Sunday, February 27, 2011

Unions' real impact has been to impede progress

Published in The Tennessean, Sunday, February 27, 2011

Unions' real impact has been to impede progress

by Richard J. Grant

When consumers have a choice, they prefer to buy products that are produced by companies that are not held back by a unionized workforce. It's not that consumers inquire as to the company's relationship to a union, but they do select their purchases on the basis of lower price and higher quality. Companies that wish to please their customers will gravitate toward those jurisdictions that best allow them to do this.

The purpose claimed for trade unions is to increase the wages and improve the working conditions of union members. They can never do this for every worker, but only for a few. This is because they can raise wages only by restricting the supply of labor to a particular employer; and that they can do only in the short-term. The real long-term effect of trade unions has been to jump out in front of the parade of economic progress and pretend that they are leading while they are, in fact, merely slowing it down.

The big increases in American wages over the past 200 years have been due to the use of savings as capital and its transformation into tools, machinery, and technological improvements. It has also been due to improvements in management, worker training, and increased knowledge. But most of all, the improvements have been due to the constitutionally protected liberty of Americans to associate freely and to defend themselves against coercion, particularly from government interference.

It is a long-held myth that “employers” hold a power advantage over “workers.” The truth is that labor is scarce, good workers are scarcer still, and employers must compete with one another for the best workers available. This will be true as long as we have unfulfilled desires and entrepreneurs who work long hours seeking ways to fulfill them.

The employment relationship is an exchange, ultimately between free individuals. If two or more individuals decide that the best way to provide a service is to work together, either as a partnership or under the leadership of one individual, then they are free to do so. They choose how to organize their firm, what to produce, and how to produce it. If their customers are willing to pay enough to cover all the firm's costs, then the firm will survive. If not, then they will have to change the way they do things.

In a free society, those who see themselves as employees rather than owners would also be free to form an association to help market their services to the owners of companies. The leaders of the association could also negotiate the terms of employment with the employers on behalf of the association's members. But the employers would accept this arrangement only if it contributed to their efficiency in the service of their customers. No individual could be forced into such an arrangement.

Implicit in the natural right to associate is the right to disassociate. In a free society, workers would always have the right to bargain collectively. What they cannot have is the right to force anyone else to bargain with them. When governments created such an artificial right they did so by trampling on the natural rights of employers.

No civil relationship can survive the arbitrary use of legislative coercion. Modern unions must learn to live without that which they never should have had in the first place.


Richard J. Grant is a professor of finance and economics at Lipscomb University and a scholar at the Tennessee Center for Policy Research. His column appears on Sundays. E-mail: rjg@richardjgrant.com

Copyright © Richard J Grant 2007-2011