Unions – From the Point of View of Freedom

Posted: January 14, 2012 in Economics, Freedom
Tags: , ,

Unions Should not be BannedLego Empire Union Meeting

Many people feel that due to the powerful and coercive nature of unions, they should be banned. Others think that at the very least there should be laws limiting the more harmful behaviour of unions as many of these concerns are valid. People are worried about high unemployment, rising prices, falling standard of living, unfair working conditions, etc. Taking away people’s freedom to assemble does not seem to be the proper solution. Sure it will alleviate some of the problems, but it does not get to the root of the problem: lack of freedom.

Far too often a law made to reduce a given social or economic ill will have worse consequences then the problem it was meant to fix. Legislators will in turn pass new laws to solve these new problems only aiding in worsening the situation. It is a vicious circle. We should address the root of the union problem, rather than tackle its consequences. If there are harmful socio-economic effects coming from unions, we should be looking at removing existing laws, not putting new band aids in place.

Let’s view the issue from a rights perspective. If a group of employees want to gather to improve their situation on their own time and property, there is no reason why they should be denied this freedom. This, of course, is different from unions meeting on an employer’s property or having meetings during working hours without the employer’s approval.

If presently unions are too powerful and are causing too many problems, it’s because government regulations give them this power. In a free market, people would not be able to use unions to demand a larger wage than what the market would bear. On the other hand, they would be able to use unions to demand a wage equivalent to the market value. If employers are putting them in dangerous positions that are not worth the pay, they can band together to get what is fair. Unions can help workers get what is deserved, and take away any unfairness and dangers caused by unscrupulous employers. Unions have a useful purpose in helping workers get wages at the market price. Henry Hazlitt explains this well in “Economics in One Lesson” in the chapter “Do Unions Really Raise Wages?”

“…For the competition of workers for jobs, and of employers for workers, does not work perfectly. Neither individual workers nor individual employers are likely to be fully informed concerning the conditions of the labor market. An individual worker, without the help of a union or a knowledge of “union rates,” may not know the true market value of his services to an employer. And he is, individually, in a much weaker bargaining position. Mistakes of judgment are far more costly to him than to an employer. If an employer mistakenly refuses to hire a man from whose services he might have profited, he merely loses the net profit he might have made from employing that one man; and he may employ a hundred or a thousand men. But if a worker mistakenly refuses a job in the belief that he can easily get another that will pay him more, the error may cost him dearly. His whole means of livelihood is involved. Not only may he fail promptly to find another job offering more; he may fail for a time to find another job offering remotely as much. And time may be the essence of his problem, because he and his family must eat. So he may be tempted to take a wage that he knows to be below his “real worth” rather than face these risks. When an employer’s workers deal with him as a body, however, and set a known “standard wage” for a given class of work, they may help to equalize bargaining power and the risks involved in mistakes.”

However, there should not be laws helping unions take advantage of the public or take advantage of the employers. It should not be illegal for someone to become a scab, as this is something that is used to take unfair advantage of the employers. The whole point of unions was, and should be, to stop the employers from giving the employees less than they are worth. By having a law stop someone who is willing to work for the lower price, it allows the unions to use coercion to make the employers give more than the employees are worth. If an employer owns a business, that business is the property of the employer. Only the owner should have the right to say who is allowed to participate in a business venture or occupy the land. If the employer is inviting a potential employee to come and work on his land or in his business, no one other than the property or business owner has the right to stop the potential employee from taking part in this voluntary exchange. By the same token, there should be no law forcing a company to deal with unions. Ron Paul gives a good example of this in his book ‘Liberty Defined‘:

“Compulsory unionism, protected by law by a majority vote, violates the principle of protecting minority rights. Making workers pay dues to be represented by an organisation they disagree with is hardly fair or just. Coercing businesses to accept contracts with unions at the risk of being closed down is not a voluntary agreement. Workers who are willing to work at a lower than union wage are subject to violence by militant union workers”

