On Labor Unions; P. L. Greaves, Jr.

With nerves on edge, family har mony too often flies out the window. In addition to the deep mental an guish, there are also physical and financial losses. An adult's health, as well as his spirit, may suffer ir reparably. A child's growth may be permanently stunted. The loss of the family car can reduce both the hope Mr. Greaves, economist, lecturer, and author of nu merous articles and books, served with the U. S. House of Representatives Committee on Education and La bor during the preparation and passage of the 1947 revisions of the National Labor Relations Act, popu larly known as the Taft-Hartley Act. and the possibility of getting an other job. The foreclosure of a mort gage on the family home can liqui date the savings of a lifetime. In short, a prolonged period of unem ployment can wreck a person's life. Then, too, the unemployed are not the only sufferers. With millions of able-bodied persons searching for a source of income or twiddling their thumbs in frustrated idleness, the potential quantity of goods and ser vices available in the market place is greatly reduced. This means higher prices and lower living standards for everyone. Government programs to provide a floor for the unemployed also mean higher taxes and/or still higher prices as a result of the polit ical creation and distribution of un earned dollars. Actually, mass un employment and its aftermath is probably the greatest single driving 751 752 THE FREEMAN December force behind our politically spon sored inflation.

So solving the problem of mass unemployment is a major task of our time. Before we can solve it, we must locate the root cause. There was no unemployment at Plymouth or Jamestown. There was no mass un employment during this country's first hundred years of existence. What is different today? Not a Free Market One major difference is that there is no longer a free market in jobs and wage rates. There are now laws on the statute books that grant cer tain groups of workers the privilege of demanding and getting higher wages than they could and would earn in a free market. The unem ployed are no longer permitted to compete and thus reduce the higher than free market wage rates of the privileged few. So those shut out from the higher paying jobs must com pete for work and drive down the wage rates in unorganized occupa tions. Then, they face the floor de creed by minimum wage laws which often prevent employment at these reduced market wage rates.

Employers cannot long pay work ers the legal minimum wage rate if consumers cannot or will not buy the resulting goods and services at prices that cover costs. As a result, mil lions are now legally prevented from taking either high paying jobs or low paying jobs. The free market in jobs and wage rates has been legally de stroyed. It should thus be evident that the remedy for mass unemployment is to repeal the laws which prevent people from competing for the higher paying jobs or taking the lower pay ing jobs-lower paying, until work ers acquire the skill and experience needed to climb the ladder to higher incomes. Organized Against Whom? The Labor Union in America by Clarence B. Carson. Pub lished by Western Goals, Alex andria, Virginia, 1983. 114 pages, $5.00 paper. The book is also available from The Foun dation for Economic Education, Irvington-on-Hudson, New York 10533 Historian Clarence B. Carson has written a small book, Organized Against Whom?, which tells some of the story of how we strayed from the free market path for jobs and wage rates. It is an ugly story vividly de scribing the coercion and violence employed by many in the labor union movement in their effort to convince the electorate that they are entitled to special privileges and immuni ties. They have successfully con vinced many that labor unions are 1983 ON LABOR UNIONS 753 the protectors of downtrodden poorly paid workers who are supposedly at the mercy of greedy all-powerful employers who rob them of their rightful earnings.

Today, thanks to socialist and la bor union propaganda, there is little understanding of the fact that em ployers are merely middlemen op erating in a heavily taxed and very competitive market place. Actually, employers have very little to say about wage rates. Employers are compelled by market forces to pay employees in accordance with the value that consumers place on the production of their marginal em ployees, the last hired. If employers pay higher wage rates than they get back from consumers, they suffer losses and sooner or later cease to be employers. If employers seek to in crease their profits by paying lower than market wage rates, competi tors soon bid away their employees. Thus, the free market competition of employers is the salvation of work ers looking for higher wages. The Voluntary Way In a free society, labor unions, like other organizations, would be vol untary groups trying to advance the interests of their members. They would abide by the laws and seek no special privileges or immunities.

Unions that offered employers the most competent and reliable work ers, who were willing to work for competitive free market wage rates, would grow and prosper. Labor unions that offered incompetent workers, insisted on featherbedding, or other unnecessary or costly con ditions and demanded higher wage rates than competent nonunion members would willingly accept would soon fade away. Certainly, in a free society no group should or would resort to violence, coercion or special privileges to obtain what it seeks. The free market operates accord ing to the Golden Rule. The higher values one contributes to the mar ket place, as valued by consumers, the more one receives in return. Free market operations are always vol untary transactions by which all parties exchange something they have. for something on which they place a higher value. Goods and ser vices thus continually move to per sons who place a higher value on them. Barring human error or the use of force or fraud, all parties gain from all such transactions. The pre vention of the use of force or fraud is a prime function of government.

