How Monopolies Imprison the Free

Government or business - all service monopolies are harmful.

With the statist left beginning to digest its stunning defeat in Wisconsin and prepare for longer-term combat to restore union power, higher taxes, and corruption, someone deep in the underground control bunker of the Vast Left-Wing Conspiracy seems to have realized that angry mobs of dirty hippies on the government payroll may not be the most persuasive representatives of their point of view.  So they're rolling out bespoke-suited lawyers instead.

As propagandized by the unionized online rag Truthout:

The International Commission for Labor Rights (ICLR) sent a notice to the Wisconsin Legislature, explaining that its attempt to strip collective bargaining rights from public workers is illegal...

The ICLR identified the right of "freedom of association" as a fundamental right and affirmed that the right to collective bargaining is an essential element of freedom of association. These rights, which have been recognized worldwide, provide a brake on unchecked corporate or state power...

The opening paragraph of the ICLR statement reads:

"As workers in the thousands and hundreds of thousands in Wisconsin, Indiana and Ohio and around the country demonstrate to protect the right of public sector workers to collective bargaining, the political battle has overshadowed any reference to the legal rights to collective bargaining. The political battle to prevent the loss of collective bargaining is reinforced by the fact that stripping any collective bargaining rights is blatantly illegal. Courts and agencies around the world have uniformly held the right of collective bargaining in the public sector is an essential element of the right of Freedom of Association, which is a fundamental right under both International law and the United States Constitution." [emphasis added]

This argument is riddled with logical fallacies and is false in effect, but it contains two essential grains of truth which are well worth pondering.

Freedom of Association Works Both Ways

First, the ICLR is absolutely correct that freedom of association is a fundamental human right which cannot be taken away.  That's why neither Gov. Walker nor any of the other legislatures which have banned collective bargaining for government employees banned unions themselves.   Government workers are human beings who have exactly the same right to join into groups of their own free will as anyone else has.  If they want to call those groups a "union" that's fine, too.

What the protests in Wisconsin and elsewhere are about, is not a right but the ill-gotten profits of blackmail and thuggery - a unique privilege of monopoly collective bargaining.  Since FDR's days, unions have subsisted on a power found nowhere else in American tradition: the power to force their employers to deal with them and them alone.  Unions also have unique exemptions from having to follow laws against violence and conspiracy which is why the expression "union thug" is redundant.

When an organization becomes unionized in a non-Right-to-Work state, that union suddenly becomes the sole bargaining agent for its members.  Of course an employer has the right to negotiate with the union, just as it can negotiate with any other vendor or supplier.  Unlike any other kind of provider, though, labor law strips the employer of the right not to negotiate with the union and to get employees from somewhere else instead - a monstrous violation of the employer's right to freedom of association.

Gov. Walker's new law merely restores the proper balance.  Employees, as before, have the right to join together into organizations called unions; employees, as before, have the right to contribute funds to the union called dues.  What they don't have is their former "right" to force their employers to heed their demands because the employers are banned from hiring anybody else.  In Wisconsin, the union workers must compete with non-union workers just like every other American worker has for decades.  What's unfair about that?

Checks and Balances Are Good

So much for freedom of association which the ICLR and its Democrat fellow-travelers wants "for me, but not for thee."  What of its plaintive plea for "a brake on unchecked corporate or state power?"  In this, they are absolutely right - but reach the wrong conclusion.

We all most definitely need brakes on unchecked corporate or state power, the more checks on power the better.  History shows time after time that both big government and big business, left unchecked, will inevitably be oppressive, corrupt, greedy, and unjust.  This has nothing to do with the nature of either government or business, but with human nature itself.

Our Founders weren't experienced in giant multinational corporations because such entities didn't exist in 1776, but they were adamant about the need to separate government powers and provide tension between the different branches and layers.  At around the same time as our Founders were pondering the nature of government, Adam Smith was considering businesses and reached much the same conclusion:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

In other words - left to themselves, businesses will collude rather than compete and rip off the public.  Left to themselves, government employees will collude and rip off the public in the same way.  As Smith pointed out, a free country can't very well forbid businessmen from meeting with each other but it certainly should discourage "trusts" and price-fixing.

Scragged agrees wholeheartedly with Smith and Teddy Roosevelt that "trust-busting" is a legitimate responsibility of government.  Our current economic crisis was largely caused by government failure to break up monopolies; in fact, just as Adam Smith warned, government created an effective home-mortgage monopoly with Fannie and Freddie that, when they crashed, took down the whole market.