Henry Hazlitt goes on:

“The most obvious case in which intimidation and force are used to put or keep the wages of a particular union above the real market worth of its members’ services is that of a strike. A peaceful strike is possible. To the extent that it remains peaceful, it is a legitimate labor weapon, even though it is one that should be used rarely and as a last resort. If his workers as a body withhold their labor, they may bring a stubborn employer, who has been underpaying them, to his senses. He may find that he is unable to replace these workers by workers equally good who are willing to accept the wage that the former have now rejected. But the moment workers have to use intimidation or violence to enforce their demands—the moment they use pickets to prevent any of the old workers from continuing at their jobs, or to prevent the employer from hiring new permanent workers to take their places— their case becomes questionable. For the pickets are really being used, not primarily against the employer, but against other workers…. The strikers are therefore insisting on a position of privilege, and are using force to maintain this privileged position against other workers.”

If the employers are only offering $10 an hour, and this is too low, then the employees can quit and find another job, or band together as a union and go on strike stating that the wage is too low. However, if there are people that feel the wage is just fine for the work, then the employees are wrong and the job is worth that wage. Maybe the employers are paying their workers $20 an hour which many would be willing to do for $10 an hour. Is it fair to go on strike knowing that the employer will either have to pay them $25 or go out of business? Why shouldn’t someone be allowed to come and say they are willing to work for $15 or $20 an hour when that is a fair wage? Why should the employee working for the employer at $20 an hour and willing to continue doing so not be allowed just because others want more and are going on strike? This causes the employees happy with their conditions to lose their freedom to work, lose their wages and whatever lifestyle those wages provide. Freedom is about having the ability to choose, and there should be no law that takes away these freedoms when it does not infringe on the rights of others.

Public Unions

I do however feel different when it comes to public unions because they infringe on the rights of all taxpaying citizens. When someone works for the government, they are not working for a business that pays employees out of private profits, earned through voluntary exchange. In a private business workers might be able to say that the company is making “too much money” from their work and that they deserve more based off the work they are providing their employers. When it comes to the government, workers can’t make this same argument. The state has no product or service it sells to willing buyers. It gets its money through coercion. When a public union goes on strike to get more out of the government, they are essentially holding the citizens of the country hostage to their demands. There is no company that has to worry about losing profits from giving in to their demands, only a government that has no profits to lose. It is only people in a government that have to worry about getting re-elected that are concerned about appeasing to the union, and who will often do whatever it takes to get re-elected.

Since politicians want to get re-elected, they will not be concerned so much with what is best for the country, but what is best for them. Public unions have a lot of power in swaying public opinion for or against a given politician. Public unions can also use union dues to finance political campaigns and lobby politicians. Considering that public employees are paid with taxpayer money, these union dues can be used to get the employees more money in the form of pensions, wage hikes, benefits, etc. In this way public unions acquire more money with which to bribe the politicians. It is a vicious circle. With government officials not having to worry about profits of shareholders, it’s very easy for them to give in to the public unions’ demands and avoid any bad publicity. In a company, the decision makers might get fired for making the company lose money as this could lead to the company going bankrupt. In politics this doesn’t matter. With the ability to tax, the government has almost limitless funds for the public unions to appropriate.

With government employees being paid through taxation, the public union employees going on strike are doing so at the cost of taxpayers. Taxpayers are left holding the bag when the politicians give in for personal reasons instead of taking into account what is actually right.

Public employees are hired to serve the public, not to help a company make more profits. They take the average citizen hostage through their strikes when they deny the public those services on which they are counting on. The public cannot choose to go somewhere else for these services, as the government has a monopoly on most of them. This adds even more pressure on the politicians to give in to the unions’ demands as public outrage generally increases when services like education or healthcare are being denied. It can be viewed as unfair to the government employee to not have the same rights to strike as employees in the private sector. But they know before taking a government job that they are there to serve the public. Most of these jobs should be private in the first place but that’s a different matter. There is no reason for the government to provide services that aren’t essential, and that the public can’t provide for themselves.