Dr. Carson tells us how many la bor unions now operate, with the help of laws and court decisions, coercing employers to join with them to grant them a monopoly of certain jobs. Such unions are thus able to shut out the competition of competent applicants for those jobs. Then, by demanding still higher wage rates, some unions 754 THE FREEMAN December further reduce production and em ployment by pricing some of their own members, those with low se niority, out of their high paying jobs. In short, labor unionism, as now practiced, is not only the enemy of employers, investors and con sumers, but it is primarily the en emy of competent job seekers who, as a result of union action, must re main underpaid or unemployed. Unions Gain Monopoly Status Today, we live in an economy of political privileges with all kinds of lobbies trying to get for their mem bers what they consider their "fair share" of the political largesse. Un questionably, labor unions have been one of the first and strongest of these political pressure groups. As Dr.

Carson narrates, they won their first great political victory in 1914, when they persuaded Congress to decree: "That the labor of a human being is not a commodity or article of com merce." Congress has great powers, but it did not by this legislation al ter the fact that labor is one of the factors of production traded in the market place. With this law on the books, union leaders waged a propaganda cam paign demanding that government help them raise wage rates above those of the free market, which they maintain, falsely, are set too low by the whims of all-powerful employ ers. Their propaganda campaign was accompanied with strikes and vio lence that disturbed the entire na tion and contributed to the mass un employment of the depression period that started in 1929. As a result of this propaganda and the show of force, Congress and the courts were persuaded in the 1930s to grant these labor union advocates of self-serving coercion most of the special privileges and immunities they sought. Now, we have the re sults. Employers as a breed are be coming scarce. So are investors will ing to place their savings in new or expanded production facilities. The combined result is that the ranks of the unemployed are now reckoned in the millions. Mass unemploy ment has even caught up with many of the legally privileged union mem bers. The economic laws of the mar ket cannot long be circumvented without eventually producing unde sirable consequences.

As Dr. Carson tells us, our consti tutionally chosen government has empowered the labor unions to ac complish all this. He may be a bit harder on the unions than they de serve. There can be no excuse for their resort to violence and coercion. However, they can hardly be blamed for taking advantage of the special privileges and immunities from prosecution that Congress and the courts have conferred on them. In taking advantage of existing laws, they are doing no more than many 1983 ON LABOR UNIONS 755 college kids~ lots of old folks and millions of persons in between. Of course, that does not make it right or permanently possible. Neither Congress nor the courts have any power to repeal the laws of econom ics. They could make us all million aires, but only by destroying the value of the dollar. A price must be paid for every interference with the inexorable laws of economics. A Storyof SpecialPrivilege It would seem we are fast losing the freedom for which our Founding Fathers pledged their lives, their fortunes and their sacred honor. As Dr. Carson writes: "The thrust of the American Revolution was in the di rection of removing special privi leges and legal supports from groups and organizations." For decades now the courts have supported Congres sional grants of "special privileges and legal supports" on a wholesale basis. As Carson writes, this has been "a fundamental departure from the principles of good government," not to mention the principles of sound economics.

Our government has permitted, encouraged and even underwritten the power of labor unions to coerce all other elements of our society to bend to their will. This small book tells much of the story of how this came about. In doing so, it exposes many of the errors in the popular fallacies, the acceptance of which has permitted labor unions to attain their present position of power. This story is one with which every American should be familiar. The book is not without its faults and contradictions. Some are only the result of an unfortunate choice of words. For example, lawlessness is referred to as the "state of nature." Or, "An ancient union complaint could certainly be disposed of if gov ernments neither recognized, gave status to, taxed, or otherwise no ticed private organizations, except as they might disturb the peace." That would mean no legal recognition or taxation of corporations or any other private organizations. In effect, it would repeal the First Amendment.

For no press or religious organiza tions would have any status or right to be recognized in court. Or when Carson writes, "Congress is empow ered to make laws regulating com merce." The Constitution carefully limited that power to "interstate commerce," and that is what it meant until the Supreme Court, in 1937, ignored the key word "interstate" in a 5 to 4 decision which upheld the National Labor Relations Act, pop ularly known as the Wagner Act. There are some unfortunate con tradictions in the book, as when we read, "Let me confess at the outset that I do not know what labor unions are." Then the author proceeds in chapter after chapter to tell what they are and what they do. At an756 THE FREEMAN December other point we read, "Violence is not essential to unionism." That is true, of course, if they operate within the rules and ethics of a free society. However, the thesis of this book is that labor unions are organized against society in general and against other workers in particular.

