Institutionalized extortion
November 27, 2008

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How can any otherwise intelligent person continue to think collective bargaining is a good idea?

If anyone pictures a bargaining session as a meeting where two parties sit down and work out an agreement beneficial to both sides, they are wrong. The employer can only lose. Since he has all the workers he needs, he’s already paying a competitive wage – otherwise, his employees would quit and work elsewhere. Higher wages will force him to raise prices, which will make his customers either cut back on purchases or patronize his competitors. In either case, he’ll have to cut production and lay off workers.

Unlike the employer, the union has a weapon. It can go on strike, and its members can threaten to beat the hell out of any scabs who attempt to cross the picket line. (“Scab” is organized labor’s label for people willing to work at the market wage – people like Michigan’s 450,000 unemployed workers.) Eventually, the employer either gives in or goes out of business.

People will admit that the UAW has gone too far when unskilled assembly workers in the auto factories get $28 an hour plus COLA increases, yearly bonuses, health insurance and pensions. But it is not a matter of going too far. Collective bargaining itself is wrong. It is government interference in a private transaction. Government forces the employer to “bargain”, then allows striking union members to block others from taking the jobs at the wage they’ve turned down.

Collective bargaining is institutionalized extortion. That may not have been apparent in the middle of the Great Depression, when President Roosevelt signed the Wagner Act creating the National Labor Relations Board, but 73 years have passed and we have yet to correct the error.