Joe's Paycheck; B. Summers

"I think m~nagement is afraid we might bring i in a union," he an swered. "Maybe so,~' I replied. "But what would you do if your paycheck didn't reflect your increased productivity?" "Look for a~other job." "Of courser I said. "Your com pany knows tpat you won't continue working for t~em if they don't pay a competitive! wage-union or no union." "You are saying that competition, 166 THE FREEMAN in addition to better technology, has a lot to do with my bigger pay check." "Yes. Many workers use the same technology year after year. Yet even they benefit when other workers are provided with better equipment." "How's that?" he asked. "In a free market, all employers compete for workers. When some employers can offer higher wage rates because improved equipment has made their employees more pro ductive, competition will raise the wages of all workers. For instance, if you want to keep your best laborer from going off to work in a new fac tory-or taking a job that has been vacated by someone who went to work in a factory-you had better give him a raise.

"Here is another way of looking at it," I continued. "Improved tools and equipment lead to increased produc tion. With more goods and services entering the market, everyone's paycheck buys more. Even if nomi nal wage rates should fall in a defla tionary period, real wages would continue to rise as long as investors make more capital available. "Capital is the key to real growth. Everyone benefits when savers fur nish the investment capital needed to create better tools of production." "If investment capital is the ulti mate source of higher real wages, what about labor unions?" he asked. "Many people think unions are the reason wages are rising." "Have you ever seen a picket line?" I asked. "Sure." "Who were they trying to keep out?" "Strike-breakers. " "Precisely," I answered. "Unions try to increase union paychecks by denying paychecks to nonunion workers. These excluded workers have to settle for whatever jobs are available in the nonunion sector.

Because of union obstructions, some workers are prevented from getting better jobs. "And to make matters worse, unions often wind up hurting the very workers they are supposed to help. Look at the auto and construc tion unions. Union wage demands have priced many union workers out of their jobs." "I see that some unions are trying to protect Ameri~an workers by sup porting import quotas," he noted. "Sure," I replied. "They want to protect union jobs by preventing other Americans from spending their own paychecks as they see fit. Are you and your family helped by such tactics?" "I never thought of it that way," Joe said as he cashed his check. "Maybe we should pay more atten tion to what people do, rather than what they say." i "Ridgway K. Foley, Jr. The Source of SovereigntY1 I. PERSPECTIVE THE concept of sovereignty-the monopoly of coercive power wielded by the statelies at the root of al most all statist dreams and schemes.