The Free Market 7, no. 5 (May 1989)
Any business owner whose employees deliberately set out to harass and even endanger customers could do only one thing: fire the offenders, and maybe sue them for damages as well. Nothing else would be compatible with free-enterprise and private property. But thanks to a whole host of government interventions, unionized companies like Eastern Airlines cannot take the actions that morality and economics would dictate.
Eastern has been hobbled by a legacy of bureaucratic management. During the bad old days when airlines were fully regulated by the government, managements were cozily in cahoots with the bureaucrats and union bosses. The resutling featherbedding and other mandated inefficiencies were foisted off on the hapless flyer through higher prices and inferior service, as were the above-market wages extorted by unionized airline employees.
When partial deregulation came along during the Carter administration, sclerotic Eastern started a long downhill slide. Only the attempts of entrepreneurial chairman Frank Lorenzo to inject some economic rationality into Eastern has had a chance of saving the company from bankruptcy. But his efforts have been hamstrung by politically-favored unions. And now they are attacking Eastern's customers by striking, as well as encouraging 'their cohorts in the rest of the industry to engage in a work slowdown designed to aggravate customers.
Labor unions, it must be remembered, are not simple associations of workers. They are conspiracies against the public interest. In the past, striking union members have done everything from breaking kneecaps to sending out false air traffic control signals. And when they do so, they are immune from justice.
Through laws and court decisions, the federal government gives these organizations and their bosses a whole range of special-interest privileges. For example, unions are virtually immune from prosecution for assaults and property damage during strikes.
We all have the right to quit our jobs. We also have the right to quit as a group. But we emphatically do not have the right to set up harassing picket lines and criminally assault those who choose to work. Yet that is what a strike consists of: the threat and actuality of violence against workers who want to support their families rather than obey union bosses. Thanks to government-granted favors, unions get away with things that would send anyone else to the crowbar motel and rightly so.
With the Eastern strike, and the attempt to spread it to other forms of transportation, the unions have taken a serious risk. Union power has dwindled in recent years and this could help it along. Tormented consumers must know who to blame for their purgatory, however. But that is not easy, since there is so much disinformation about unions—spread by union propagandists, leftists, and the government itself. Even the standard historical account is an accumulation of myths.
One myth states that unions have played a crucial role in representing U. S. workers. In truth, unions have historically represented only a small fraction. Today, only about 15% of the civilian workforce is unionized. Even at their height in 1955, unions comprised only 25%. And labor economist Morgan Reynolds thinks that union membership could drop in a few years below 10%.
Before 1860, there were virtually no unions in America. After the Civil War, socialists and communists tried to organize workers into unions to overthrow capitalism. But the organizations inevitably declined and disbanded amidst public hostility, thanks to widespread bombings and killings by union organizers.
The founding of the explicitly non-Marxist American Federation of Labor in 1881 gave a temporary boost to the unions, but it was only temporary. Unions still had little influence. But that all changed with World War I. As part of its wartime central planning, the U. S. government pushed unionism as a useful adjunct to cartelized big business.
The government even approved union violence by outlawing "interference" with coercive union activities; forcing companies to rehire violent union members with full back pay; and seizing the assets of companies that refused to go along. The government even created a union: the Loyal Legion of Loggers and Lumbermen.
After the War—over the opposition of government contractors and their unions—the labor market was deregulated, and union membership plummeted.
Contrary to another myth, union membership took another free fall in the Great Depression. It wasn't until the New Deal that union membership began to grow again, with laws that mandated federal fixing of minimum wages, maximum hours, and other working conditions, and bolstered union cartelization by giving them the power to set the terms of employment.
Especially objectionable among the New Deal laws were the Norris-LaGuardia Act, which prohibited injunctions against union violence, and the Wagner Act, which forced employers to "bargain in good faith" with unions, i.e., to submit to their government-backed demands.
Note: as culpable as Franklin Roosevelt was, Herbert Hoover had led the way. As secretary of commerce under Harding and Coolidge—Murray N. Rothbard has pointed out—he was an ardent union advocate, boosting collective bargaining and preaching the "humanitarian" goals of the union movement. After the 1929 Crash, as president he used government power to keep wages high for unions—exactly the opposite of what should have happened during a depression, when all other prices were falling.
Unions received yet another boost from World War II, when the government further cartelized the economy. Wages were set by bureaucratic decree and businesses had to obey the central planners in Washington, who invariably favored unions. By the end of the war, union membership had nearly doubled.
After World War I, when the wartime fascism was dismantled, unions fell apart. But this didn't happen in the unfortunately much milder dismantling after World War II, and unions were able to avoid market competition and thus sustain their membership. As always, one of their major tools was violence and the threat of violence.
Eventually, however, a public outcry against these tactics led Congress to pass another major piece of union legislation, this time over Harry Truman's veto: the Taft-Hartley Act of 1947. It was a blow to union power, but rather than repeal existing pro,union laws, it gave the government even more power, especially to intervene in labor disputes and to force employees back to work.
Nevertheless, Taft-Hartley marked a turning point: the federal government was no longer an unalloyed union champion. Eight years later, union membership peaked, and it has fallen ever since. In the absence of new federal interventions, it will continue to do so.
Many people are unaware of this decline, in part because of public-sector unions like the postal workers and the National Education Association, which—observes Constitutional lawyer Edwin Vieira—have "quasi-governmental power" that is "incompatible" with "constitutional liberties." Even here, however, unions represent only 34% of employees.
Another myth is that unions were founded to assist the poor and oppressed. In fact, they have always concentrated on cohesive, high-wage groups that are easy to organize and which are positioned to wreak havoc with strikes and other anti-competitive practices.
Today, as in the past, the purpose of unions is to protect well,to-do workers from wage competition. Typical are the Air Line Pilots Association, where some senior captains make $150,000 to fly less than 11 hours per week. The average annual salary of ALPA members is $85,000 for less than 19 hours of work a week. And no one thinks of Eastern's $52,000 mechanics and $43,000 baggage handlers as the oppressed proletariat—especially when massive overtime caused by deliberate union makework is added on top of these high incomes.
Another myth is that unions raise the standard of living of all workers. In truth, unions do not and cannot raise wages in general. Wages are determined by the productivity of the individual laborer, which in turn is largely determined by the amount of capital invested per worker. Therefore, the best way to raise wages is to increase the productivity of labor, which means creating a freer economy with more capital investment.
Unions can and do raise their own pay, but only at the expense of non,union and marginal workers. This is why unions promote such anti,competitive government interventions as minimum wages, which are designed to throw out of work those whose market worth is less than the minimum. This enriches unions at the expense of the most vulnerable members of society.
Even with their limited numbers, unions enact a dreadful toll on our economy. They stymie competition, thwart the will of consumers, and promote misallocation of resources. Businesses and consumers bear the costs of arcane work rules and other mandated inefficiencies, absenteeism, luddite delays of new technology, and the disruptive violence of strikes.
It is impossible to measure precisely how much damage unions do the U.S. economy. But Morgan Reynolds's "unsubstantiated hunch" is that real income would rise 10% if unions disappeared.
The solution to union violence and inefficiency is simple: cut off the government's tentacles. In this case, repeal the laws which grant the unions privileges and immunities. Justice for private property, consumers, and working people allows nothing less.
