Saturday, October 13, 2012
Labor Unions = Labor Cartels
I have a little part-time business providing computer services in the small town of Limon. Limon is a long way from any major cities- about 70 miles. There is, I think, one or two other guys in Limon doing what I do.
Say I contacted the other two guys in Limon providing computer services and suggested that we meet together and set prices, so that each of us was charging the same amount, in order to allow us to keep our prices high. This is what the law refers to as collusion, and it is illegal. We would be forming what is known as a "cartel". I know when we think of cartels we think of insanely rich Arab sheiks or mysterious drug-runners in the Andes, but a cartel is just an association of producers of some particular good, agreeing on the price of that good. Cartels are illegal.
Now say I also, after forming my little cartel in Limon, also called my buddies on the town council (if I had any) and got them to pass a law saying that any new producers of computer services in Limon had to join my cartel, and that the cartel got to decide whether or not any new computer repairman was allowed to join my cartel. And then suppose that I used the increased profits that I made to help make sure those same town council people kept getting elected so that they never repealed that law.
Would you be outraged? Would you be outraged at the formation of my cartel all by itself, let alone using political influence to protect my cartel?
This is precisely what a labor union is- a cartel of people providing labor setting the prices of that labor and using political influence to ensure that nobody can break that cartel. If you would be outraged by my computer repair cartel, you should also be outraged at unions.
People say that it's different because a labor union is formed of workers instead of business owners. But am I not a worker? If I set the price of my services in concert with other computer repairmen, isn't it the value of my labor that I'm setting? How is it different for me than for a teamster, just because he works for an employer and I work for myself?
Well, you could say that I can set my price to be whatever I want, while the teamster just gets what his boss pays him. But the teamster can go work for someone else. He can negotiate a higher wage with his boss or go get another job, even switch lines of work. And I cannot set my wage to be whatever I want it to be either- I can be undercut by my competition.
Making a distinction between labor cartels and any other kind of cartel (like a computer repair business cartel) is based on one concept- the class distinction between workers and capitalists. Workers are said to occupy a certain economic class, one which inherently lacks power. Therefore it is acceptable for them to unionize (form a cartel, in other words) in order to even the playing field with capitalists who inherently possess power. This distinction is a Marxist one, and has no foundation in reality. A business owner, a self-employed person is not necessarily rich, and an employee is not necessarily poor. A garbage collector can unionize because he is considered a member of the working class, even though he makes $60,000 a year before benefits, while someone who runs her own housecleaning business would be considered a capitalist, even though she might make much less, and would be thrown in jail if she formed a cartel with other housecleaning businesses.
The fact is, the worker is trading a good just like the oil sheik. The worker is trading his time and expertise for a certain monetary return. He's not a serf. In a free society, he can go work for someone else. This is exactly the same thing the "capitalist" or business owner does- trades his time and expertise for a certain return. For both the worker and the business owner, they sell their goods at the highest price, and can negotiate higher prices or find new buyers for their goods freely. Marxist economic theory has been utterly discredited, but still forms the basis for our conception of ourselves as either workers or business owners.
But we're all just people. Even corporations are just people- a corporation is just a collective agreement between people to enter into a certain kind of cooperative endeavor. In a free society, people freely trade their goods and services. A union is fundamentally based on the idea that people should not be free to make these decisions, that experts and bureaucrats must control the way we freely contract with one another.
Labor unions are labor cartels. They are agreements between producers of a good to raise the price of a good (labor) and to limit the ability of the purchaser of that good to negotiate for it. They're bad enough when they're just private agreements. In any other good besides labor, just forming the cartel would be illegal. But labor unions further have the protection of law. I know many people are forced to be in unions in their particular fields. But a free society should not stand for this. Labor unions should not only not have the protection of law; they should be illegal.
Say I contacted the other two guys in Limon providing computer services and suggested that we meet together and set prices, so that each of us was charging the same amount, in order to allow us to keep our prices high. This is what the law refers to as collusion, and it is illegal. We would be forming what is known as a "cartel". I know when we think of cartels we think of insanely rich Arab sheiks or mysterious drug-runners in the Andes, but a cartel is just an association of producers of some particular good, agreeing on the price of that good. Cartels are illegal.
Now say I also, after forming my little cartel in Limon, also called my buddies on the town council (if I had any) and got them to pass a law saying that any new producers of computer services in Limon had to join my cartel, and that the cartel got to decide whether or not any new computer repairman was allowed to join my cartel. And then suppose that I used the increased profits that I made to help make sure those same town council people kept getting elected so that they never repealed that law.
Would you be outraged? Would you be outraged at the formation of my cartel all by itself, let alone using political influence to protect my cartel?
This is precisely what a labor union is- a cartel of people providing labor setting the prices of that labor and using political influence to ensure that nobody can break that cartel. If you would be outraged by my computer repair cartel, you should also be outraged at unions.
People say that it's different because a labor union is formed of workers instead of business owners. But am I not a worker? If I set the price of my services in concert with other computer repairmen, isn't it the value of my labor that I'm setting? How is it different for me than for a teamster, just because he works for an employer and I work for myself?
Well, you could say that I can set my price to be whatever I want, while the teamster just gets what his boss pays him. But the teamster can go work for someone else. He can negotiate a higher wage with his boss or go get another job, even switch lines of work. And I cannot set my wage to be whatever I want it to be either- I can be undercut by my competition.
Making a distinction between labor cartels and any other kind of cartel (like a computer repair business cartel) is based on one concept- the class distinction between workers and capitalists. Workers are said to occupy a certain economic class, one which inherently lacks power. Therefore it is acceptable for them to unionize (form a cartel, in other words) in order to even the playing field with capitalists who inherently possess power. This distinction is a Marxist one, and has no foundation in reality. A business owner, a self-employed person is not necessarily rich, and an employee is not necessarily poor. A garbage collector can unionize because he is considered a member of the working class, even though he makes $60,000 a year before benefits, while someone who runs her own housecleaning business would be considered a capitalist, even though she might make much less, and would be thrown in jail if she formed a cartel with other housecleaning businesses.
The fact is, the worker is trading a good just like the oil sheik. The worker is trading his time and expertise for a certain monetary return. He's not a serf. In a free society, he can go work for someone else. This is exactly the same thing the "capitalist" or business owner does- trades his time and expertise for a certain return. For both the worker and the business owner, they sell their goods at the highest price, and can negotiate higher prices or find new buyers for their goods freely. Marxist economic theory has been utterly discredited, but still forms the basis for our conception of ourselves as either workers or business owners.
But we're all just people. Even corporations are just people- a corporation is just a collective agreement between people to enter into a certain kind of cooperative endeavor. In a free society, people freely trade their goods and services. A union is fundamentally based on the idea that people should not be free to make these decisions, that experts and bureaucrats must control the way we freely contract with one another.
Labor unions are labor cartels. They are agreements between producers of a good to raise the price of a good (labor) and to limit the ability of the purchaser of that good to negotiate for it. They're bad enough when they're just private agreements. In any other good besides labor, just forming the cartel would be illegal. But labor unions further have the protection of law. I know many people are forced to be in unions in their particular fields. But a free society should not stand for this. Labor unions should not only not have the protection of law; they should be illegal.
Labels: economics
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