Tuesday, March 30, 2010

Quote of the day: On unions

Reading up on some of those folk I included the economics family tree, I came across this quote from William H. Hutt on unions, as if he were talking to the EPMU this week:

    _quote Unions gain at the expense of other labor, not capital, and
the transfer reduces total output.”

(Paraphrased in John B. Egger’s biography of William H, Hutt,
from Hutt’s 1973 book Strike Threat System:
The Economic Consequences of Collective Bargaining)

Or as Vedder & Gallaway put it in 2002:

    “Unions transfer income from the unorganized to the organized, and depress total income to such a degree that even organized workers are poorer.”

In his earlier book Collective Bargaining, Hutt quotes from William Thompson, “a friend of Robert Owen, who some regarded as the most significant founder of modern scientific Socialism and the originator of the idea of ‘surplus value’.”

    “Thompson can hardly be regarded as a biased witness against working-class
bodies. He was, we are told, of the most kindly and gentle disposition, but when he
considered the workmen’s combinations of his day he was moved to passionate
condemnation of them. To him they were ‘bloody aristocracies of industry...
[The] excluding system depended on mere force and would not allow
other workers to come into the market at any price…It matters not,” he said in
1827, “whether that force…be the gift of law or whether it be assumed by the
tradesmen in spite of the law: it is equally mere force.”
    “Gains [of the unionised few] were always ‘at the expense of the equal right
of the industrious to acquire skill and to exchange their labour where and how
they may.’ This [Hutt reminds is] is the founder of scientific Socialism speaking
- not an employer.”

And William Stanley Jevons, from whom Hutt and others learned so much, summarises the same basic points even more forcefully in his 1883 book Methods of Social Reform and Other Papers:

Firstly. The supposed struggle with capitalists in which many Unions engage, for
the purpose of raising wages, is not really a struggle of labour against capital, but
of certain classes or sections of labourers against other classes or sections.
Secondly. It is a struggle in which only a few peculiarly situated trades can succeed
in benefiting themselves.
Thirdly. Unions which succeed in maintaining a high rate of wages only succeed
by PROTECTION—that is, by levying contributions from other classes of
labourers and from the population in general.
Fourthly. Unionism as at present conducted tends therefore to aggravate the
differences of wages between the several classes of operatives; it is an effort of
some sections to raise themselves at the expense of others.”

“An effort of some sections to raise themselves at the expense of others.” Just as it is with the minimum wage--which as Eric Crampton shows assiduously in repeated posts, raises wages for those in employment at the expense of those who aren’t, while reducing total incomes all round.

At the end of the argument Jevons concluded:

    “The Unionist overlooks the fact that the cause to which he is so faithful, is only the
cause of a small exclusive class; his triumph is the injury of a vastly greater
number of his fellow-workmen, and regarded in this point of view, his cause is a
narrow and selfish one, rather than a broad and disinterested one. The more I
admire the perseverance, the self-forgetfulness, the endurance, abstinence, and a
hundred other good qualities which English workmen often display during the
conduct of a great trade dispute, the more sincerely do I regret that so many good
qualities should be thrown away, or rather misused, in a cause which is too often a
hurtful one to their fellow-men.”

One can still say the same today.

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