Economics Questions

Re: Are unions and labor laws always bad?

Bill — Fri, 10 Dec 2010 04:30:47 GMT

In the 19th century most of the factories in western countries have made their employees work for 12 hours a day and more. After a few years of such exhausting work many people had become ill, but then the factories just replaced them with new workers. These short-sighted policies I believe have not only decreased the total economic output but also made a lot of people ill and exhausted

You are making the assumption that unions were responsible for higher wages and shorter working hours. In the 19th century prior to the industrial revolution which brought about machinery that enabled workers to be more productive. A shoemaker may have to work 12 hours to make enough shoes to earn a meager existence A farmer without the use of modern tractors and harvesting equipment may have had to toil 12 hours just to feed his family. This same scenario is playing out right now in many 3rd world countries. It isn't because they lack labor unions. Labor unions are not capable of making people more productive. Labor unions can only extort money from employers they don't create wealth. Unless there is a union out there dedicated to increasing productivity and creating wealth for the employer and ultimately their members. I'll have to say they are all bad.

Re: Are unions and labor laws always bad?

EmperorNero — Fri, 10 Dec 2010 04:28:10 GMT

Eugene.
Factories in the 19th century didn't make their employees work, they wanted to work that long and under such conditions because it was an improvement for them. Conditions in the countryside were even more backbreaking, why else would people have moved to the cities to get a job in a factories? Society was dirt poor back then and working 12 hours is superior to going hungry. We just tend to compare their working conditions to our current conditions, and not those that went before it. Working in a factory was very desired and a factory workers standard of living would actually be in the upper half of the population.

It was not unions and labor laws that improved conditions; supply and demand did. Capitalists have to compete for labor, and the price of labor (i.e. wages and working conditions) goes up if labor is in increasing demand. Gowing industrialization means that labor is in increasing demand. Laws and unions can force up benefits for some privileged groups at the expense of others, but they do not cause an improvement for society as a whole. They only appear to improve conditions because they tend to come at the same time as improvements in conditions. Actually they make society poorer because laws and unionizing distort the productivity of the economy.

Re: Are unions and labor laws always bad?

Wibee — Fri, 10 Dec 2010 01:41:28 GMT

I am surprised with your response to this liberty student. collective bargaining and contracts seem a very free market way of dealing with company abuses.

Edit: Talent and downtime make strike less attractive. People who know your business and facility are very important.

If they strike hapazardly and bring down the business, everyone is out of a job. That is in no one's best interest.

Re: Are unions and labor laws always bad?

Agamentus — Thu, 09 Dec 2010 19:21:45 GMT

"Unions are ineffective without violence. Until you can prove otherwise, this conversation isn't going anywhere."

At a seminar I attended this past June, the justification for Unions was that if you had people working in two different locations (A and B) in the same industry, people in one location can organize to get similar treatment to those at another.

So for example, if people in Location B are paid 10% more than at location A for doing the same exact thing, people at Location A can unionize and demand a 10% pay increase. If the employer at Location A balks, the workers go on strike until their demands are met. The union WORKS if there is no one else to replace the striking workers, so the employer must agree to the pay increase or lose the business entirely.

I agree though, if violence is used by either party, all bets are off. Also, if the striking workers are replaced by alternative labor, then the very notion of the union is undermined because the origional workers were being compensated more than their productivity actually warrented. This neatly explains why specialized workers traditionally had more success with unions than un-specialized labor who were rather expendable. If someone else is willing to do the work you do at the same or lower wage, unions won't help you unless coercive tactics are applied.

Re: Are unions and labor laws always bad?

LogisticEarth — Thu, 09 Dec 2010 19:06:10 GMT

I don't know why you're insisting on playing the fool, but look at the question I replied to. Then look at my answer. Then explain exactly where I am wrong.

The OP asked if labor laws and unions are always un-libertarian. He obivously has a slant that they were the sole cause of the improvement of working conditions, but that was not the question asked:

Eugene:"So despite the fact that unions and labor laws are usually considered anti-Libertarian, I am not convinced it is always the case. What do you think?"

To this you replied unequivically "Yes, they are always bad".

If you go back and re-read the thread, I've stated very clearly that a union not violating the NAP really doesn't do anything that you can object to. They're just collections of individuals voluntarily associating with eachother. There is nothing in the definition of "Union" that states that they must use aggressive violence. If you want to call a union that doesn't use aggression a "guild", that's fine, just say that outright.

