More Than The Traffic Will Bear; P. L. Poirot

Consider these recent examples: • Back in 1950, an arbitration award set up a pension plan between the American Federation of Hosiery Workers and the Full Fashioned Hosiery Manufacturers. In addition to paying the market rate of wages, the manufacturers were to put an extra four per cent of payrolls into a pension fund for union members. This proved to be more than the manufac turers could bear, and union officialshave agreed to let them drop the pension plan. • Early in 1954, United Mine Worker beneficiaries of the Anthracite Health and WeHare Fund were advised of the necessity of a 50 per cent cut in future pension and death [211 ] benefits. This attempt to charge more than the traffic would bear also backfired. The royalties for the pension fund, on top of regular wages, weakened the capacity of the anthracite industry to meet competition from other fuels. • United Auto Workers employees of the Studebaker Cor poration were obliged to vote themselves a 14 per cent pay cut because the high wages won in earlier "bargaining"

proved to be more than the traffic would bear. • When the traffic decided not to bear the high prices of coffee, the late Brazilian government revised the exchange control barriers it had thrown between the coffee producer and the coffee consumer. • The traffic would not bear the government's price for butter, the result being an unmanageable stockpile of ~~the original spread," and a growing consumer demand for a very fine substitute. In each of the foregoing attempts at monopoly pricing, the power of the government had been enlisted to compel compliance. But even the strongest government cannot permanently thwart the working of the law of supply and demand; the traffic will not bear it. The Part Government Played Many persons do not recognize that the government is involved in every attempted monopoly. They might con· tend that the government played no part in the three "labor" cases cited-that the Hosiery Workers, the Mine Workers, and the Auto Workers respectively made their own deals. But each deal, in the final analysis, hinged upon the power to control a particular segment of the [212 ] so-called labor market. In each instance, the union relied upon political force to keep other workers from com peting· for certain employment opportunities. Each counted upon the power of government to sustain its monopoly position, but the traffic would not bear it.

In the recent coffee situation, it was a foreign govern ment which tried to charge more than the traffic would bear. The government of the United States collaborated through the extension of credit to the Brazilian govern ment, but together they failed. The nature of the governmental intervention in behall: of farmers· is fairly well understood by the American peo ple, as the full weight of the resultant tax burden begins to crush. That effort to charge more than the traffic will bear must fail as .surely as any other political· attempt to force customers into a corner and keep them there. To trade is to· exchange one item for another, as butter for coal. Each party to any trade is both a buyer and a seller, and a person must be satisfied in that dual capacity before he will trade voluntarily. If the seller of butter is satisfied as a buyer of coal, and the seller of coal is satis ned as a buyer of butter, there is a basis for free trade to their mutual advantage. When one considers all poten tial buyers and sellers of butter and coal and all other items of commerce, the maximum of trade in any society occurs at the unrestricted free market price, which al ways reflects all that the traffic will bear.

When the government intervenes to force a change from the free market price, the theory is that one of the parties to the trade will gain at the new price. The idea [213 ] usually is to help the underdog, whether it be the poor consumer and his family, or the poor farmer, or the poor infant industry, or the poor employee, or the poor De fense Department of the government, or whatever. But the theory is false. It still takes two to make a trade. To arbitrarily change a price for the benefit of one party to the bargain necessarily means a change to the other party's disadvantage. And it is always that forgotten other party who will not bear the attempted charge. If the government raises the price of butter above its free market level, the owner of coal will not voluntarily trade as much as before. He doesn't want less butter for more coal. So, instead of helping the presumed underdog, the government intervention only 9.rives from the market some of the chances for the underdog to get what he wants through trade.

If it can be proven that trade is harmful, there may be a valid case for socialism. For there can be no doubt that government intervention discourages trade. It is true that in a free market, every seller tries to charge all the traffic will bear. But any compulsory change from the free market price, whether upward or downward for a par ticular product, is bound to be a change in the opposite direction for something else. Without exception, when change is attempted by socialistic means, the result is more than the traffic will bear! [214 ] IN DEFENSE OF THE INDIVIDUAL t, Gdmund A. Opitz THE author, for nine years a parish minister, formerly directed the conference program for Spiritual Mobilization, and in that capacity held a number of two-day seminars for clergymen and laymen designed to promote a better understanding of the libertarian philosophy. Similar questions recurred at many of these conferences, and experience suggested ways of clear ing up certain persistent misunderstandings. The following dialogue is a reconstruction of many conversations.