Union Power and the Public Interest

In one of the most carefully documented and fact-packed books ever devoted to the subject, Emerson Schmidt analyzes the realities of union power and “collective bargaining” and the tremendously harmful role they have played in obstructing and reducing production, causing unemployment and instigating inflation. “Trade unionism, as it presently operates in the United States,” he concludes, “has made workers as a whole poorer than they would otherwise have been.”

Mr. Schmidt begins by defining the union problem. He contends that the central aim of the unions is to take labor out of competition. One of the myths he disposes of is that, especially in an inflation period, wage increases persistently lag behind increases in the cost of living. Between 1960 and 1970, for example, the consumer price index increased by 31 per cent; in the same period, gross average hourly wages in manufacturing increased from $2.26 to $3.36, or 49 per cent.

Schmidt is correct, also, in his analysis of the moot question of the role that union-wage demands play in exacerbating inflation. Inflation is always finally a monetary phenomenon: only an increase in the money supply in relation to the production of goods and services can raise the average level of prices. But if we ask what, in turn, causes the monetary managers to increase the monetary supply, we find that a main purpose is to avert the unemployment that excessive money-wage increases tend to bring about.

In one of his most powerful chapters, Schmidt concludes that “violence and the threat of violence are an integral part of collective bargaining.” He proves this with a wealth of detailed evidence. Yet the overwhelming majority of so-called labor experts even today remains blandly oblivious to the intimidation and latent violence inseparable from the strike weapon.

What is to be done about excessive union power? The main part of the cure has long been obvious to sober students of the problem. It is to repeal practically all of the federal labor legislation passed in the last forty years—the Norris-LaGuardia Act, Davis-Bacon Act, Walsh-Healey Act, Wagner-Taft-Hartley Act, minimum wage laws—and the mass of state and local legislation that imitates and supports them. We should repeal, in short, all the special immunities, exemptions and privileges that have been granted to unions and their officials. Locally, we should enforce the common or statute law against mass picketing and all forms of union intimidation, harassment and violence.

Mr. Schmidt, I take it, agrees with all this; but in some respects he would apparently go farther and draft, for example, “a body of antitrust laws appropriate to the labor markets.” In view of the arbitrariness, uncertainty and contradictions in our present antitrust laws as applied to corporations, this proposal must be viewed with misgivings. But whatever differences one may have with some of Schmidt's conclusions, he has written one of the most informative and cogently-argued books on the union problem that has appeared in the last decade.

Reviewed by Henry Hazlitt / Economics (204 pages, indexed) / BFL Price $10