Define your terms: What is a "Union"? What is a "Guild"?

I think your defense of a unicorn libertarian union entity is a distraction. Unions are ineffective without violence. Until you can prove otherwise, this conversation isn't going anywhere.

I will respond with a hypothetical: A critical number of factory workers decide amongst themselves to threaten to quit work during the middle of production of a very important order that must be filled, unless the employer agrees to provide each member a piece of "safety equipment X". The employer then decides that it is best to agree to these demands rather than have the order disrupted. There is no violence here. There are no labor laws. This is only one situation with one possible method of deal making. You can't say it will be either effective or ineffective without looking at the individual cases, so it's impossible to "prove" that it will work, but logically you have to admit that it's concievable that it would.

Furthermore unions can also provide other, non-negotiation related services, similar to the guilds you mention.

What is an unfair wage?

There is no such thing, which I thought was implied by my definition and the fact that I put "fair wage" in quotes. You're the first one who used the term here, I was responding to how you used it.

Re: Are unions and labor laws always bad?

liberty student — Thu, 09 Dec 2010 17:55:15 GMT

LogisticEarth:
It absolutely makes sense. This is what I'm arguing. Unions are, at the base of it, simply an organization of individuals pooling thier negotiating power, information gathering power, etc. It is the labor laws, State assistance, aggressive picketing, vandalism, that makes them "un-libertarian". However those qualities are not inherent to the concept of a union. They are simply how they are manifested today.

It is how they have always manifested themselves.

A History of Labor Unions From Colonial Times to 2009

The question you need to answer, is from where does their negotiating power originate? Are unions the product of times where there was full employment and labor was scarce?

LogisticEarth:
Thus when Liberty Student claims very bluntly that they are always bad and un-libertarian, I take issue with it.

I don't know why you're insisting on playing the fool, but look at the question I replied to. Then look at my answer. Then explain exactly where I am wrong.

LogisticEarth:
I'm not sure where LS is from, if he's from Europe or certain parts of the US I can understand the possible disconnect here as it seems that unions manifest themselves as wards of the State in some regions much more than others.

Name a union that is not a ward of the state in the US please.

LogisticEarth:
A "fair wage" can be found when two interests, the employee and the employer, arrive via negotiation on a price to secure the employee's work.

What is an unfair wage?

LogisticEarth:
What we are discussing here is whether or not unions are anti-libertarian. They clearly do fit within the philsophy provided that they operate under the non-aggression principle. Modern unions frequently do not, however this does not mean all unions must inherently be anti-libertarian.

If my aunt had balls she would be my uncle.

LogisticEarth:
I think this semantic split over "guild" and "union" is a distraction.

I think your defense of a unicorn libertarian union entity is a distraction. Unions are ineffective without violence. Until you can prove otherwise, this conversation isn't going anywhere.

Re: Are unions and labor laws always bad?

LogisticEarth — Thu, 09 Dec 2010 15:44:56 GMT

Autolykos:

In a free market, there's no reason why unions/guilds couldn't form in different employment areas. Businesses could then contract with them for labor. However, the businesses would in no way be prima facie obligated to do so. Does that make sense to you?

It absolutely makes sense. This is what I'm arguing. Unions are, at the base of it, simply an organization of individuals pooling thier negotiating power, information gathering power, etc. It is the labor laws, State assistance, aggressive picketing, vandalism, that makes them "un-libertarian". However those qualities are not inherent to the concept of a union. They are simply how they are manifested today. Thus when Liberty Student claims very bluntly that they are always bad and un-libertarian, I take issue with it. I'm not sure where LS is from, if he's from Europe or certain parts of the US I can understand the possible disconnect here as it seems that unions manifest themselves as wards of the State in some regions much more than others.

On the issue of safety, I'm not claiming that unions would be the ONLY path to workers getting better working conditions, but merely another way of achieving the same ends via collective bargaining power.

libertystudent:

Look, I weep for people who start out at the bottom. Ok, no I don't. I started at the bottom. And I hustled and worked my way to a pretty good position. No one negotiated for me. I let my hard work, punctuality, diligence and curiosity win over my bosses. Sure, I made mistakes, sure I was underpaid at times, but there is no worker's utopia flowing from solidarity. A fair wage can be found where there is competition between firms for that labor.

