Friday, December 14, 2012

But aren’t right-to-work laws also unjust?

As expected, the reaction to Monday’s column about Michigan’s right-to-work legislation inspired spirited discussion.

Weeding out both praise and invective that were unresponsive to my argument, there was a dissent that had merit. It was the libertarian argument that right-to-work laws also violate the rights of employers and employees to make a voluntary contract. An employer should be free to require membership in the union and/or payment of dues as a condition of employment.

Like most libertarians, I agree with that argument in principle, but one cannot evaluate right-to-work laws in a vacuum.

Right-to-work laws and the Taft-Hartley Act from which they proceed are wholly a reaction to the Wagner Act. The proponents of Taft-Hartley first tried to get the Wagner Act repealed. When the Supreme Court ruled Wagner constitutional, conservatives passed Taft-Hartley. If the Wagner Act were not already law, Taft-Hartley would be both unnecessary and unjust.

However, in the context of the Wagner act, neither is necessarily true. A brief allegory will illustrate.

Employer Smith sits down at the bargaining table with Union Jones. The two discuss potential terms of an employment contract, but are unable to reach an agreement. Jones wants more than Smith is willing or able to pay. Smith gets up to walk away.

Just then, Luca Brasi walks up and makes Smith “an offer he can’t refuse.” Brasi puts a gun to Smith’s head and invites him to sit back down, assuring him that at the end of the meeting, either his brains or his signature will be on a collective bargaining agreement.

Brasi is the Wagner Act.

Perceiving his newfound leverage, Jones increases his demands. He asks for even higher pay, more benefits and a stipulation that the employer require all employees to join the union or pay union dues as a condition of employment.

Although these terms will eventually put him out of business, Smith is ready to agree to them, due to the ominous presence of Mr. Brasi.

Besides, any counter offer he makes is subject to review for “reasonableness” by members of the Corleone family (the National Labor Relations Board) anyway.

At that moment, Don Corleone walks in. After thanking Brasi for his loyalty and service, he advises him that if the contract is too one-sided, Smith will go out of business and the Corleone family will lose the tribute Smith pays them each year. In addition, all of Jones’ Corleone-loyal union members will be unemployed. Corleone whispers instructions in Brasi’s ear.

The instructions are the Taft-Hartley Act.

Brasi then turns the gun on both Smith and Jones. He tells them that no agreement they make can include a requirement that employees join the union or pay union dues as a condition of employment.

Now, it is true that Brasi violated the rights of both Smith and Jones, as they were both prohibited from voluntarily agreeing to a closed union shop. However, it is clear that the rule actually offered some relief to Smith while mitigating some of Jones’ ill-gotten gains. Smith was only deprived of the right to agree to terms even less favorable to himself.

Besides, this abuses the word “agree.” Once Brasi pointed the gun at Smith, no agreement Smith made could be considered voluntary. The only reason he was at the table at all was the gun pointed at his head.

A free market is defined in only one way: All transactions between market participants are voluntary. This results in all market players striving to provide maximum value in order to obtain maximum value in return. Employers pay more to attract better employees so that their products will be better and profits higher. Employees work harder to get bonuses, raises and promotions.

Both act as they do because their customers have a choice whether to buy from them or not. The employers’ customers are consumers. The employees’ customers are employers. Each must persuade their customers to buy. They cannot force them to. This is the sole reason that free markets create more wealth.

As soon as Luca Brasi enters the room (the Wagner Act is passed), there is no longer a free market. No longer are all participants acting voluntarily. The cause and effect relationships that result in higher productivity, lower production costs, lower consumer prices and higher real wages are gone. So are the natural controls that keep Smith from paying higher labor costs than his sales can sustain.

Full article: http://communities.w … rk-laws-also-unjust/

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