What it comes down to is that their freedom to strike would infringe on the taxpayers freedom to spend that money as he would like to. In a free market we pay company’s for their services or products depending on whether the company provides us with what we are looking for. When it comes to government, we don’t get to make this choice. A public sector union violates the property rights of tax payers by using government coercion to acquire more for itself at the expense of society.

Taxes take away freedoms

Another way to look at freedom is in terms of choices. The more choices you have, the more freedom you have. For example, many people in Quebec have less freedom on where to go to school than in Ontario. This is because the government has laws in place that stop particular groups of people from being allowed to attend English schools, and force them to attend French schools depending on the where their parents went to school. People going to school in Quebec who parents did not attend an English school in Quebec has less freedom than those that are allowed to attend any school they wish. It’s like having to answer for the crimes of your ancestors, except in this a crime was not even committed.

Now imagine you’re in a restaurant. If you are able to choose only half of the items on the menu, clearly you have less freedom to choose than if you were able to have everything. Now imagine that you have $50, and everything on the menu cost $50 or less. At this point in time, you still have the freedom to choose anything you want. If however, someone were to come along before you got to the restaurant and take $25, you would not have the same number of choices. You would not be able to order anything above $25.

In the same way, you have a certain amount of economic freedom when you use 100% of you salary as your starting point. If the government comes along and takes away 50% in the form of taxes, you have fewer choices regarding what you can spend your money on.

If you’re wondering what government employees can do to make sure they get their fair share if they can’t use hostile union tactics like the private employees, I would remind you that they are there to serve the public. If what they do is really to serve the public, then the government would want to make sure they have people in those positions to do the work. If the government is not paying its employees enough, the employees have the opportunity to quit, and find something in the private sector. The government, unless it makes a law further eroding our freedoms that stops you from doing this, will be forced to pay you what you are worth if it wants to keep providing the services that people are demanding. As for whether the government should be providing what is being demanded by a group of people… That  is another discussion altogether.

  1. Quiet Mike says:

    Allowing the use of scabs completely undermines the usefulness of unions. There will always be people desperate enough out there to take what they can get even if their salary is far lower than what the job is worth, no matter what the occupation might be.
    Thus allowing scabs effectively lowers average salaries. Why would employers choose to negotiate with unions when they can replace it’s workers at a fraction of the cost?
    Being pro-union and pro-scab at the same time couldn’t be more contradictory. Not forcing companies to deal with their respective unions further contradicts your supposed pro-union viewpoint. A union worker who can either be replaced or ignored is just another worker.
    You’re entitled to your viewpoint, but don’t call an apple an orange when it’s clearly an apple.

    • Lee Weishar says:

      Allowing scabs doesn’t undermine the usefulness of unions, it takes away an unfair use of coercion that unions use against both the employer and other potential workers. So it does undermine some of what unions do today, but that’s the point. If a person is willing to work for a lower wage, it is because he is WILLING to work for the lower wage. if this potential worker is willing to work for the lower wage, then it is because without it, he will be even worse off. What the striking unions do, with scabs not being allowed, is keep wages higher than the market price, insuring people are paid more than the job is worth.

      If the workers are being paid the market price (which the unions can help the employees get) then the employer would choose to negotiate as opposed to getting new workers because the costs would be greater. When you consider having to hire and train new employees to get around a union that is only helping the workers get what they are worth, they have nothing to gain by firing everyone and getting others at almost the same price.

      I never said I’m pro union, at least not pro unions with the unfair advantages and power they have today. I am pro the freedom to have unions, as long as there are no laws in their favor letting them take advantage of others through coercion.

      If a potential worker is not free to get a job at a wage he is willing to take due to unions using a form of violence to keep prices arbitrarily high, it goes against both the freedom of the employers and the freedom of these potential workers.

