Twisted Mind
Well-known member
- Joined
- Mar 19, 2006
- Posts
- 242
In a free market economy, employers must bid competitively for the services of workers, just as they must bid competitively for all other factors of production. If an employer attempts to pay wages which are lower than his workers can obtain elsewhere, he will lose his workers and thus will be compelled to change his policy or go out of business; if, other things being equal, an employer pays wages which are above the market level, his higher costs will put him at a competitive disadvantage in the sale of his products, and again he will be compelled to change his policy or go out of business. Employers do not lower wages because they are cruel, nor raise wages because they are kind. Wages are not determined by the employer’s whim. Wages are the prices paid for human labor and, like all other prices in a free economy, are determined by the law of supply and demand.
Since the start of the Industrial Revolution and capitalism, wage rates have risen steadily—as an inevitable economic consequence of rising capital accumulation, technological progress and industrial expansion. As capitalism created countless new markets, so it created an ever-widening market for labor: it multiplied the number and kinds of jobs available increased the demand and competition for the workers services, and thus drove wage rates upward.
It was the economic self-interest of employers, that led them to raise wages and shorten working hours—not the pressure of labor unions. The eight-hour day was established in most American industries long before unions acquired any significant size or economic power. At a time when his competitors were paying their workers between two and three dollars a day, Henry Ford offered five dollars a day, thereby attracting the most efficient labor force in the country, and thus raising his own production and profits. In the 1920’s, when the labor movement in France and Germany was far more dominant than in the United States, the standard of living of the American worker was greatly superior. It was the consequence of economic freedom.
Needless to say, men have a right to organize into unions, provided they do so voluntarily, that is, provided no one is forced to join. Unions can have value as fraternal organizations, or as a means of keeping members informed of current market conditions, or as a means of bargaining more effectively with employers—particularly in small, isolated communities. It may happen that an individual employer is paying wages that, in the overall market context, are too low; in such a case, a strike or the threat of a strike, can compel him to change his policy, since he will discover that he cannot obtain an adequate labor force at the wages he offers. However, the belief that unions can cause a general rise in the standard of living, is a myth.
Today, the labor market is no longer free. Unions enjoy a unique, near-monopolistic power over many aspects of the economy. This has been achieved through legislation, which has forced men to join unions, whether they wished to or not, and forced employers to deal with these unions, whether they wished to or not. As a consequence, wage rates in many industries are no longer determined by a free market; unions have been able to force wages substantially above their normal market level. These are the “social gains” for which unions are usually given credit. In fact, however, the result of their policy has been (a) a curtailment of production, (b) widespread unemployment, and (c) the penalizing of workers in other industries, as well as the rest of the population.
(a) With the rise of wage rates to inordinately high levels, production costs are such that cutbacks in production are often necessary, new undertakings become too expensive, and growth is hindered. At the increased costs, marginal producers—those who have been barely able to compete in the market—find themselves unable to remain in business. The overall result: goods and services that would have been produced are not brought into existence.
(b) As a result of the high wage rates, employers can afford to hire fewer workers; as a result of curtailed production, employers need fewer workers. Thus, one group of workers obtains unjustifiably high wages at the expense of other workers who are unable to find jobs at all. This—in conjunction with minimum wage laws—is the cause of our widespread unemployment problem today. Unemployment is the inevitable result of forcing wage rates above their free market level. In a free economy, in which neither employers nor workers are subject to coercion, wage rates always tend toward the level at which all those who seek employment will be able to obtain it. In a frozen, controlled economy, this process is blocked. As a result of allegedly “pro-labor” legislation and of the monopolistic power that labor unions enjoy, unemployed workers are not free to compete in the labor market by offering their services for less than the prevailing wage rates; employers are not free to hire them. In the case of strikes, if unemployed workers attempted to obtain the jobs vacated by union strikers, by offering to work for a lower wage, they often would be subjected to threats and physical violence at the hands of union members. These facts are as notorious as they are evaded in most current discussions of the unemployment problem—particularly by government officials
Since the start of the Industrial Revolution and capitalism, wage rates have risen steadily—as an inevitable economic consequence of rising capital accumulation, technological progress and industrial expansion. As capitalism created countless new markets, so it created an ever-widening market for labor: it multiplied the number and kinds of jobs available increased the demand and competition for the workers services, and thus drove wage rates upward.
It was the economic self-interest of employers, that led them to raise wages and shorten working hours—not the pressure of labor unions. The eight-hour day was established in most American industries long before unions acquired any significant size or economic power. At a time when his competitors were paying their workers between two and three dollars a day, Henry Ford offered five dollars a day, thereby attracting the most efficient labor force in the country, and thus raising his own production and profits. In the 1920’s, when the labor movement in France and Germany was far more dominant than in the United States, the standard of living of the American worker was greatly superior. It was the consequence of economic freedom.
Needless to say, men have a right to organize into unions, provided they do so voluntarily, that is, provided no one is forced to join. Unions can have value as fraternal organizations, or as a means of keeping members informed of current market conditions, or as a means of bargaining more effectively with employers—particularly in small, isolated communities. It may happen that an individual employer is paying wages that, in the overall market context, are too low; in such a case, a strike or the threat of a strike, can compel him to change his policy, since he will discover that he cannot obtain an adequate labor force at the wages he offers. However, the belief that unions can cause a general rise in the standard of living, is a myth.
Today, the labor market is no longer free. Unions enjoy a unique, near-monopolistic power over many aspects of the economy. This has been achieved through legislation, which has forced men to join unions, whether they wished to or not, and forced employers to deal with these unions, whether they wished to or not. As a consequence, wage rates in many industries are no longer determined by a free market; unions have been able to force wages substantially above their normal market level. These are the “social gains” for which unions are usually given credit. In fact, however, the result of their policy has been (a) a curtailment of production, (b) widespread unemployment, and (c) the penalizing of workers in other industries, as well as the rest of the population.
(a) With the rise of wage rates to inordinately high levels, production costs are such that cutbacks in production are often necessary, new undertakings become too expensive, and growth is hindered. At the increased costs, marginal producers—those who have been barely able to compete in the market—find themselves unable to remain in business. The overall result: goods and services that would have been produced are not brought into existence.
(b) As a result of the high wage rates, employers can afford to hire fewer workers; as a result of curtailed production, employers need fewer workers. Thus, one group of workers obtains unjustifiably high wages at the expense of other workers who are unable to find jobs at all. This—in conjunction with minimum wage laws—is the cause of our widespread unemployment problem today. Unemployment is the inevitable result of forcing wage rates above their free market level. In a free economy, in which neither employers nor workers are subject to coercion, wage rates always tend toward the level at which all those who seek employment will be able to obtain it. In a frozen, controlled economy, this process is blocked. As a result of allegedly “pro-labor” legislation and of the monopolistic power that labor unions enjoy, unemployed workers are not free to compete in the labor market by offering their services for less than the prevailing wage rates; employers are not free to hire them. In the case of strikes, if unemployed workers attempted to obtain the jobs vacated by union strikers, by offering to work for a lower wage, they often would be subjected to threats and physical violence at the hands of union members. These facts are as notorious as they are evaded in most current discussions of the unemployment problem—particularly by government officials
