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Monday, June 25, 2012


Foundation of Economic Education

Although written before the passage of the Labor Management Relations Act of 1947 (Taft-Hartley) and of the Landrum-Griffin Act of 1959, the authors criticism of compulsory collective bargaining still applies. On another occasion, he contrasted voluntary and coercive collective bargaining as follows:

      If collective bargaining means that the workers in a plant form an organization and elect a spokesman (not necessarily an employee) to discuss wage rates, hours, working conditions, etc. with management, and if the employer agrees to the procedure, I can see no objection to such conduct. But this is not what labor men mean by collective bargaining. They consider that if the employer does not accept the demands of the union, the employees will go on strike and, by picket lines and violence, prevent other workers from taking their jobs. The strike will inflict such losses on the employer that he will capitulate and accept the terms of the union. I do not agree that strikes, picket lines, and violence against workers seeking the jobs of the strikers are “a necessary mechanism in modem, industrial society.”

  A great many people feel that collective bargaining is all right in principle and that what is needed is better men as labor leaders and union officials. Many industrialists will say, “Of course we believe in collective bargaining” or “We recognize that collective bargaining is here to stay” or “The employers in the past were not fair to labor,” etc. These views are incorrect. Collective bargaining, like all other monopolistic practices, is wrong in principle.

  About 1800, the English law condemned combinations, both of employers and employees. These combinations were rightly called conspiracies. But about 1824, the English law against the combination of laborers was repealed. I believe the English lived under the shadow of the French Revolution and were afraid of revolution breaking out in England. You will hear people say that the Wagner Act gave certain rights to labor. This is incorrect. I will read a letter I sent to The Wall Street Journal on this subject:

  An agency for promoting private enterprise published a letter recently from which I quote:

  The National Labor Relations Act must be so rewritten that the rights and duties of employer and wage-earner in relation to each other and to the public are clearly defined. Individuals and minorities among wage-earners, whether union or non-union, must be protected against majorities. The right of collective bargaining must at all times be maintained. But every worker must have the right, free from coercion from any source, to join or refrain from joining a union.

  Let us analyze this alleged right of collective bargaining.

  Confining our discussion to civil rights, all rights are creations of the law.

  All human acts fall in two categories:

  1. Acts of which the law takes no notice;

  2. Acts commanded or forbidden by law.

  In the first category we are free to act; we have the right to act as we will. In the second category we have no right to disobey the command and no right to do what is forbidden.

  A man has the right to marry. This right is in the first category, the law neither forbids nor commands. A young man asks ten maidens to marry him—and each maiden says no. So he goes to the legislature and says that women are denying him the right to marry. So the legislature passes a law which prohibits any woman from interfering with the right of a man to marry.

  Armed with this law, the man goes to his favorite woman and demands that she marry him. If she refuses, the man goes to a National Marriage Relations Board which decides that the woman is engaged in an unfair marriage practice and that she cannot interfere with the man’s right to marry. The Board draws up a marriage agreement or contract and compels the woman to sign it.

  In this hypothetical case, we may observe:

  1. The law took from the woman the right to decide whom she would marry or whether she should marry at all.

  2. Before the law was passed, the right to marry meant that the man had a right to marry if he could find a woman to marry him.

  3. After the law was passed, the right to marry meant something else—namely, the right to compel a woman to marry him.

  4. The marriage contract signed by the woman was signed under duress, and was therefore not a contract at all, but a legal mandate.

  The analogy between this case and the Wagner Act is clear. Employees always had the right to engage in collective bargaining, if they could find a willing employer; that is, the law did not interfere. The Wagner Act conferred no rights on employees. But it took away from the employer the right not to deal with a particular labor union or with any union. Under the Wagner Act, most labor agreements or contracts are signed by employers who are under duress—and hence are not really contracts.

  The discussions between the employer and the labor union should not be called bargaining, for it is of the essence of bargaining that both parties are acting voluntarily. Would discussions between a highwayman and his victim be described as bargaining? In genuine bargaining each party makes offers. But labor unions, like bank robbers, make demands. Those who make demands have the power and the will to use force. The labor union threatens to strike if its demands are not met, thus inflicting a loss on the employer. The labor unions expect the higher wages in the future will exceed the present losses due to the strike. But the employer is faced with two losses—the loss due to the strike, or the loss which will come from meeting the demands.

  The Wagner Act gives employees the power to inflict certain and indeterminate losses on employers, with the consent and assistance of the federal government. It substitutes force for competition as the mechanism for distributing the social product.

  We should never refer to the Wagner Act as a law which confers upon workers the right of collective bargaining—but as a law which denies to employers the right to enter into voluntary agreements with their employees.

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