As the author describes so well, they have for years pursued their policies by resorting to violence and coer cion. For decades now the govern ment has given its support to their antisocial actions-actions that impede not only full employment and prosperity but also the legitimate activities of many governmental en tities. Criticism might be made of such statements about labor unions as, "They are not economic organiza tions'" and "Nor is the labor union primarily a political organization." If economics is the science of human actions to attain selected goals, then attaining union goals by boycotts, strikes and stopping others from working are certainly economic ac tions. This book presents many in cidents illustrating how labor unions have used both economic and politi cal means to attain their present po sition of power. Perhaps this reviewer's greatest disagreement is with the author's assertion that "Labor unions are re ligious, or religion-like organiza tions and, as I say, once this is grasped they come into focus. Their immediate goals are ethical in char acter; their ultimate goals are reli gious. Their economic claims are ethical in character." The latter might be so if they sought their le gitimate ends by ethical means.

However, there is nothing ethical or religious about the use of coercion, be it legal or illegal. As for labor unions being reli gious' many economically ignorant labor union members and Congress men undoubtedly swallow the pro paganda and follow the wishes of the union bosses with a "religious" faith and fervor. We may live "in the age of the divine right of majorities," as the author rightly states, but the fact that labor unions are "supported by compulsory tithes and taxes" does not make them religious or "established churches." Religion pertains to the supernat ural-metaphysics. Except for the fact that reason tells us there must have been a Creator, religions deal with matters which cannot be logi cally proved or disproved. Religions are concerned with the irrational aspects of human life. Conse quently, honest people, who are both sane and intelligent, can and do dif fer on religious matters. The aims and actions of labor unions are cer tainly neither heavenly nor irratio nal. They are earthy and concrete.

Labor unions seek more for their members. There is nothing wrong with that objective if they pursued 1983 ON LABOR UNIONS 757 it by ethical means-by voluntary agreements for the mutual benefit of all parties. However, as Dr. Carson has so vividly pointed out, our present problems have arisen from the use of violence, coercion and spe cial privileges which are neither ethical nor particularly metaphysi cal. The mass media, which are largely manned and edited by labor union members, constantly present a one sided favorable picture of union pol icies, privileges and activities. The The Labor Monopoly public needs to know more about the antisocial effects of the prerogatives exercised by labor unions. This book strips away much of the veneer that covers the unfortunate deification of labor union activities, activities which, if committed by individuals or other organizations, would be properly labeled as crimes. We need more books which, like this one, ex pose the root cause of mass unem ployment, a major blight not only on economic peace and prosperity but also on the pursuit of human happi ~~. i IDEAS ON LIBERTY Do employers in fact possess monopsony power in the labor markets in which they operate? Certainly they would like to do so and often at tempt to do so. But I see nothing in the history of wage rates in this country and in comparisons of union and nonunion industry experience that would lead me to conclude that employers in this country do now or have ever exercised significant monopsony power in the labor mar kets. The weakness of the individual worker in obtaining "fair" wages is one of the most durable and widely-believed myths in the economic folklore of the modern world. Even my hero, Adam Smith, gave it some standing, though it may have possessed some greater validity in his day than in ours. Today's worker, with his far greater physical and psycho logical mobility, need hardly sit still to be exploited, and a solid core of movable workers will protect even those who have little or no mobility, just as I am protected in buying television sets by those who are shrewd enough to know that it is not magic but easily understood processes which cause them to work.

BENJAMIN A. ROGGE A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN A Strollwith WilliamJames A Stroll with William James is a thoroughly misleading title for Jacques Barzun's voluminous book about the psychologist and philoso pher whom Whitehead called "that adorable genius" (Harper and Row, 344 pp., $19.95). The word "stroll" connotes something light and airy, but this study of the works and in fluence of the American thinker who picked the word "pragmatism" (from the Greek word "pragma," meaning "the thing done") to describe the test of truth is more like a safari, with beaters whacking the circumam bient bush in eight or nine different directions to track down all manner of fascinating quarry. The book begins simply, with a bit about the man. But Barzun doesn't tarry very long with the bare facts about William James's most cosmo politan upbringing. As the son of 758 Henry James Sr., the Swedenbor gian philosopher, and brother to the younger Henry, the novelist who worshipped all things English, Wil liam grew up on a "transatlantic shuttle." This "typically American philosopher ," as he is usually called, was learned in four languages. At one point he decided he wanted to be a second Delacroix, his favorite French painter. He drew and he drew as a child, and after perfecting his French in Geneva and picking up a reading knowledge of Italian he joined John La Farge as an art ap prentice in William Morris Hunt's studio in Newport, Rhode Island.