A "fair wage" can be found when two interests, the employee and the employer, arrive via negotiation on a price to secure the employee's work. I am not claiming that unions are a path to a "worker's utopia". What we are discussing here is whether or not unions are anti-libertarian. They clearly do fit within the philsophy provided that they operate under the non-aggression principle. Modern unions frequently do not, however this does not mean all unions must inherently be anti-libertarian. Any more than coporations are "anti-libertarian" because they are currently provided limited liability by the state, or banks are inherently "anti-libertarian" because they are currently granted charters that allow fractional-reserve banking or have thier deposits insured with taxpayer dollars.

See where I'm coming from?

I think this semantic split over "guild" and "union" is a distraction. Both have and do use the State to meet thier own ends. If your definition of a "union" is an association that uses aggression and the State, and your definition of a "guild" is an association that does operates without agression or State assistance, then I think you're using a very uncommon definition of both terms.

Re: Are unions and labor laws always bad?

Autolykos — Thu, 09 Dec 2010 14:56:28 GMT

LogisticEarth:
I'm kind of confused about where we're drawing the line between guilds, which are apparently A-OK, and unions, which are apparently useless and a drain on the economy.

LS, you say that unions do nothing but milk the labor of the "most productive employees". But what of jobs that are unskilled, or involve fairly standardized skillsets where one individual isn't that much more likely to be that much more productive than the next. And employees don't always have time to research and negotiate a fair market price for thier labor/skill and might find it advantagous to enter into an organization that does some of the legwork for them.

In a free market, there's no reason why unions/guilds couldn't form in different employment areas. Businesses could then contract with them for labor. However, the businesses would in no way be prima facie obligated to do so. Does that make sense to you?

LogisticEarth:
You are also forgetting about working conditions. The "productive" employee and the "loser" employee in the same position probably both have an equal desire to have similar conditions when it comes to safety.

I think two things can be brought up here:

A business which has hazardous working conditions will have more difficulty finding/keeping employees, ceteris paribus.
Workers who are hurt on the job have opportunities to sue the businesses. Successful lawsuits would build up "case law" regarding what constitutes and what does not constitute "safe working conditions".

Re: Are unions and labor laws always bad?

Autolykos — Thu, 09 Dec 2010 14:47:23 GMT

Eugene:
I think because new immigrants came every time, so the factories could dispose of the old and tired workers and get the new immigrants.

With all due respect, I'm going to presume (for now) that you can't or won't address the rest of my reply. So my points will stand until you do.

How do you know whether "new immigrants came every time"? Can you explain what you mean by "every time"? And you still haven't given any evidence that factory work, which was often easier than farm work, made a majority or sizable minority of factory workers exhausted and/or ill.

Re: Are unions and labor laws always bad?

liberty student — Thu, 09 Dec 2010 09:32:56 GMT

LogisticEarth:
I'm kind of confused about where we're drawing the line between guilds, which are apparently A-OK, and unions, which are apparently useless and a drain on the economy.

A union is not a guild. Guilds helped to solve the information asymmetry that leftists claim disadvantages workers relative to large firms, and [sic] necessitate the union, to combat information asymmetry and class interest with solidarity.

LogisticEarth:
LS, you say that unions do nothing but milk the labor of the "most productive employees".

This is true.

LogisticEarth:
But what of jobs that are unskilled, or involve fairly standardized skillsets where one individual isn't that much more likely to be that much more productive than the next.

Then they shouldn't be able to negotiate for much if anything, considering how utterly unremarkable those workers, or the job is.

LogisticEarth:
And employees don't always have time to research and negotiate a fair market price for thier labor/skill and might find it advantagous to enter into an organization that does some of the legwork for them.

That's fine. But unions cost money. Money that the employees could make. Nothing in life is free.

LogisticEarth:
You are also forgetting about working conditions. The "productive" employee and the "loser" employee in the same position probably both have an equal desire to have similar conditions when it comes to safety.

Productive employees get better work conditions. They get more vacation, pension plans, better benefits and so on. They are labor assets for the company. They are well treated. That is the incentive to become more productive. The incentives make sense.

I think you're thinking more productive/less productive guys on the same factory floor. I'm also talking about the office workers, the specialists, the tech guys. They have no need for a union. Why? They have skill, they are in demand, they are able to produce something of a higher value.

Look, I weep for people who start out at the bottom. Ok, no I don't. I started at the bottom. And I hustled and worked my way to a pretty good position. No one negotiated for me. I let my hard work, punctuality, diligence and curiosity win over my bosses. Sure, I made mistakes, sure I was underpaid at times, but there is no worker's utopia flowing from solidarity. A fair wage can be found where there is competition between firms for that labor.

