March 1, 2006
Something for Nothing: Part II
By Thomas
Sowell
Government
is not the only institution that promises something for nothing.
The decline of General Motors is just one consequence of the idea
that labor unions can get their members something for nothing.
Workers
themselves increasingly recognize the reality that there is no
free lunch through unionization and are increasingly voting to
be non-union. But the word has yet to reach many among the intelligentsia,
who still think of labor unions as institutions that benefit the
working class.
You can
always benefit particular segments of any society at the expense
of some other segment but unions do not benefit even the working
class as a whole -- just those who are current union members --
at the expense of other workers, current and future.
One reason
that General Motors has been losing market share for years --
going from selling about half the cars in the country to selling
about one quarter today -- is that its union contracts put them
at a disadvantage compared to its Japanese competitors.
Even though
Toyota has factories in the United States, the American employees
in those factories vote to keep their jobs by staying non-union.
Toyota takes business away from unionized Detroit car makers,
who are forced to lay off thousands of workers while Toyota is
hiring additional workers.
There may
not be any big difference in pay scales but unions can create
higher production costs in many other ways. Fringe benefits are
just one. Work rules are another.
In some
industries, employers pay their workers as much as, or more than,
unionized workers receive for the same jobs, just in order to
be free of red tape restrictions on how they can organize their
business or discipline employees who aren't doing their jobs right.
Toyota,
for example, takes fewer hours to produce cars with fewer defects
than Detroit cars.
While unions
are declining in the private sector, they are expanding among
government employees. Government agencies are usually monopolies,
so competition is no threat to their jobs.
Taxpayers
get hit with the high cost of these monopolies. There is no such
thing as something for nothing.
Teachers'
unions fight desperately and ruthlessly against vouchers, because
they must maintain a monopoly of school children under the compulsory
attendance laws. Their members stand to lose jobs if forced to
compete with private schools.
Monopoly
is the key to unionized teachers' job security -- at the expense
of children's education as well as the taxpayers' money.
Labor unions
in the private sector have long been in the forefront of those
pushing for higher minimum wage laws. Usually union members already
make much more than minimum wages but they need to safeguard their
jobs from others who could do the same work for less.
People on
the inside looking out benefit at the expense of people on the
outside looking in. Losers include not only less experienced and
lower skilled workers, whose output would not cover the cost of
the minimum wage, but also future workers who may find fewer job
opportunities in the unionized industries.
Minimum
wage laws are like protective tariffs insulating unionized workers
from the competition of other workers. It is robbing a less affluent
Peter to pay a more affluent Paul -- all the while using noble
rhetoric that appeals to the uninformed and the unthinking, which
includes many people with fancy degrees and even fancier illusions
about their own higher sense of compassion.
Some people
may believe that unions benefit their members at the expense of
employers -- and that big corporations should be paying a "living
wage."
That may
be possible in the short run. But think about it: If unionized
workers producing widgets get higher pay by reducing the rate
of profit of widget manufacturers, do you think investors are
going to continue to invest as much in the production of widgets
when they can earn higher rates of return by investing elsewhere?
The rate
of return on widgets cannot remain permanently below rates of
returns in other industries. Widget prices will have to rise --
and that means lower sales and lower employment. There is no free
lunch, no way to get something for nothing.
Copyright
2006 Creators Syndicate
