Regrettably Dr Reisman, the current political landscape requires a call for all able-minded communicators knowledgeable in economics to express their thoughts in regard to the misguided ideology of our current administration. Thank you for presenting your unabashed, well-reasoned viewpoint

Regrettably Dr Reisman, the current political landscape requires a call for all able-minded communicators knowledgeable in economics to express their thoughts in regard to the misguided ideology of our current administration. Thank you for presenting your unabashed, well-reasoned viewpoint

Thank you for the wonderful article. It’s definitely one to bookmark and come back to often.

When you talked about “the readiness of Obama and his associates to resort to intimidation to further their goals” it made me recall the Obama camp’s behavior during the Democratic primaries. They are not only ready–they are very well practiced!

Dr. Lynette Long has done extensive research and documentation of outright illegal actions taken by the Obama camp such as busing out of staters in to caucuses (providing free meals, gifts like ipods, and cash for their time), preventing Clinton supporters from entering the caucus venues and/or registering to participate, verbally and physically threatening Clinton supporters in some venues, and caucus participant tallying irregularities (i.e., cheating). She used to have a web site up with her extensive and detailed research, but it has recently been password protected, probably due to harassment from Obama supporters. They have harassed, hacked into, and destroyed several web sites with which they do not agree. The best link I could find at the moment is this: http://www.sodahead.com/blog/12649/the-triumph-of-fraud-caucus-analysis-by-dr-lynette-long/
Hopefully anyone interested in learning more about this can find their way from there.

Although your excellent article is about unions, I just thought I should mention the caucus fraud as the legally and morally bankrupt techniques and total disregard for peoples’ free will are exactly the same as what will be used to form unions. I wanted to point out that we do not have to wait to see what this guy and his associates are really made of. Many of us have already experienced it and it is extremely alarming.

EACH worker would either join A (not THE) union of his choice OR none at all, at any time. No elections, no Card Check, no nothing.

And each union would always know which workers were paying it dues, and which were not. No secrets, either.

By the way, I’ve been dealing directly with GM, Ford, and Chrysler ever since I began owning cars. Why can’t workers do the same as customers have always done?

i just wanted to point out that this flimsy generalized-power-asymmetry argument is a favourite of the today’s unions, who use it to boost legitimacy in the public’s eyes, diverting attention from other, more thuggish actions.

You may be right about the risk assymetry. I think in any case that there is a point on which you, I and most people reading at this site should agree. Such matters (if they exist) should be resolved via peaceful market forces. In a world of scarcity, some amount of conflict is inevitable. As free market advocates, we should strive to replace conflict with cooperation.

Government mandates tend to exasperate conflict. On the one hand, they may seem to give advantage to workers via their unions. On the other hand, they may intervene in some industries to limit competition and so affect the ability of workers to change employers or to open a company in competition to their former employers.

I don’t think that union advocates recognize this fact.

hazlitt was wrong in his assumption that there is an asymmetry of risk to the detriment of labor.

hutt’s “theory of collective bargaining” in the literature section deals with this misapprehension (held by adam smith, amongst others).

even at a commonsense level, labor being far less task-specific than capital makes it difficult to assert any advantage in the power relationship. if one worker leaves the lathe, that production ceases and i can’t deploy the capital in any other way; that lathe-operator can choose from any number of alternative jobs.

i may go broke if my production is interrupted, the worker may also be pauperized if his capital runs out before the next job. it’s impossible to say who has the knife by the blade and who by the handle in any general sense.

I’ve been commenting here for years now – starting with a Dr. Reisman post, as it so happens – and the LvMI kindly hosts my blog (which really enterprising peole can find by clicking on my name!).

As a substantive matter, I certainly do NOT conflate pro-free market with “statist-corporate hacks”; rather, I was simply referring to Dr. Reisman’s fairly consistent posting in support of large, statist corporations and against those groups who try to contest their influence, in the market and before government. The clue is to note that I said that his remarks “continue” to show him as a fan of arge, statist corporations.

TT

Yes, I have done it many times. A company offered me a position, I negotiated salary, etc. In some cases I took the job, in others I didn’t. In some cases they heard my demands and said “no thanks.”

I have no problem with people forming a union and collectively bargaining with an employer as long as the employer has the right to fire all the collective bargainers. What is needed is freedom on both sides of the contract. What is needed is the elimination of all collective bargaining laws.

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 may not know the true market value of his services to an employer. And he may be in a weak 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 to find promptly 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 believes 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.

