Something for nothing: Part II By Thomas Sowell Published March 3, 2006
Government is not the only institution that promises something fornothing. The decline of General Motors is just one consequence of the idea labor unions can get their members something for nothing. Workers themselves increasingly recognize there is no free lunch through unionization and increasingly vote to be non-union. But the word has yet to reach many among the intelligentsia, who still think of labor unions as institutions that benefit the working class. You can always benefit particular segments of any society at the expense of some other segment. But unions do not benefit even the working class as a whole -- just current union members at the expense of other workers, current and future. One reason General Motors has lost market share for years -- going from selling about half the cars in the country to selling about one-quarter today -- is its union contracts put them at a disadvantage compared to Japanese competitors. Though Toyota has factories in the United States, the American employees in those factories vote to keep their jobs by staying nonunion. Toyota takes business away from unionized Detroit carmakers, who are forced to lay off thousands of workers while Toyota hires additional workers. There may not be any big difference in pay scales, but unions can raise production costs many other ways. Fringe benefits are just one, work rules another. In some industries, employers pay their workers as much as, or more than, unionized workers for the same jobs, just to be free of red tape restrictions on how they can organize their business or discipline employees who aren't doing their jobs right. Toyota, for example, takes fewer hours to produce cars with fewer defects than Detroit cars. While unions are declining in the private sector, they are expanding among government employees. Government agencies are usually monopolies, so competition is no threat to their jobs. Taxpayers get hit with the high cost of these monopolies. There is no such thing as something for nothing. Teachers' unions fight desperately and ruthlessly against vouchers. They must maintain a monopoly of schoolchildren under the compulsory attendance laws. Their members risk losing jobs if they must compete with private schools. Monopoly is the key to unionized teachers' job security -- at the expense of children's education and the taxpayers' money. Private-sector labor unions have long been in the forefront of those pushing for higher minimum wage laws. Union members usually make much more than minimum wages but need to safeguard their jobs from others who might work for less. People on the inside looking out benefit at the expense of people on the outside looking in. Losers include not only less-experienced and lower-skilled workers, whose output would not cover the cost of the minimum wage, but also future workers who may find fewer jobs in the unionized industries. Minimum wage laws are like protective tariffs insulating unionized workers from the competition of other workers. It is robbing a less affluent Peter to pay a more affluent Paul -- while using noble rhetoric that appeals to the uninformed and the unthinking, including many people with fancy degrees and even fancier illusions about their own greater compassion. Some people may believe unions benefit their members at the expense of employers -- and that big corporations should be paying a "living wage." That may be possible in the short run. But if unionized workers producing widgets get higher pay by reducing widget manufacturers' profit rates, do you think there will be as much invested in producing widgets when higher rates of return can be realized by investing elsewhere? The rate of return on widgets cannot remain permanently below rates of returns in other industries. Widget prices will have to rise -- and that means lower sales and lower employment. There is no free lunch, no way to get something for nothing. Thomas Sowell is a nationally syndicated columnist.
Government is not the only institution that promises something for