CCQ 8 Is There a Place For Unions?

Broadstairs asks

What is the place for Unions in a free (and capitalist )society?

I'd better make sure it is clear that I am not speaking for ACT here. We had at least one full-time union official on our candidate list in 2005 and I know several other ACT members with union sympathies. Many ACT members are from "working class" backgrounds and some of the old worker/boss or "so called "social justice" mentality still lingers with some.

So you may guess my leanings. Unions do have a place-in history books.

So what is a union? A union is a group of workers who band together to use their collective strength to gain certain advantages that they might not otherwise be able to enjoy.

Now replace the word worker with diamond miners, oil producers or businessmen and what do you have? A cartel.

Now aren't cartels meant to be bad, VERY BAD things. Don't we have a Commerce Commission to bust cartels?

Now tack another few words onto the definition "at the expense of those who are not members."

This gets to the heart of the evil of unions.

In a free market, the price of tomatoes, electricity, "erotic massage", dental work and all other commodities or types of human labour is determined by the law of supply and demand.

I notice that I have to pay staff considerably more than I did two years ago (way above inflation) because labour (especially skilled)is in short supply.

If the economy keeps softening and labour supply increases, wage pressures will drop.

Now that is the natural fow of the market. Prices (wages are the price of labour) are signals to be heeded when making decisions.

Right now, some smart teens are forgoing university and learning trades. Why, because chippies can get double the wages of schoolteachers. The demand is high, wages go up, people are attracted to that sector and the shortages are eased. It all works beautifully to everyone's advantage.

Under a market system you very quickly learn your real value to others. If you don't like it, you look for ways to increase your value. You become more diligent, you improve your skills, you improve your education, you get another job that uses your talents more productively, you get a heavy traffic licence, or a welders ticket, or a Phd or do a modelling course.

You and everyone else in the market are always on your toes, always on the lookout for ways to make yourself more valuable to your fellow man.

Now some people don't like the idea of being paid what others deem they are worth. They tend to be the lazy, the malcontents and those suffering from an delusions of grandeur. They are boys who want a man's wage without developing a man's skills, or being willing to take on a man's responsibilities.

Unionism is tailor made for these losers. Now they can band together, pay a little money to the union boss and wield their collective muscle against vulnerable employers and the public.

In a union, all you need is numbers and muscle. If your employer is weak, or you are in a strategic industry (port worker, air traffic controller, Cook Strait steward) you can extort wages well above market levels.

What's wrong with that? Won't you then spend those wages in your community to the benefit of all?

Yes you will, but your boss, or his shareholders will have less money to spend in their communities. Those people outside your union will also have less money to spend and some may have no job at all.

In short, although unions can extort higher wages from the community, for a certain group, it means that everyone else must share what's left of the wealth "pie".

But don't unions protect the vulnerable, the simple, the easily "exploited"?

A friend of mine had a leather factory. They employed a young retarded man to do sweeping. He was essentially of "sheltered workshop" capability. He loved his job and he worked at the factory for several years. He was paid a good wage, but lower than the factory "standard' for a labourer.

Along came the union and said, pay this guy the standard wage. The factory owner refused as it would be both uneconomic and unfair to the more able labourers. The union said that you will have to fire him then. The owner argued and argued but the union wouldn't budge. The young guy was eventually fired and went to a sheltered workshop and an even lower wage.

Some bosses are pricks. Some bosses are stupid. But the vast majority are bosses, because the are smart, enterprising and know how to value people.

The few bosses that abuse their workers, end up back on the factory floor very quickly in a free market. Labour is any employers greatest asset and those who look after their staff the best, in the long term, make the greatest profits.

Marginal workers, the poorly skilled, the unintelligent, the illiterate, the retarded still don't need unions. They have employment contracts, they have sympathetic workmates, they have family, they have teachers, friends, church members and employment lawyers to advocate for them. They even have the courts if their contract is breached.

Their ultimate safeguard, one that socialists will scoff at, is tha free people are benevolent and will always try to "see their mates right".

Unions can do nothing for you that you cannot do for yourself. Who needs them?