v'ܩ The Problem with Unions
Home > General Politics > The Problem with Unions

The Problem with Unions

November 17th, 2008

I reject in principle the idea that people deserve a certain amount of money. A union is just another way to enforce a minimum wage, though in this case it can be arbitrarily high wage and include other perks. When we set these types of regulations we remove the ability for businesses to reward productive employees commiserate with their performance / abilities.

If we speak in terms of economics the issue comes down to everyone ‘winning’. I will try to explain by using the idea of coupons and sales. It is obvious by the existence of sale items and coupons that some items can be sold much cheaper than they regularly are and the company will still make profit. The goal of the company, however, if to make the most money possible. Some consumers are not price sensitive - They just don’t care how much a box of cheerios costs. While some consumers are extremely price conscious. Let’s assume that each box of cheerios costs .50$ to make and the regular price is 1.00$. It is in the best interest of everyone involved to make some money - even if it is only 5 cents - from the price sensitive consumer instead of making 0$ because they will pass it up. This means the company has to provide the good very cheaply to the price sensitive consumer. However, the company cannot make the good that cheap regularly - because then they won’t be maximizing their profits - some people will be willing to pay 1.00$. What you do then is you make the regular price high and provide sales and coupons for the price sensitive consumer. The extra work required on the part of the price sensitive consumer to get the lower price is worth it to them but will not be worth it to the consumer that doesn’t mind the price. In this situation the company maximizes profits by ensuring they get some amount of profit from every potential customer.

Image by Brooke Anderson

Unions / minimum wage is essentially the same thing. All people have some dollar amount at which they value themselves. This is some amount of money that they have decided they will not work above, the employer also has a maximum amount they are willing to pay their employees. In this situation the higher wage is analogous to the lower price on cheerios. The company requires some extra effort in the form of negotiation, performance, time at the company, etc. to obtain the higher wage. People who are willing to work for less will work for it and the people unwilling to work for it will either make more or re-evaluate how much they are worth as an employee as a result of the rarity / skill of comparable employees.

At this point I could point out the common arguments that tout common anti-socialism talking points but these will all be very politically charged and ultimately ineffective. So then I will just say this: The fundamental belief that all people are equally valuable is a flawed, naive, and unrealistic belief. Society functions daily through the machinations of millions of people doing sometimes small things that are important - this I will agree with, it is important that the coffee farmer in south America is doing his job. The point though is that the theoretical physicist is more valuable - There are just less people with his skill set available - where as laborers can be had easily. Similarly, the worker on the line who makes 1000 parts a day is far more valuable than the person who makes 750 parts a day. My father is an industrial plumber who works on commission. The commission system admits immediately, and without remorse, that we are all not equal, we all deserve to be paid in scale with our output.

Unfortunately, we have these unions because there were some circumstances in the past that allowed corporations to break the free market model and take advantage of their workers in extreme ways. In some ways it is the job of some sort of organizations, perhaps the government, to protect workers who honestly lack the ability to value themselves. But unions only help the people who aren’t exceptional, and hold back the truly exceptional.

Author: T.J. Seabrooks Categories: General Politics Tags:
  1. April 10th, 2013 at 06:07 | #1

    Good info. Lucky me I found your website by chance (stumbleupon).
    I have book-marked it for later!