Why Unions Go Bad

Unions are the deformed offspring of capitalism: As the twig is bent, so grows the tree.

Courtesy: mises.org

(CALGARY, Alberta) - Unions have a lot of bad press in the United States on two levels. First is the real or alleged corruption that has been displayed by union officials/people over the decades. The second is the American fantasy of individuality and self-reliance which eschews citizen cooperation. There is a good explanation for the first; the second is equivalent to an urban legend.

So many people are anti-union in their philosophy, believing that they, as sovereign individuals, should be dealing with the employer directly instead of cooperatively through a union with their fellow workers. But as Adam Smith noticed in Wealth of Nations (1776):

“The master can choose his man, but most men cannot choose their master. The master can afford to wait, he is not dependent on this man or that. But, the man must have his job—he cannot wait. In the long run the workman may be as necessary to his master as his master is to him, but the necessity is not so obvious.”

Economist John Kenneth Galbraith

Now, said economist John Kenneth Galbraith:

“That the individual worker, needing regularly to eat, often committed to a mortgage and in doubt as to alternatives, can deal on equal terms with the large corporate buyer of labour can be believed only after much careful training.” (italics added)

Columnist David Brooks

Many Americans, particularly Republicans, are self-evident recipients of that careful training.

I’m going to pick up this theme up in a subsequent article but right now I just want to explain why unions go “bad”.

A union is just that: people united for a specific reason or cause. As conservative columnist David Brooks wrote in the New York Times: “Citizenship is built on an awareness that we are not all that special but are, instead, enmeshed in a common enterprise.” (“Modesty Manifesto”, March 10, 2011) In the case of employment, it is so people—workers—can deal on some level of equality and fairness with their employer.

The inhuman working conditions—no child labour laws, no safety regulations, workhouses, debtors prisons, etc., that existed in 19th century England are well known through the works of Charles Dickens. Things got better but improvement was slow and always (and still) resisted by capitalists.

We published a piece last month by Stephen Millies on the Ludlow Massacre of 1914. (The article can be found here: Hey, Wisconsin, Remember The Union Thugs in Action). Here are the first few paragraphs of that article:

"God gave me my money," said John D. Rockefeller--the world's first billionaire in 1905. This is how the founder of the Standard Oil Trust--now known as Exxon, Mobil, Chevron, Amoco, etc.--explained the secret of his wealth.

Nine years later, the bodies of two women and 11 children were dragged out from a cellar in Ludlow, Colo. They had choked to death when the Colorado state militia set the tent above them on fire.

Ludlow coal miners were on strike against the Colorado Fuel and Iron Co. Nine thousand miners had walked out of the company-owned camps on Sept. 23, 1913.

They struck against $1.68-a-day wages. They revolted against the CF&I company stores, CF&I-controlled schools, CF&I-censored libraries and CF&I-bought-and-paid-for ministers.

CF&I was as much a Rockefeller property as Standard Oil. Twenty million dollars of Rockefeller's loot was invested in it.

So the Colorado state militia was just doing the work of CF&I—and Rockefeller—when it raked Ludlow with machine-gun fire on April 20, 1914.

Over 40 miners and their family members were murdered. Among them were the smothered victims found the next day.

Unions are the deformed offspring of capitalism

As the twig is bent, so grows the tree.

People arguing against unions may acknowledge such capitalist excesses as Ludlow, but try to counter that times are different now and that unions are no longer, or at least less, necessary. This is egregiously out of touch with the real economic world. The more complex our society becomes, the greater the need for people to work together for common ends—in this case, forestalling exploitation by a grasping corporations.

Are big corporations grasping? Of course they are. It’s in their legitimate nature. Their only concern is profit and the proof of that is all around when you count up the millions of people who are now unemployed or underemployed because their well-paid middle-class jobs have been exported to where labour is cheaper, like India and China. But you can’t really blame the corporations for looking after their own interests; it’s a fundamental rule of capitalism. Who you can blame are your elected government representatives who, for a variety of reasons, have let it happen. So much for the power of democracy.

Unions have gone “bad” because they have been distorted by the malign actions of the corporate world—As the twig is bent so grows the tree. Let’s start at a contemporary beginning.