Unions try to pressure companies by exploiting violence, and state power (or do I repeat myself). Where there are unionesque entities in the freer market, they more resemble Guilds, where workers of a particular sort, interest or class gather to share knowledge, camarderie and opportunities. They do not function as negotiators.

Re: Are unions and labor laws always bad?

Jonathan M. F. Catalán — Thu, 09 Dec 2010 05:01:47 GMT

I was thinking medieval guilds, which did have monopoly privileges. I'm not sure if this definition is relevant anymore.

Re: Are unions and labor laws always bad?

LogisticEarth — Thu, 09 Dec 2010 03:17:35 GMT

I'm kind of confused about where we're drawing the line between guilds, which are apparently A-OK, and unions, which are apparently useless and a drain on the economy.

LS, you say that unions do nothing but milk the labor of the "most productive employees". But what of jobs that are unskilled, or involve fairly standardized skillsets where one individual isn't that much more likely to be that much more productive than the next. And employees don't always have time to research and negotiate a fair market price for thier labor/skill and might find it advantagous to enter into an organization that does some of the legwork for them.

You are also forgetting about working conditions. The "productive" employee and the "loser" employee in the same position probably both have an equal desire to have similar conditions when it comes to safety.

I'm short on time so I'll let Hazlitt do the talking:

All this does not mean that unions can serve no useful or legitimate function. The central function they can serve is to assure that all of their members get the true market value of their services.

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 dear. 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.

Re: Are unions and labor laws always bad?

liberty student — Thu, 09 Dec 2010 02:34:37 GMT

Eugene:
So if you think unions are impossible without government laws

I think they are pointless without government laws.

Eugene:
and you are against laws in this matter

What you are referring to are statutes, not laws. Acts are not laws. They are corporate policy directives. Nothing more.

Eugene:
? What do you then think about the working conditions in the 19th century, and the fact that factories utilized workers until they were damaged and then replaced them with new immigrants?

Tragic. When I have to go back and live in the 19th century, I will worry about it. We've evolved quite a bit since then. Overt slavery, racism, sexism have all been worn down or completely destroyed. If I want to be worried about anarchronisms, I can go back 500 years. 1000 years. 15000 years. What exactly is the point in worrying about the injustices that cannot be resolved when we have injustices today begging for resolution?

Eugene:
Now about guilds, how do they help?

They provide an opportunity for people to share information and skills while socially networking. They are fantastic. A guild can help workers find better work, and become more productive so they are able to command higher wages.

Re: Are unions and labor laws always bad?

Jonathan M. F. Catalán — Thu, 09 Dec 2010 02:12:08 GMT

So if you think unions are impossible without government laws, and you are against laws in this matter, then you imply that unions cannot exist? What do you then think about the working conditions in the 19th century, and the fact that factories utilized workers until they were damaged and then replaced them with new immigrants?

Increasing standards of living depend entirely on capital accumulation and investment. That is, they depend entirely on productivity per worker. Working conditions became more favorable as productivity increased. It was/is through increases in productivity that man can substitute leisure for work (i.e. the shortening work week), because it is only through increases in productivity that real wages rise. It was also only due to increases in productivity and and growth in industry that competition for workers rose, forcing competing firms to offer better conditions for their workers.

I am not sure on the accuracy of the idea that "factories utilized workers until they were damaged and then replaced them with new immigrants." New immigrants threatened already employed individuals because they were oftentimes willing to work for lesser wages. However, this does not hurt the worker either. It may force workers to look for new lines of work, but in a healthy, growing economy new work should not be difficult to come by. It is the fundamental scarcity of human labor which makes everything else scarce, practically speaking. Economy-wide, given the opportunity to exploit previously unexploited resources (those which are not yet "economic goods") there will always be demand for labor as long as there is adequate supply, offering itself at an adequate price. Furthermore, firms that work with lower wages tend to decrease the price of their goods, increasing the real wages of those who buy their goods.

It should be mentioned that this rise in the standards of living of society has occurred despite of the existence of government-backed labor unions, not as a result.

Now about guilds, how do they help?

Guilds are monopolies, and as such are harmful.

Re: Are unions and labor laws always bad?

Merlin — Thu, 09 Dec 2010 01:35:04 GMT

Always.