We hear talk of companies that are "too big to fail."  There should never be such a thing; if a company is too big to be permitted to fail, it's too big to be permitted to exist at all and must be forcibly broken up into smaller bits as was done with AT&T in the 1970s.  Destroying the old AT&T phone monopoly led to a whirlwind of innovation in communications that is still going on to this day, as well as plummeting prices which benefit all Americans.  Countries which still have a telephone monopoly suffer under outrageous charges that hamper their economy.

No, the ICLR is correct that corporate and state power can't be left unchecked.  Corporate power can be easily checked by requiring competition - and in a competitive marketplace, unions are just fine.

An over-greedy union will take too much money from their employer which will go bankrupt and destroy the union in its fall, because individual consumers will buy from a more responsive, less-expensive nonunion competitor.  That's exactly what has happened in America's car market, and neither GM nor the UAW would exist today if they hadn't been bailed out by the government.

The problem isn't unions themselves.  The problem is monopoly - whether a corporate monopoly, government monopoly, or union monopoly, monopoly powers are always bad, always lead to corruption and inefficiency, and should always be destroyed and limited wherever possible.

Monopoly justice.

Tear Down Those Monopolies!

There are a handful of situations where a monopoly is unavoidable.  We don't really want competing militaries, for instance, and competing police and fire departments led to chaos in 1800s New York City as graphically illustrated in the movie Gangs of New York.

Precisely because those monopolies have to exist, however, the additional monopoly of a public-sector union cannot be tolerated.  In this, Gov. Walker didn't go far enough; his bill didn't strip collective-bargaining privileges from his policeman and fireman as it should have.  He's paying the price for his pusillanimity; the unions he protected - which, let us remind you, have sworn to "Serve and Protect" the public - are now blackmailing businesses into opposing the Governor.  Maybe it's time for another bill?

The reason our government services are so outrageously costly and inefficient is because unions have glommed onto the natural monopolies of public-sector services and created a private monopoly to their own benefit.  Government can't (normally) go bankrupt; government doesn't have to persuade customers to part with their money but grabs it from taxpayers by force; government "management" is chosen by elections in which union workers can vote, contribute, and campaign.

Unlike unionized private companies which are checked by competitors, there is no check on union greed - even less than there was on the prices of the old AT&T.  Back in the old days, if you didn't want to pay AT&T's prices, you at least had the option of doing without a telephone.  You cannot legally go without paying your taxes.

Where there are private monopolies today, like with your local gas or electric company, the rates are heavily regulated by the government and the service is still poor.  The far larger and richer teachers unions provide a "service" so overwhelmingly awful and so awe-inspiringly expensive that the old robber barons of AT&T would have blushed with shame.  At least AT&T's overpriced phone lines worked through thick and thin; in Wisconsin, two-thirds of the eighth graders cannot read adequately.

The new breed of Tea Party Republican is - finally! - attacking their mortal enemies in the public-sector unions, who steal taxpayer dollars and use them to buy Democrats.  This is a vital battle that must be won.

Don't be deluded: the true battle isn't against unions per se, but against monopolies and public-sector corruption wherever it may be found.  Public-sector unions steal from taxpayers, but so do subsidized ethanol producers, all manner of farm subsidies, the giant banks that were bailed out at taxpayer expense, no few defense contractors whose products cost the earth and carry no risk to the company...

Put that way, conservatives might even have some common ground with the protesting lefties.  That really would be a surprise!

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Economics.
Reader Comments

An interesting and thought-provoking article -- and this from a public school teacher!

For reasons too complex to get into here, it is my belief that this assault on teacher's unions (and even you have noticed no mention of other public sector unions on the part of the Governor of Wisconsin) is merely one facet of a massive play on the part of some venture philanthropists who would very much like to get their hands on the vast amount of public money earmarked for education.

I think they are going to win. I do not think it will lead to any real improvement for the students, but I do not think it will lead to a terribly worse situation for them either.

Where education is concerned, America will trade the devil of government bureaucracy for the devil of the corporation whose pockets are lined with politicians. Our students won't perform any better but there will be plenty of corporate money funding new studies that indicate that they are (as opposed to the opposite, which is happening today).

But you may -- you just may -- have a point about public sector unions.

March 28, 2011 3:53 PM
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