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Monday, October 8, 2012

Why Wages Rise

Like so many organizations, labor unions get blamed for sins they never committed, receive absolution for follies of their own making, have aims they cannot attain, and make claims for deeds they never achieved. For example, unions claim credit for raising wages. The truth is that unions have had no more to do with the general level of wages than with the level of the seven seas.2 Admittedly, they have succeeded in obtaining increases for some of their members. And this has been not entirely at the expense of nonmembers; their tactics have disemployed many of their own members as well. In any event, their coercive wage hikes have not caused inflation. It is the covering-up, subsequent action that brings on inflation and makes the growth of socialism a financial plausibility.
The actions of union members are based largely on the thinking of their top officials. Much of their philosophy is summarized in this sentence from an AFL-CIO pamphlet (Publication No. 41) :
Through their legislative activities, unions have continuously championed measures to improve governmental benefits for various groups of citizens, without regard to whether the beneficiaries are union members or not.
There may be less generosity in this doff of the hat to nonmembers than first meets the eye. One finds the unions, for instance, supporting more government aid to foreign countries, federal aid to education, more compulsory social security, government ownership of power and light facilities, federal aid to so-called distressed areas, and so on—all of these being part and parcel of government’s guaranteed full employment program—the cover-up for uneconomic practices by labor unions.
Through Political Intervention
Labor unions are politically influential. In large measure, they obtain increased federal activity for projects they sponsor. Their coerced and uneconomic wage hikes cause unemployment; in short, their policies price workers out of the market. Then the unions throw their enormous political influence behind federal urban renewal and other “full employment” projects which, in turn, cost billions of dollars, making for governmental costs that cannot possibly be financed by direct tax levies. And this is how labor unions cause inflation and socialism!
In principle, if not in degree, the social action program of the National Council of Churches resembles the labor unions’ program—the assumption by government of more and more responsibility for the welfare of the people. The National Council of Churches is influential. The government activities it sponsors carry enormous costs. This is how the N.C.C. causes inflation and socialism!
And, chambers of commerce? Only a few in the whole nation have refrained from seeking federal aid for local roads, hospitals, airports, and so forth. Chambers of commerce have political influence. The “benefits” they advocate and achieve cost money. This is how chambers of commerce cause inflation and socialism!
Millions of citizens from all walks of life cause inflation in the very same manner. And all of them, along with labor unions, the N.C.C., chambers of commerce, and thousands of other organizations loudly decry inflation and demand that the fire be put out as they more or less innocently add fuel to it!
Were we to explore any deeper, we should have to inquire into the cause of the lax dispersal of the unlimited billions of dollars that government so easily grants to any and all pressure-group beggars. Why this Aladdin’s Lamp, the slightest rubbing of which yields handouts without limit? Why, in Congress, is the question seldom asked any more, “Where’s the money coming from?” The cause of this fiscal irresponsibility is complex indeed, but it has to do with that dearth of economic understanding which allows people to believe they can pay bills by “watering” the medium of exchange, with a crack-up in our educational system, an inability to see and think long-range, a breakdown in integrity, and a striking perversion of the ideal of statesmanship.

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