Labor Unions: Tools of a Lost Era

J. J. Miran

"A specter is haunting" the American economy. Its grasp strangles firms into submission through violent, coercive tactics. Its propaganda riddles the minds of workers and draws them as if a moth to a flame. Once the champion of the "little guy," now his covert enemy. This article explores the factors that gave rise to labor unions, explains their evolution from effective tools to prehistoric strains on the economy, and describes their current existence in today's economy.

Since the Industrial Revolution sprang forth from the textile mills of England, industry has been and always will be a harsh, profit seeking system that holds little regard for the human condition. This may seem to be a relatively pronounced statement, but it is merely the nature of capitalism. The major focus of a firm in a competitive market is to produce a quality good or service utilizing the factors of production as efficiently as possible in order to obtain the highest degree of wealth. A firm is not responsible for human rights in the sense that its nature does not seek to uphold them if the cost of upholding them compromises its ultimate goal of increasing profits. But as Adam Smith said, "it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages." So when observing large firms we cannot caste blame upon them for their nature so much as we can blame a mosquito for the little red bump on our arm. In response to these conditions forged by capitalism, workers were forced to band together in order to retain their rights thus giving way to the inevitable rise of labor unions.

Unions became the tool of the proletariat in acquiring the rights that firms were by nature reluctant to give them. Their coercive techniques (which often lead to violence) forced the government to mandate legislation giving workers' rights. They strong-armed (and continue to do so) American companies into providing better conditions (now inflated wages and job security). The effectiveness of unions however ultimately proved to furnish their downfall rendering them tools of a lost era. The very legislation that unions pushed for has shifted the government's role in business from what was once practically nonexistent to being responsible for upholding workers rights. The individual no longer needs the support of the union because it has the support of legislation and the government. Without any justifiable need for unions why are they still here and to what avail do they provide for the "little guy" or the economy as a whole? To articulate it plainly, inefficient production, inflation, unemployment, and ultimately un-American socialism.

Although there is no place for unions in today's society their old-hat tactics are still seen and their results are no longer tolerable. It is no secret that unions have made it virtually impossible for firms to fire union workers. This unnatural job security strips workers of their motive to be as productive as possible because there is no consequence for slacking off. Also, their wage (which is already too high) will remain the same no matter their productivity so there is no reward for working to the best of ones abilities. The result is a socialistic dogma that holds firm's hostage by forcing them to pay unnaturally high wages for substandard labor. On average union workers wages are 25\% higher then their non-union brethren. This unwarranted wage deferential increases the firms production costs. Higher costs diminish profits, so in order to compensate for its lost earnings firm's increase their prices ultimately passing inflated wages onto the consumer. Now it is facile to see how unions drive up prices through their requisitioning of wages, however, you might be wondering how this affects unemployment. When the unions demand a higher wage, they are instituting a price floor which causes the supply of labor to exceed the demand for labor resulting in a surplus of workers who are unemployed due to their very own so-called protector. That extra 25\% wage differential along with all the money that lines the pockets of overpaid union officials could be used to employ millions of Americans.
Besides being an economic drain, labor unions are down right un-American. Americans are generally suspicious of anyone wielding excessive amounts of power. It is in our nature, and seen in our unique government with its unique checks and balances, and our central banking system which has 12 central banks because of the fear of centralized power. The unnatural monopolistic power of labor unions granted to them by the outdated Clayton act of 1914 should strike fear into the hearts of Americans instead of lulling into a sense of security. As "The land of the free" we hold our freedom with the highest regards and when one gives up individual power to a group, such as a union, one losses individual freedom. F.A. Hayek wrote, "To be controlled in our economic pursuits means to be...controlled in everything," so as Americans how can we continue to tolerate labor unions when they violate the very fabric of our nature.