Thursday, February 24, 2011


I have been a member of two labor unions during my long career. The first, when I was very young, decided to strike for higher pay for its members. Eventually, after many months on strike, the union won the labor rates for which it held out. Once we got back to work, the company engaged in massive layoffs because, during the strike, competitors of the company had managed to take away most of the customers.

I was in another union for about 11 years at a major transportation company. In this case, the company, many decades before, had decided it wanted to avoid union agitation and, rather than fight unionization, invited the union to represent its employees. Many fellow union members did not like the union. The union “bosses” acted like thugs and the company, over the years, endured several strikes. This left room for Federal Express to start up without paying union wages.

It seems that everyone is saying “unions can be good for the workers” but I think it is time we question the roles unions have played in society. One of the most eloquent critics of unions was the little-known economist Ludwig von Mises from Austria. Below, I list some of the “problems” of unions and inject some of his most prescient criticisms:

1. Unions can gain no improvements in wages, benefits or working conditions that companies would not already be able to provide. If the business was not already successful and earning a significant profit, there would be no interest among union bosses to unionize the employees. In other words, unions would not exist without a strong capitalist system from which to derive dues.
a. Ludwig von Mises: “The union members are not conscious of the fact that their fate is tied up with the flowering of their employers’ enterprises.” – Planning for Freedom p. 91

2. Unions tend to agitate in order to justify their existence.
a. Ludwig von Mises: “Strikes, sabotage, violent action and terrorism of every kind are not economic means. They are destructive means, designed to interrupt the movement of economic life. They are weapons of war which must inevitably lead to the destruction of society.” – Socialism p. 307

3. Unions are a defacto government regulation of businesses.
a. Ludwig von Mises: “The labor unions aim at a monopolistic position on the labor market. But once they have attained it, their policies are restrictive and not monopoly price policies. They are intent upon restricting the supply of labor in their field without bothering about the fate of those excluded.” – Human Action p. 374 - 377

4. Unions put companies out of business. They force employers to raise wages that often put the company in an uncompetitive position. The company has no choice but to close the factory, move to another state or move overseas to remain profitable.

5. Unions support socialist/progressive platforms because progressive politicans want union votes. In return for votes, politicians allow unions the power to coerce businesses. Unions also tend to support bills and legislative measures that raise taxes, give them more power in negotiations and remove consent from employees and business owners. In the case of government unions, the government enables unions to demand benefits and pay raises that are paid by less affluent taxpayers. These “advances” for the working man are merely excuses to launder those tax increases to the union bosses by means of increased union dues. This is re-distribution disguised as a contractual benefit.

6. Unions destroy worker/company relations because they create a “we versus them” attitude. Unions must be collectivist in nature. They need to create a “group think” where union members consider themselves part of a fight or struggle to gain more power over time and skim more profits. Union members are often discouraged from having a stake in the success of the company.

7. Unions often say that they favor the little guy. This is not true; in many cases Big Unions favor Big Business and Big Government. They create crony capitalism where government is used to benefit all parties and restrict competition from non-union companies.

8. Labor unions tend to oppose the introduction of new technologies and more productive machinery. They look for opportunities to create unproductive jobs, duplicate jobs and patronage jobs in order to swell membership and collect more money in dues and pension plans. These actions lower production, raise product prices and harm the competitive position of businesses. Sometimes, in order to use the new highly productive technologies, companies move to “right to work” states or out of the country which reduces local employment.

9. Labor unions take the credit for higher wages and this tends to justify violence and otherwise illegal practices.
a. Ludwig von Mises: “As people think that they owe to unionism their high standard of living, they condone violence, coercion, and intimidation on the part of unionized labor and are indifferent to the curtailment of personal freedom inherent in the union-shop and closed-shop clauses.” – Planning for Freedom p. 153

10. Unions restrict the division of labor. Any improved business process which requires new higher skills from employees is resisted and the company is often forced to provide unproductive jobs for those displaced by division of labor improvements.
a. Ludwig von Mises: “No social cooperation under the division of labor is possible when some people or unions of people are granted the right to prevent by violence and the threat of violence other people from working.” – Planned Chaos p. 127

11. Unions seek the power, through government, to require union membership which is monopolistic.
a. Ludwig von Mises: “The cornerstone of trade unionism is compulsory membership.” – Socialism p. 435

12. The power of unions comes from their government-protected ability to strike which is a method of stopping production and harming businesses and jobs.
a. Ludwig von Mises: “The weapon of the trade union is the strike. It must be borne in mind that every strike is an act of coercion, a form of extortion, a measure of violence directed against all who might act in opposition to the strikers’ intentions.” – Socialism p. 435
b. Ludwig von Mises: “The policy of strike, violence, and sabotage can claim no merit whatever for any improvement in the workers position.” – Socialism p. 437

13. Unions are tied to capitalism and the success of capitalist organizations, yet union bosses routinely propagandize against capitalism. They express false Marxist views of capitalism and use the moral argument against capitalist profits and production improvements. They prejudice union members against their capitalist employers and create discord even in situations where the employers are trying to improve the strength and profitability of the company.

14. When possible or necessary, unions have no problem compelling membership through practices like card check. This puts a union thug behind each voter to ensure that he/she votes the "right" way.

15. Unions have less regard for member rights than they do for maintaining their situation. In many cases grievances are settled in complete disregard for the merits of the case. Union bosses sometimes trade grievance settlements for other “considerations”.

16. Unions have an incentive to keep poor employees on the job and many unions have little regard for whether the member actually does a good job. This destroys productivity, encourages a cynical work ethic and undermines the ability of management to engineer a productive enterprise.

17. Unions tend to squander the money they collect in dues and pension plan payments. This forces them to "buy" politicians who will request bailouts from government to make up shortfalls. The taxpayer is rewarding them for their loss of trust among their members.

18. Union leaders (and many politicians) demand that you never question their motives but always question the motives of the people whose productive and organizational abilities provide the union dues and pension payments. They tell you that their motives are to help people and bring about "social justice" while the motives of corporate managers is to steal money that would not exist but for those very corporate managers. Yet, it is the corporate managers, not the union leaders, who provide the jobs, industrial plants and capital investments that make possible the magnificent products that make our lives better. They tell you that it is proper for them to use force against those corporate managers but improper for anyone to question them about what they do with the billions of dollars they, the union leaders, "earn".

I think that most people who work in a union shop will recognize many of these “problems” with unions.

I’m certain many of them are Tea Party protesters.


No comments:

Post a Comment