Imagine a small apartment building—15 or 20 suites—owned by a single landlord who has invested his capital in the service of his tenants in the expectation of making a fair profit—a cooperative scenario.

Over time a mutually supportive relationship develops, both among the tenants, and with the tenants and the landlord. Everything works fine until the landlord discovers greed.

“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed.” (Adam Smith)

The landlord attempts to increase his profits by raising the rent, reducing maintenance and cutting corners wherever possible. The relationship of trust and mutual respect between tenants and landlord slowly dissolves. As Adam Smith said:

“All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons.”

Unions were established and evolved in response to capitalist excesses. Business was ruthless to workers and workers had no option but to respond in kind. Workers, however, were very limited in the powers they had because business controlled the government. As Adam Smith noted:

“The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen.” (my italics) (Is this Walker’s next step in Wisconsin?)

Almost from the beginning, the American people have been taken in by the myth of individuality. I don’t think it was an intentional thing, but the clear result has been a modern divide-and-conquer, every-man-for-himself society. The philosophy of united we stand, divided we fall has little currency in American culture. (Which reminds me of an article I read a few years ago in the Wall Street Journal which referred to “The Untied States”. Freudian slip?)

The capitalist model

Capitalism is, theoretically, about a person investing their capital in a service or production for a profit. Were it still so straightforward, society would be in much better shape. But greed, a natural human motivation, has been allowed to exist, unrestrained.

In Emile: or, On Education (1762), the Swiss philosopher Jean-Jacques Rousseau (a contemporary of Adam Smith and the Founding Fathers) wrote:

“The universal spirit of laws in all countries is to favour the stronger against the weaker, and those who have against those who have nothing; this disadvantage is inevitable and without exception.”

The Founding Fathers of America had a unique historical opportunity to change this equation but, being members of the propertied elite themselves, it evidently never occurred to them. Heavily influenced by the French Enlightenment, the founders would undoubtedly have read Rousseau.

In The Social Contract Rousseau also said:

“There is undoubtedly a universal justice which springs from reason alone, but if that justice is to be admitted among men it must be reciprocal. Humanly speaking, the laws of natural justice, lacking any natural sanction, are unavailing among men. In fact, such laws merely benefit the wicked and injure the just, since the just respect this while others do not do so in return.”

And that where wealth if concerned, “no citizen shall be rich enough to buy another and none so poor as to be forced to sell himself…”

Another contemporary of Adam Smith and the Founding Fathers was the Marquis de Condorcet who wrote:

“It is easy to prove that wealth has a natural tendency to equality, and that any excessive disproportion could not exist, or at least would rapidly disappear, if civil laws did not provide artificial ways of perpetuating and uniting fortunes…”

These are things that the Founding Fathers would have, or should have, known. Many commentators on this site have talked about the prescience of the Founding Fathers. A prima facie case can easily be constructed showing that they were anything but prescient, and for other reasons they set up a flawed republic that was virtually doomed from the start.

The Constitution, as former Supreme Court Justice Thurgood Marshall has pointed out, was “defective from the start”. Even after a civil war and momentous social transformations, the current system of government is still unable to deal with terrible economic disparities, violence and the growing, uneducated, nonvoting percentage of the population.

The failure of capitalism—from the ordinary citizen’s point of view

Billionaire Henry Kravis

In 1987 the consumer products giant Beatrice, was the target of a takeover by corporate raiders Henry Kravis and associates. They used a miniscule fragment of equity—about $40 million—to leverage a buyout of the company at $6.2 billion.

They broke up the company and sold off pieces of it for about $3 billion. The whole process—over about 16 months—produced not a single penny of growth, but Kravis and associates walked away with the $3 billion. The new owners of the spun-off units, found themselves laboring under a newly created burden of $3 billion of debt while the entire Beatrice entity—before and after—had not substantially changed. This is the reality of the modern economic system. Money and debt are created out of nothing—from thin air.

