May 25, 2012

What To Do With Labor


The functions of a union in a "free market" economy is a difficult thing to rationalize. In such an economy there is suppose to be many producers serving many consumers with the result that the consumer gets the best products at the lowest prices possible. If a producer does not compete he fails.

The theory is on solid footing in a free market; however, it breaks down if the market instead is controlled by an oligopoly or monopoly. In this instance, the producer no longer cares as much about the wants and needs of the consumer. He will produce the cheapest product possible and charge the highest price because the consumer has no choice.

In the perfect world, labor will deliver their product, their labor, to the producer under the guidance of a free market system. The problem is we do not have a free market when it comes to labor. Usually one union represents labor at one company and often within one industry. Therefore, labor has the opportunity to "extort" wages and benefits that are potentially much higher than a free market would allow. In a global economy this results in goods coming from a foreign country to be cheaper than what is produced within the United States.

No one has come up with a solution to this problem, including myself. Perhaps we need to treat labor in the same manner as utilities. We have accepted the fact that our electricity providers in this country need to be of such a size that it does not permit more than one company to be able to provide electricity to large regions of the country. Further, the cost to be a provider of electricity is so costly that it limits who can enter the business. As a result, we have deemed them to be a utility and must be regulated so their influence and power is not abused.

Is this what we must do with labor?

4 comments:

  1. Wow! First time I heard it said in this manner. Well done!

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  2. I assume you will be moving out of Michigan with these comments.

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  3. Where to even start . . .

    So, the problem with our economy is that those pesky worker bees can band together and negotiate for wages that would otherwise be lower? And those poor bosses have no recourse but to fork over the money. Which is why, of course, executive compensation is at all time lows . . . doh, except that it's not! Hmmm . . .

    In a truly free market there would be no laws restricting what labor could do, actually, just as there would be no patents (which allow pharmaceutical companies to charge Americans 8 - 10 times what Europeans pay for prescription drugs) nor copyrights.

    Treat labor like utilities? Hell, why be so progressive?

    Why not return to the days of serfs? Give people just enough to eek out short, miserable lives. Yeah, isn't that what the Founding Fathers meant by the pursuit of survival? Oh, crap again, I got that wrong . . . what was it they wrote?

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  4. Ken
    The problem is not that the worker bees negotiate for better wages, its that they threaten to shut down and bankrupt companies if they don't get wages beyond what the skill the offer is worth

    Most automobile assembly line jobs take from 1 to 5 days to learn, about the same time as a fast food server, but pay middle class wages that otherwise would require 2 years in a trade school or 4 years in a college to be able to earn

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