, 1926 pp. 613-616)

Labor unions today function too much like our out-of-control government. The Founders of this country envisioned a government to protect the rights of their citizens in the enjoyment of life, liberty, and the pursuit of property. In other words, it was supposed to step in only when inherent rights were threatened or contractual agreements needed arbitration.

Our government has become a nasty bully, stopping at nothing to ensure its own, elite interests while usurping the Constitution and brazenly restricting the freedoms of the American people. Bureaucratic abuses are on the rise, as the media reports daily on corruption, cover ups, and pay-offs.

Now, substitute the word "union" for government. Clearly, unions no longer exist to simply protect workers' basic rights. They have become national bastions of greed and political power that revel in privileged immunity from prosecution, even if they order their members to commit violence.

Therefore, I am convinced that a Right-to-Work concept is the only view compatible with individual liberty that honors the freedoms of association and right to property. Currently, the U.S. has 22 "Right to Work" states.

Indeed, government interference, with its complex set of laws, coupled with mafia-like unions and their bosses, have crippled the American economy and the once-coveted dream of entrepreneurship.

Thomas E. Woods cites a startling report: "The damage that unions have inflicted on the economy in recent American history is actually far greater than anyone might guess. In a study published jointly in late 2002 by the National Legal and Policy Center and the John M. Olin Institute for Employment Practice and Policy, economists Richard Vedder and Lowell Gallaway of Ohio University calculated that labor unions have cost the American economy a whopping $50 trillion over the past 50 years alone.

That is not a misprint. "The deadweight economic losses are not one-shot impacts on the economy," the study explains. "What our simulations reveal is the powerful effect of the compounding over more than half a century of what appears at first to be small annual effects."

Not surprisingly, the study did find that unionized labor earned wages 15 percent higher than those of their nonunion counterparts, but it also found that wages in general suffered dramatically as a result of an economy that is 30 to 40 percent smaller than it would have been in the absence of labor unionism.

Many libertarians support a free market, called "laissez-faire" capitalism. In French it means, 'Leave it alone". We believe the government should stay totally out of business--from regulatory agencies to labor laws to bail outs.

A free market, driven by consumer needs in a competitive environment, is self-regulating and adjusting. It places a merit demand upon the worker and a reward demand upon the employer in order to keep reliable, competent people. The consumer, not the government, is the check on quality control that pressures both sides to provide an excellent, affordable product/service or risk failure.

Real risks are natural components for a healthy, unhindered economy. Government bailouts (safety nets) discourage personal responsibility (the "Too Big to Fail" mentality). Bailouts artificially prop up the economy. People are lulled into thinking they avoided a disaster; but in truth, they only delayed it.

The market doesn't have to flow in boom/bust cycles; such extremes are caused by what Murray Rothbard called "loose money and credit" generated by the Fed and distributed through the Central Banking system. But the quicker you let the economy fall, the quicker it rebounds to full recovery.

No, the U.S. does not have a free market. We don't even have true capitalism, but corporatism, which is the deformed offspring of big business and big government. It distorts the economy with protectionism and taxation. For a better understanding of the difference between capitalism and corporatism, read here.

So, back to how unions fit into all of this. Until we have a truly free market where government will not, cannot hinder or assist the marketplace, private sector unions will continue to bed down with prostituting politicians who sell their favors to the highest bidder. In return, the unions get government legislation on federal and state levels that keep them strong, companies weak, and the taxpayers broke.

It is no secret that Henry Ford hated unions. He was convinced that the workers were too influenced by powerful, politically motivated bosses who would end up doing more harm than good. While the union philosophy was to restrict productivity as a way to foster employment, Ford believed productivity was the means to economic prosperity.

Although gains in productivity would obviously make some jobs obsolete, Ford saw that expansive, economic growth would create new jobs within the company and its supporting businesses. He claimed that smart managers would do right by their employees in order to profit, and eventually, enough good managers would create a strong socio-economic system that shut out bad managers and bad unions.

Ford believed the UAW (The United Automobile Workers Union) was out to ruin his business, and he was the last automaker in Detroit to hold out against them, despite now-famous violence, work disruptions, and bitter stalemates. He was ready to close down the company, but his wife Clara threatened to leave him if he did. She said it was wrong to deny their son and grandsons their places in the Ford dynasty.

Almost overnight, Ford Motor Company struck a deal with the UAW and contracted terms more favorable to the union than any other automaker. (sources: Charles E. Sorensen with Samuel T. Williamson, My Forty Years with Ford, 1956, and Henry Ford with Samuel Crowther, My Life and Work, 1922)

We're all familiar with the auto company bailouts that earned GM the nickname "Government Motors". Back in 2006, George Reisman was just one of the economists sounding the alarm. His article, "Where Would General Motors Be Without the United Automobile Workers Union?" reported these alarming facts:

"Over a year ago (2007), The Cincinnati Enquirer reported that "the United Auto Workers contract costs GM $2,500 for each car sold."

GM had to pay..."a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets."

GM had "healthcare obligations that accounted for more than $1,600 of the cost of every vehicle it produced."

In 2008, GM had pension obligations that left it with a net worth of minus $16 billion.

No one listened, and the taxpayers were forced by the government to pick up the bandits' tab. Our children and future generations will have to live under the crushing debt. Now, after the big rescue I ask...

