Wednesday, December 26, 2012

Right to Work is Right for Michigan

The argument for Right to Work in Michigan isn't complicated, but unions and democrats have been putting out lots of misinformation, trying to confuse people.

The case for Right to Work is simple.  You should not be forced to join or pay dues to a union as a condition of employment.  Unions claim to support workers, but they want to fire workers who refuse to give them money.

Unions argue that they are providing a benefit to the workers, and that the workers who don't pay dues to the union are "free riders" who deserve to be coerced into paying them money.  But this argument is false.  First, the unions are free to set up non-exclusive agreements so that they only represent their members and not non-members.  But unions overwhelmingly refuse to set up this sort of agreement, choosing instead to coerce people who don't want to be in the union.  The people who don't want to join a union are 'captive passengers', not 'free riders'.

The second problem with this argument is that the union may not actually benefit the worker, or the benefit may not exceed the cost of membership.  Under the unions' argument, THEY decide unilaterally that they benefit the worker, rather than the worker deciding for himself what benefits or does not benefit him.

Unions also argue that mandatory union dues are no different from taxes.  But only government can collect taxes.  Are unions claiming to be units of government?  Effectively, that is what they are.  In any case, this argument does not provide any reason not to eliminate these taxes, which is what Right to Work does.

Some libertarians might argue that unions and employers should be free to agree to contracts that require union membership.  That argument would only be valid for private sector employers in a truly free labor market.  But virtually no employer would agree to such an arrangement.  The reason why they do is because of government coercion (banning firing strikers, requirement to negotiate in good faith, etc.) and union coercion (threats of violence, property destruction, and blocking access).  These government policies are mostly federal, which states can't change, but states can pass Right to Work laws.

Curiously, the left decries monopoly businesses, but is all for monopoly unions.  But unions basically businesses that sell negotiation services and related products.  They may not call themselves businesses, but they provide services in exchange for money, which is the essence of a business.

The economic effects of a monopoly (which in free-market terms, can only exist through government coercion) are well-known.  Monopolies lead to higher prices and worse service, since competition allows people to choose lower prices and better service and forces businesses to improve their services to stay in business.  Thus we would expect monopoly unions to give worse service at higher prices.  Conversely, if there were competition among unions, workers would get better service at lower prices.

Coercive unions are actually worse than monopoly businesses, since they not only restrict competition, but also force people to buy their product on the penalty of losing their job.  This coercive power makes them tempting targets for outside interests who seek to capture control of them for other purposes.  In the heyday of communism, many unions were controlled by communists.  Many unions have been controlled by organized crime.  Some union bosses use the unions for their personal benefit.  Many unions these days are controlled by left-wing activists who push politics unrelated to workers' interests.  These interests push employers and politicians to provide benefits to themselves, rather than the workers.  If workers sense that something is wrong in their union, they should be able to leave, not be forced to keep paying it money.

Thus workers should have nothing to fear from Right to Work. It not only benefits those workers who don't want to be part of unions, but it also benefits those workers who like and want to be members of unions. The people who don't benefit from Right to Work are union bosses who have to provide better, cheaper service to workers.

What economic effects should we expect from Right to Work?  Without coercive unions making unreasonable demands and enforcing inflexible work rules, we would expect businesses to benefit.  They would make larger profits, create more jobs, invent more new and better products, and ultimately expand the whole economy.  Union bosses will certainly suffer, and some overpaid union workers may not do as well, but workers as a whole will benefit from more jobs, growing demand for labor, and more accountable unions.

Indeed, we find that states with Right to Work laws have better economic growth and create more jobs.  But unions deride these jobs as low-paying and claim that Right to Work is a "right to work for less".

First of all, there is nothing wrong with a "right to work for less".  To the extent that unions do increase their members' wages, they do so by shutting out other workers who are willing to work for less.  Why should some workers benefit by discriminating against other workers?

Economic statistics need to be interpreted carefully.  Unions point out that states without Right to Work have higher wages than those with it.  Now this cannot prove that Right to Work caused this gap, since there are numerous factors that affect wages.  Indeed many southern (Right to Work) states have had higher poverty and more minorities before they had Right to Work.

Furthermore, such statistics fail to take cost of living into account. When wages are adjusted for cost of living, Right to Work states actually have higher wages than non-Right to Work states.

But the real measure of the effect of Right to Work on wages is what happens when a state switches from one policy to the other.  Oklahoma became a Right to Work state in 2001, and wages did not suffer.

Thus Right to Work is morally and economically the right policy for Michigan.

See also: The Economics of Labor Unions

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