Organized Labor and Power

I was reading a discussion about how the American worker has been replaced with cheaper overseas labor. Some blamed it on the greedy business leaders. Those who blamed the business leaders failed to realize they themselves, shop for the best deal. The capital of the producers and the consumers flows to its most efficient route.

There have been past attempts made by the U.S. Congress to promote competition. The Sherman Anti Trust Act, passed in 1890, was such legislation. It even included the labor organization, the American Railway Union, ARU, because the labor union with its 150,000 members prevented competition and harmed the consumer. It seems the congress of the 21st century is more interested in having the U.S. economy run by the Federal Government than it is in promoting competition.

At the turn of the 20th century the American economy became more industrial instead of agrarian. The American labor force gained more political power. The Clayton Act was passed in 1914. Important difference between the Clayton act and its predecessor, the Sherman act, is that the Clayton act contained safe harbors for union activities. Now unions could create practices that reduced competition and hurt consumers.

The United Auto Workers was formed in 1935. Over the years it would reach a membership of 1.5 million in 1979. In 2009 its membership was down to less than 500 thousand. The UAW was one of the first unions to organize black Americans. That's because capital flows to the most productive use and poor southern black Americans would work for lower wages than white Americans, so the UAW organized the black Americans. After businesses were required to pay the same wages to blacks as to whites, then racism set in.

The UAW would negotiate with one auto maker and apply that contract to all three manufactures. Soon the monopoly of the UAW hurt the consumer. Enter foreign competition and increased consumer choices and you have the results. A smaller UAW and General Motors, a company that WAS to big to fail, now in bankruptcy. The only thing saving them is the federal government's help to organized labor.

The government employees unions have no threat from foreign labor. The government employee unions have no threat from competition. They have a monopoly that hurts consumers and benefits the government employees. The government employees make almost twice what the average private employee makes.

Power should not be held by groups. Power should be diffused to the smallest holder, the individual. Whether held by labor, business, church, or state, power corrupts.

Charles Tolleson