Unions suck the life blood out of companies and industry. They add little and eventually suck the life out of their own members:
In 1914, Henry Ford doubled his employees’ wages to $5 a day and cut their workday to eight hours. He then hired more people. He didn’t do this out of benevolence. As Adam Smith wrote in “The Wealth of Nations,” “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.” It was in Ford’s interest to increase his company’s profits, and to do that he needed to attract the best workers he could find. When companies compete for workers, they get higher wages and better working conditions. Ford shortened the workday to better compete. Then GM and Chrysler matched Ford’s deal to keep up. Workers won.
All without a union. It wasn’t until 30 years later that the UAW appeared and unionized the workers. Union membership gave them good benefits for a while, but then growth slowed and stopped. That sure didn’t help workers. Consider what happened at GM. Over the past 20 years, much-less-unionized Toyota created 15,000 jobs — in America, not in Japan. Over that same period, GMÂ lost 400,000 American jobs.Â One reason GM shrank was union rules. How’s that good for workers?
Unions cause class war against the bosses, without realising along the way it is the profit of those bosses that allow workers to benefit. When the profits cease then the workers suffer.
Of course workers have a right to unionize — it’s part of freedom of association. But to be effective, that right needs a free-market environment. That means no compulsory membership — free association, not forced association. Second, enterprise must be truly free and competitive, which means no privilege or favoritism from government — no bailouts and crony capitalism.
When enterprise is competitive, workers acquire more bargaining power because multiple employers bid for their services. Also, self-employment is a real option because no government barriers to entry prevent it (like licensing, zoning or complicated taxes and rules). As the great economics writer Henry Hazlitt pointed out, free unions can play a constructive role when they have to attract members by offering valuable services, such as information on the latest market conditions. But the market must be free in all respects.
Today, workers should know the downside of unionizing. It’s not just the cost of their union dues. It’s the opportunities lost in union shops because the rules limit entrepreneurs’ ability to change, adapt and grow. It’s that freedom — free enterprise — that gives America and workers the power to prosper.