The rest of the chapter of unions contains many of the same analysis as offered in the article on which we are commenting.

I think that it is worth recognizing the arguments that Hazlitt advanced. There is an assymetry of risk between the employer and the employee. An employer (at least one of any size) who loses out on a productive employee is not nearly as bad off as an employee who loses his entire income. For this reason, individual bargaining may be skewed to the advantage of the employer.

The key is to forbid either side to use intimidation, coercion or violence to further their interests. It goes without saying that an employer may not enslave his workers to labor if they would rather not work. On the other hand, wage earners who bargain collectively should consider the possibility that the emloyer may be able to hire other workers at wages lower than what they are demanding.

In practice, I think that collective bargaining is likely to only be necessary in highly specialized fields for which there are few potential employees. For a job that has many, many qualified workers (working on an auto manufacturing assembly line comes to mind), the market should do quite fine to reveal the market wages and terms of employment.

To do with what, precisely?

To do with what, precisely?

So whom is bailing out whom? Certainly without the cooperation of the U.S. government, without the cooperation of ‘this’ U.S government, surely you don’t suppose the corporations could bail themselves out?

Or instead are you suggesting that the corporations sought undue risk, despite the lack of a safety net provided by the government, and the current demands of bailouts for corporations are appearing ad hoc?

Oh, that’s right, the U.S. government did insure the mortgage backed securities bundles through Fannie Mae and Freddie Mac, and surely, these institutions were not founded as part of any “right-wing” capitalist conspiracy?

To clarify: Capitalist ideology holds that the free market is a better solution to meet the needs of citizens than the government. I don’t know why we’re still debating this in the 21st century, for the opposition to the free market mechanism of demand satisfaction implies one of two counter-arguments: That the government knows better for citizens what they want than they actually do; or alternatively, it doesn’t matter what the citizens want, it only matters what the government wants.

Before this really leaves your head spinning, consider that capitalism is the most environmentally friendly economic system ever devised. The principle of scarcity is explicitly recognized through pricing, as opposed to central planning, which operates on the principle, “As it is commanded, so it shall be done.”

Furthermore, a free market is not based on a pie, or “zero-sum” game, it is based on labor, and the transformation of resources or rendering of services that add utility to the buyer. Only in resource-driven, under-developed nations do we find the economy reflecting a cut-throat game where one gains inherently at the expense of others. Non-coincidentally these regimes are far from “liberal.”

As for corporations, I much prefer an institution that offers me a good or service I desire in exchange for capital I have earned, than an extortionate and exploitative “agent of social good” that sticks a gun to my head and demands tribute.

So before you conflate pro-free market with “statist-corporate hacks” I suggest you delve into libertarian theories a bit more carefully, rather than aggregating all “pro-capitalist” ideas together under the socialist rubric “product of dialectical materialist brainwashing,” or if you prefer the Neomarxist view, “indoctrinated by the hegemonic superstructure.”

Politicans understand their own interests, and the rent-seekers understand their own, so the lack of an understanding of the impact on citizens generally of the policies they initiate or perpetuate comes at no cost and may even help to salve their own consciences.

Further, certain parts of your argument are unsupported, overstated or are irrelevant distractions, such as the following:

- Curiously, you do not discuss whether, as employment is a contract, workers ought to be able to freely associate in a union and negotiate with employers as a block.

- While I am certainly opposed to a federal law that mandates open votes for unions, it’s not clear what harm, if any, will result in the states that have open-shop laws that provide that union membership is not manadaatory and prohibit employers from discriminating against workers who do not join.

- At least in the open-shop states, collective bargaining is NOT “an attempt to compel employers to deal with just one party”.

- While you draw a picture of Obama’s apparent ignorance, I suggest that more cynicism may be appropriate – he might affirmative not want to really understand, as that might cause him to check his own power. But in any case, you provide no support for the suggestion that Obama’s “actual knowledge — of economics, of the meaning of individual rights, and of the nature of government — appears to lag far behind that of his bumbling predecessor.” I serious doubt that this is even possible, but in any case, what’s the point of throwing a gratuitous cumb of support to Bush and the Republicans, who managed to create the Perfect Storm that brought us Obama? Trying to salve your own conscience for your support for this disastrous “leader”?