The basis of the modern economic system is almost entirely smoke and mirrors—a paper chain of debt, profit and obligations. The machinations of the denizens of Wall Street which almost brought down the global economy demonstrated this. They created all sorts of fantasy financial instruments that, when the bottom fell out, turned out to have no value at all—none, nada, zilch, zero. As Joseph Mason, a professor of finance at Louisiana State University in Baton Rouge summarized: “The industry was self-financing, using loopholes in rules. Regulators weren’t keeping track of ownership of the capital, which became more difficult to do with the use of CDOs [collateralized debt obligation]. The losses fed on each other.”

In 2008/09 the global brewer InBev took over Anheuser-Busch for $52 billion to become Anheuser-Busch InBev. The company globally sells about 300 brands, including Budweiser, Bud Light, Stella Artois and Beck's.

In a joint statement at the time, the companies said that given "the limited geographical overlap between the two businesses and the efficiency of Anheuser-Busch's brewery footprint in the U.S., all of Anheuser-Busch's U.S. breweries will remain open."

Still, said Tom Pirko, president of Bevmark LLC, an international food and beverage advisory company, "they leech out every dollar. They will make Anheuser-Busch perform the way global companies do. That means no more goody-two-shoes attitude toward workers and distributors. Everyone is going to have cuts and bruises over this."

It is this kind of behemoth behaviour that unions try to counter in order to look after the reasonable, day-to-day interests of the ordinary working American. In this corporate and economic jungle, are unions, in principle, good or bad? It’s your country; you decide.

Daniel Johnson

Deputy Executive Editor, Salem-News.com

Born and raised in Calgary, Alberta, as a teenager, Daniel Johnson aspired to be a writer. Always a voracious reader, he reads more books in a month than many people read in a lifetime. He knew early that in order to be a writer, you have to be a reader.

Another early bit of self-knowledge was that writers need experience. So, in the first seven years after high school he worked at 42 different jobs ranging from management trainee in a bank (four branches in three cities), inside and outside jobs at a railroad (in two cities), then A & W, factories and assembly lines, driving cabs (three different companies), collection agent, a variety of office jobs, John Howard Society, crisis counsellor at an emergency shelter, salesman in a variety of industries (building supplies, used cars, photocopy machines)and on and on. You get the picture.

In 1968, he was between jobs and eligible for unemployment benefits, so he decided to take the winter off and just write. The epiphany there, he said, was that after about two weeks, “I realized I had nothing to say.” So back to regular work.

He has always been concerned about fairness in the world and the plight of the underprivileged/underdog. It wasn’t until the early 1990s that he understood where that motivation came from. Diagnosed with ADD (Attention Deficit Disorder) he researched the topic and, among others, read a book Scattered Minds by Dr. Gabor Maté, an ADD person himself. Maté wrote: "[A] feeling of duty toward the whole world is not limited to ADD but is typical of it. No one with ADD is without it."

That explains his motivation. Hard-wired.

As a professional writer he sold his first paid article in 1974 and, while employed at other jobs, started selling a few pieces in assorted places. He created his first journalism gig. In the late 1970s, when the world was recovering from a recession, the Canadian federal government had a job creation program where, if an employer created a new job, the government would pay part of the wage for the first year or two. The local weekly paper was growing, so he approached the publisher and said this was an opportunity for him to hire a new reporter. The publisher had been thinking along those lines but cost was a factor. No longer.

Over the next 15 years, Daniel eked out a living as a writer doing, among other things, national writing and both radio and TV broadcasting for the CBC, Maclean’s (the national newsmagazine) and a host of smaller publications. Interweaved throughout this period was soul-killing corporate and public relations writing.

It was through the 1960s and 1970s that he got his university experience. In his first year at the University of Calgary, he majored in psychology/mathematics; in his second year he switched to physics/mathematics. He then learned of an independent study program at the University of Lethbridge where he attended the next two years, studying philosophy and economics. In the end he attended university over nine years (four full time) but never qualified for a degree because he didn't have the right number of courses in any particular field.

In 1990 he published his first (and so far, only) book: Practical History: A guide to Will and Ariel Durant’s “The Story of Civilization” (Polymath Press, Calgary)

Newly appointed as the Deputy Executive Editor in August 2011, he has been writing exclusively for Salem-News.com since March 2009 and, as of summer 2011, has published more than 160 stories.

He continues to work on a second book which he began in 1998.

View articles written by Daniel Johnson