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From: eyal@wisdom.BITNET
Newsgroups: mod.politics
Subject: Re: welfare, crime, business, unions, and freedom
Message-ID: <12231079812.47.MCGREW@RED.RUTGERS.EDU>
Date: Fri, 15-Aug-86 16:48:04 EDT
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Posted: Fri Aug 15 16:48:04 1986
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I'm not sure whether this article made it through the first time I
sent it (there were some problem on the BITNET line to the USA), so
I'm sending it again.

>Business and employees: The relationship between an *individual*
>employer and employee is not symmetrical.  Employers ... paid
>workers a barely adequate living wage, which meant they couldn't
>afford to strike, or put money aside and quit, in order to protest 
>low wages, or unsafe working conditions.

The wages an employer pays don't depend on the arbitrary decision of
either him or his workers; they depend on the productivity of labor,
which depends mostly on the technology used. An increase in labor
productivity always causes an increase in real wages, and it is the
ONLY way to bring about such an increase for all workers. An employer
can't arbitrarily decide to pay his workers less than their
productivity justifies (the obvious example is Henry Ford, who
introduced methods which increased the productivity of labor, and then
paid his workers $5 a day - about twice the prevailing wages at the
time; you can bet he wasn't moved by kindness or generosity), and he
also can't arbitrarily decide to pay them more without going out of
business. When technological conditions were such that labor
productivity was low, then wages necessarily had to be barely adequate
by today's standards (though compared to the earnings of agricultural
workers, or of workers in Europe, during the same period, they were
quite high); working conditions had to be unsafe, since the expense of
making them safer would have lowered wages even further; the only
alternative was to give better wages and conditions to SOME of the
workers, while firing the others, forcing them to either seek work in
other industries at even worse conditions or become unemployed - and
that's the ONLY result unions ever achieved.

The two best books about unions, examining both history and economic
theory, are Emerson P. Schmidt's "Union Power and the Public Interest"
and Morgan O. Reynold's "Power and Privilege".

>In the book I recommended in my last posting, William Manchester's
>"The Glory and the Dream," he offers another explanation for the 
>Great Depression.  ... those who were manufacturing
>the cars and refrigerators couldn't afford to buy them.  They bought
>them anyway, on credit terms which they couldn't meet. ...
>When it turned out that most people couldn't afford
>the payments on their debts, the banks and then the economy 
>collapsed.  Note that NONE of this was the result of government 
>action or inaction.

The only way a large number of people can get more credit than they
can meet is if credit is made artificially easy by the government;
that's exactly what happened in the 20's. For an excellent economic
history of this period, I recommend Benjamin Anderson's "Economics and
the Public Welfare".

>In fact, the top income tax rate was dropped from 65% to
>25% in 1925, which today's economic thinking says should have
>generated an enormous boom.

Not if accompanied by irresponsible manipulation of money and credit.

>We, as a society, have made the value judgement that such people
>should not have to sell their homes and cars (which are usually old
>VW's not new BMW's) and live in abject poverty until such time as
>employment can be found again.

First of all, the only cause of prolonged, general unemployment is
those labor unions you're so much in favor of - so you're using one
problem caused by government intervention to justify more
intervention.  Second, when you say "we, as a society, have made the
value judgment", what you really mean is that some people made it at
other people's expense.

>Rather, we have decided that tax
>revenues (which are largely voluntary--it is laughably easy to cheat
>the IRS)

Oh, come on! When you take someone's money at the threat of
imprisonment, then it is not voluntary, no matter how easy you claim
it is to "cheat".

>should be used to prevent such poverty.  You disagree with
>this value judgement; I agree with it, and I don't think that either
>of us can change the other's mind.

Which boils down to: you don't have any reasons for this "value
judgment", it's just a capricious whim, but you want it enforced on
everybody.


        Eyal Mozes

        BITNET:                         eyal@wisdom
        CSNET and ARPA:                 eyal%wisdom.bitnet@wiscvm.ARPA
        UUCP:                           ...!ihnp4!talcott!WISDOM!eyal

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