- “while Bush may be accused of disregarding the rights of foreign terrorists at war with the United States”: here is another irrelevant – and twisted – distraction from your main points. Surely you recognize that our military leaders have been the strongest opponents of applying the Geneva Convention standards (no norture) to our treatiment of suspected foreign terrorists (many apparently simply foreigners sold out fby Afghan natives in exchange for bounties), so I have to wonder, do even you hate our military leaders? But of course this who reference is a strawman, as Amercian opposition to the “war on terror” is quite obviously not a concern about the interest of a few terrorists, but about our OWN interests involved with spending trillions on a reckless fantasy (while Bushies lined their pockets), with alienating our friends abroad, setting off culture wars at home and vastly expanding the power and secrecy of government.

Your skewed remarks continue to reveal you as a fan of large, statist corporations – the kind whom our government is now busy bailing out of bad decisions to the tune of an Iraq war or two – and hardly a friend of liberty.

Speaking of “friends of liberty”, I invite “free market intellectuals” like Dr. Reisman and others here to start entertaining second thoughts about the state grant of limited liability to shareholders, and its role in the vast moral hazard-generating and rent-seeking machine that clearly holds sway and is rotting away our financial industry:
http://mises.org/Community/blogs/tokyotom/archive/2009/03/04/when-will-tom-woods-and-other-quot-free-market-quot-intellectuals-have-second-thoughts-about-limited-liability.aspx

It does, after all, bear on the question of all of the rules that have come out of Washington to help tie our enormous, and once very dirty, Gullivers down.

If people don’t have a right to form trade unions (voluntary ones would be toothless tigers) then why does Reisman care about the secrecy of it all? The non-union members might get hurt? Why not go back to good ol’ days where trade unions couldn’t get legal recognition because they served no free market purpose? Maybe employers and non-union labour can team up and get the union members arrested via having CCTV inside the workplace, give the police video evidence of threats and show the public the real face of trade unions?

On the other hand this is a bit of a head scratcher:

“Precisely this ‘success’, however, is the cause of major problems. The first is that higher wage rates reduce the quantity of labor that any given amount of capital funds can employ. For example, at a wage of $20,000 per year, $1 million of payroll funds can employ 50 workers for a year. But at a wage of $25,000 per year, it can employ only 40 workers for a year. With every further rise in the wage, correspondingly fewer workers are able to be employed.”

Isn’t Reisman zero-summing here? If labour is cheaper an employer will hire more in direct proportion to labour’s cheapness? Since cheaper labour tends to low-skilled labour is this any different from make-work procedures whereby mechanical diggers are replaced by people with shovels because more will be hired?

And, finally, bit of an aside but:

“Furthermore, while Bush may be accused of disregarding the rights of foreign terrorists at war with the United States . . .”

What rights should foreign terrorists who are at war with the U.S.A. should the President be abiding by? If the President was showing more concern for the enemy than his fellow citizens then he should be arrested for treason. Maybe Libertarians would think twice if the argument was rephrased: “a rightful private-property owner disregards the ‘rights’ of a violent armed robber on his premises”.

Perhaps this article can help shed some light of Reisman strange assertion:

Are Al-Qaida Prisoners of War?

http://www.uwgb.edu/dutchs/PSEUDOSC/POW.HTM

Give me break! But then I have very little time for Reisman. He really doesn’t have a clue.

A popular argument you pose very typical and one that has been debunked a 1000 times over here. You address a symptom of problem, poor working conditions, and mis-place the blame.

You have much reading to do.

”
Today we have an unsustainable working environment. Workers salaries have been stagnant for the last 30 years and executive pay has increased from 20 to 40% to 200 to 400% of the average worker”

As long as there are people out there who believe we need to manipulate these things than we will always be in the turmoil we are in today.

FYI Just about everything you stated in that quote is factually wrong.

I don’t think Obama knows enough (how old is he anyway – I didn’t know anything about economics until I heard of Harry Browne who wrote about Mises in 1996). I was older than Obama is now back in 96. I confess to not knowing anything about Austrian economics in 96.

How can anyone become president if they actually know anything anyway? They have to have some skills, but for what? Lying seems to be the number one requirement to get elected (all the more amazing that Ron Paul ever got elected). A pretty face, nice speaking voice, and youth seem to be what people want. And, this election was really the anti-Bush vote anyway.

I don’t know if McCain could have been any worse, but I still think he would have caused a nuclear war, so no matter how bad Obama does, hopefully he won’t push that button. But maybe I’ll have to put this computer under my desk, so I can duck and cover faster.