What has changed so that this atrocity doesn't happen again?

The companies, unions, and government's ménage à trois is tighter than ever, and it's back to business as usual.

Interestingly, union membership in the private sector is now at 6.9%--the lowest since the 1930s. But union membership in the public sector--government-owned, supported or regulated organizations--is 36.2% of the American workforce. It is expanding in size and employee benefits--even as other Americans face chronic high unemployment (8.9% as of 2/2011) under the shadow of another Depression.

Public employees earned benefits worth an average of $13.38 an hour in December 2008, the Bureau of Labor Statistics (BLS) says. Private-sector workers got $7.98 an hour.

Overall, total compensation for state and local workers was $39.25 an hour — $11.90 more than in private business. In 2007, the gap in wages and benefits was $11.31.

The gap has been expanding because of the increasing value of public employee benefits. In one year, government benefits rose three times more than those in the private sector did: up 69 cents an hour for civil servants, 23 cents for private workers.

Note that federal employees in 2008 made on average almost $8,000 more than their private-sector counterparts. When you add in benefits, the gap spreads to about $30,000. (USA Today)

At least union workers in the private sector realize they are negotiating for limited, speculative resources based on what consumers are willing to pay.

If the wage/benefit package is too high and profits too low, the company will go out of business; therefore, this reality makes the unions more willing to strike an agreement.

But public sector employees work for the government; it doesn't have any competitors. Its "customers" (American citizens) are enslaved to its services from the cradle to the grave, and it has no plans to go out of business!

Public unions can therefore contribute money to the campaigns of sympathetic politicians, make unreasonable demands, and then get their pocketed cronies in government to raise taxes to cover the costs. Powerful lobbyists ensure that public jobs are protected, regardless of economic conditions or performance of the worker.

For example, just look at what it takes to "fire" a teacher in the Chicago school system: (thanks to the Chicago Tribune and Reason Magazine) See larger image here.

Scenarios are similar all over America.

Now, let me assure you I am NOT against unions in principle, nor am I against those who join them to seek advocacy for just working conditions, wages, and retirement benefits in both sectors.

But can we locate a common denominator in all union problems, private and public? Yes. It's the U.S. government.

Americans suffer across the board. First, as consumers, we pay higher prices for often mediocre goods, thanks to private sector unions. Then, as taxpayers, we are forced by the government to provide a living for its employees that exceed that of the average citizen, thanks to public sector unions.

I can't blame people for wanting to position themselves for the best benefits possible--that's pretty much the "American way". But it loses its luster when it's no longer a product hashed out of rugged individualism and mutual respect, but ignoble concessions to the scare tactics of a labor gang.

Unionism wouldn't be a problem if "we, the people" had maintained our vigilant watch on freedom's wall. Liberty is a dangerous thing, for it requires us to know the difference between what to courageously allow at risk and what to avoid at all costs.

Today, I believe we've confused the two concepts and human rights and liberties are in grave danger--not from without, but within. It's simple: we either make choices that benefit the individual or the group...choices that result in greater slavery or freedom.

Therefore, if we have to point just one finger, let's aim it at the government. Get it and its damaging interference out of the market and its labor, where neither business nor workers can court powerful, third-party favors. Make public unions and governments answer directly to the taxpayers!

We must slash the size of Leviathan on federal and state levels, thereby reducing the need for so many employees. (Private industry can deliver legitimate services much better...services not outsourced by the government, but INSTEAD of the government, such as a private postal service.)

Strengthen and deregulate the market; weaken and regulate the government.

I favor a return to a confederacy of states patterned after our original Constitution, The Articles of Confederation. (I have an extensive series on this site as to why I believe it is a superior way to govern that prohibits many of the abuses we have today.)

But big changes require small steps; and any reforms that reduce the State and restore individual liberties are good.

End collective bargaining for public sector employees, and return real, decision-making power back to the original employers of government--the taxpayers. We must call for genuine citizen legislatures, not professional ones.

We would do well to heed Switzerland's federalistic concept of direct democracy--similar to the Articles of Confederation--that runs on vibrant input from the people while safeguarding against a "tyranny of the majority".

In case you haven't noticed, our constitutional republic no longer exists. A form of government is not sacrosanct, particularly if the governing powers make a mockery of it every day and throw tokens--like national voting--to the naive to keep them happy.

If promoting a return to a confederacy of states akin to the Articles of Confederation scares you, then at least, get to really know your representatives and refuse to send union and big government patsies to state legislatures and Congress.

Demand competent management from your government and call leaders into accountability for spending. Insist they pay bills with extra money, not add a new program or promise (which is why the states can't pay employee pensions now).

If they don't, vote with your feet, if possible. Distance yourself as much as you can from dependency upon the state and its agencies. Take the initiative to save on your own and invest in hard money, such as gold and silver.

We've forfeited our power as consumers and taxpayers to brigands, and they're getting away with it. Government can't very well stop the train of union abuses when it's guilty by association. You know politicians won't, because they want their cut of the loot. And these companies? They're behind the controls at gunpoint!

The runaway train is headed smack into our children's future domestic peace and prosperity.

Who can arrest it? The American people who cherish individual liberty, and despise the ruinous mentality of a mob.