      • Quiet Mike says:

        Corporations have but one driving force and that is to make as money as possible. If a unionised factory worker is making $15-$20/hr (an average middle class income). If scabs were legal, there would be no reason why the company wouldn’t lock out the employees and hire scabs at $10/hr… how much training do you think is required to work an assembly line?

        Unions have helped to keep our middle class for decades, that is, until corporations were permitted to set up overseas where they can hire people who are forced to work for 30hrs+ straight without a break for 25cents an hour and any attempt at forming a union is punishable by 12 years in jail and if they quit, they literately starve. personally, if those jails were in Canada and not China, I’d prefer jail.

        Unions are nothing more than democracy at work in the workplace where majority rules. If a union is formed where you work and you want no part of it, guess what? you’re “free” to look elsewhere. People quit there jobs over much less.

        • Lee Weishar says:

          The best answer I can give for your concerns is to read the chapter ‘Do Unions Really Raise Wages?’ from Henry Hazlitt’s ‘Economics in One Lesson‘. You can click on the link in the article to view the PDF.

          The simple answer though, has to so with the problem with viewing a wage higher than the market value as good. This can only be viewed as good for that one employee (and even then, not as good as you might think once you read the chapter I mentioned). It is not good for those people who now will not get jobs, and it is not good for all the people that will now be paying higher prices for the goods.

          You are absolutely correct when you say that the driving force of corporations is to make as much money as possible. The thing is, that is good in a free market economy. In a free market economy, the only way to make money is by giving people what they want, to as many people as you can. To say we need a union to able to use coercion because it is not a free market economy is not a good solution. we need to make things more free, not less. With the wage being held artificially high due to coercion by unions, which are using regulation as opposed to the will of the people, companies will often be forced to raise prices to keep up with the costs. Maybe they will no longer be able to compete, and it will have to close down. With prices being higher, everyone who would purchase the good or service now has less money to spend on other goods or services, which now has trickle down effect on all other industries, hurting the economy as a whole, meaning less jobs in the economy as a whole. With the higher prices, it changes the supply and demand curve, meaning there will now be less people willing to purchase the good or service. This can also bode very bad for the company, and the workers that are left.

          It all comes back to freedom though. If there is someone who is willing to work for $10 an hour, then he should be allowed. If the job is not worth it, people will not work it. If you are viewing the idea that people are forced to because they would starve otherwise since they wouldn’t have a job… think of the person who would have had the job if it was $10, and who now has to go hungry because he has nothing. The other thing to think about, is what is causing the lack of jobs that is making people desperate in the first place? it is not lack of unions that do this (if anything, they are playing a big part in its cause). That is what should be solved. taking away peoples freedoms by giving higher wages than the job is worth will not make people less desperate, it will make people more desperate.

          As I said in the beginning, Unions should not be banned, they just should not have laws on their side allowing them to use a form of violence to get their way.

  2. You assume property rights trump worker rights. Shouldn’t workers have the right to collectively act similar to the collective action of stockholders. Else we have a system like indentured servitude or slavery with rights exercised only by the employer.Your logic is faulty.

    • Lee Weishar says:

      Great comment and question.

      I consider workers to be their own property, so in a sense neither trumps the other. I do believe workers should have the right to act collectively – they are dealing with their bodies – and so their property. I don’t believe that they have the right to damage or trespass on someone else’s property though, or to hurt others in any way. A union is good for organizing and stopping the employer from taking advantage of the workers, but it should not be used to take advantage of the employer either – it should be used to keep things fair.

      I don’t think employers have the right to do as they wish to the employees either, but I believe they should have the right to hire who they wish, and let go of who they wish if things are not working out to their satisfaction.

      I believe that if someone wants to work, and someone wants to pay them for the work for a wage which they agree to, then no one should have the right to stop this process from taking place

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