Labour’s Right-to-work Doublespeak

The Bling Bling

Right-to-work legislation was introduced in Michigan this past Thursday. Public and private sector workers will soon have the freedom to choose whether or not they wish to pay union dues in an organized workplace. Beforehand, it was mandatory.

Labour unions in neighbouring Ontario are feeling threatened. After all, ending this involuntary expropriation of workers would undermine their business model. In response to the announcement, CAW President Ken Lewenza remarked, “Any time government intervenes and reduces the standards of living for workers, it has an impact in competing states and competing provinces. I’m disappointed, of course.”

This, of course, is union doublespeak.

Consider an example of the state of affairs prior to the introduction of right-to-work legislation. A man is hired at a local factory. This factory is unionized. On his first day of work, a union rep grabs for his wallet. “Pay up, or take a hike,” he says. “You’ve got no choice. It’s the law.”

This is coercion. It is the solicitation of membership using badges and guns. It is the actual intervention.

It is true that right-to-work legislation will reduce the standard of living of unionized workers. Previously, these workers enjoyed the special privileges associated with a government-erected barrier to competition. On the other hand, it will raise the standard of living of those workers, previously excluded, who are now willing and able to work for less.

Firms that embrace these non-unionized workers will have an opportunity to out-compete unionized firms on price. Lower prices benefit consumers. It raises their standard of living.

This is a good thing.

  • @JohnCollison

    Pharmacists are protected by the State in multiple ways – through the schools, licensure, professional associations, etc.,.

  • Gregory Cummings

    Hi Stan. Thank you for your question.

    You are mistaken in your contention that a retailer is not a producer and merely a cost add-on to a final product. Rather, a retailer functions in the essential role of capitalist within the market economy.

    In order to illustrate this, consider the example of a rural farmer, Smith. After harvesting his crops, he must transfer them into the city in order to sell them to the grocer, Johnson. Smith then sells his crops to Jones who in turn employs the services of A and B to ship the crops to Johnson.

    Say for example that Jones purchases Smith's crops for $500. He pays A and B $50 for their labour services and then sells the crops to Johnson for $650. Jones has profited $50 from the entire transaction.

    Importantly, Smith could have sold his crops directly to Johnson for $650. Or A and B could have purchased the crops from Smith for $500 and in turn sold them to Johnson for $650. Why didn't they? Either they lacked sufficient capital to buy the product, wanted payment as soon as the harvest was complete (Smith) or while they worked (A and B), or were unwilling to bear the risk that the crops would not sell for $650.

    Where does the capitalist (Jones, in our example) obtain his capital? Original production, voluntary exchange and the saving of money.

    As Murray Rothbard explains, the role of the capitalist "is to save labourers from the necessity of restricting their consumption and thus saving up the capital themselves, and from waiting for their pay until the product would (hopefully) be sold at a profit further down the chain of production. Hence, the capitalist, far from somehow depriving the labourer of his rightful ownership of the product, makes possible a payment to the labourer considerably in advance of the sale of the product. Furthermore, the capitalist, in his capacity as forecaster or entrepreneur, saves the labourer from the risk that the product might not be sold at a profit, or that he might even suffer losses."

    In technical economic terms, the labourers earn the "discounted marginal value product" of their labour for accepting payment now instead of later. The capitalist, by advancing money to the labourers, receives a discount for time-preference and, if he has forecasted correctly under conditions of uncertainty, pure profit. If he forecasts incorrectly, he suffers losses. Is this not the plight of every merchant or retailer?

    With regard to the pricing of pharmaceuticals in Ontario, the provincial government unilaterally determines the cost, mark-up and professional fees charged by pharmacies. Hence, the many shortages that result. Yes, if pharmacies were freely permitted to compete on price, this would be a means by which to drive out marginal competitors.

    There is no compulsory provincial union of pharmacists. There are associations which pharmacists may voluntarily join. I am advocating voluntarism, not coercion.

  • Stan

    Would you assist here? As a retailer and member in a government regulated/rigged price fixing cartel (the 'right to associate applies at all economic levels) you are not a producer. Rather, you are a cost add-on to a final product.

    Wouldn't your goal be to sell closer to the price of goods supplied to you so as to eliminate the less cost efficient in your trade rather than sponge-off and rely on the government regulated price sponsored with assistance of your union (association).

    Perhaps you can help here understand your position? Thanks.