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July 14, 2019 - Freedomain Radio - Stefan Molyneux
01:04:08
Unions, Immigration and Foreign Trade
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Hi everybody, it's Steph. Hope you're doing well.
It is time to talk about the hostess who formerly frequently had the mostest and now has virtually nothing at all.
So, as you probably know, Twinkies, Ho-Hos, Ding Dongs, and all other sorts of church chime bell snacks have gone the way of the dodo, at least in the current incarnation it seems that the brand name will probably survive as moving forward and so on.
Now, I must admit, I'm fascinated by unionism.
I'm fascinated by unionism.
I'm also fascinated by the predations on Wall Street, and so I've talked about this a lot before.
I'm going to focus on unionism.
A long time ago, when I was in theater school, I did a scene study from a streetcar named Desire.
I was a Stanley Kowalski.
And one of the things that the teacher said in the course of, I can't remember whose scene study it was, but he said, when you're out of food, when you're homeless, and someone comes along and says,
that person is to blame, that group is to blame, that race, that ethnicity, that tribe is to blame, Then you're most likely to, or highly likely to, believe them.
Just because you're desperate and so on.
And at the time, I was not courageous enough at this point to speak my mind this openly.
That took some years, but I think I was 20, 21.
But I thought at the time that whoever was pointing the finger So whoever was standing in front of you and saying that your low state is the responsibility or is the fault of this group, that if you want to find who's really to blame, you just follow the finger up the wrist, the forearm, the bicep, the shoulder, and up the neck to find the head, and that's the person.
Whoever's pointing the finger is the one who is most likely the cause of your ills and ailments.
And it's fascinating to me.
Now, I guess I've been in the union one time.
When I was a teenager, I worked as a waiter at Pizza Hut.
And I wasn't in the union.
I got free food. I got free uniform and all that kind of stuff.
But then, when I was at Swiss Chalet...
We were in a union, and everybody at Swiss Chalet, at least to my knowledge, especially the people, you know, there were these elderly, I guess in the stewardess profession, they're called galley hags, sky fossils, but women who'd been waiters for a long time, and they hated the union.
And so there would be stuff deducted from my paycheck.
I had to pay for my meals. I had to pay for my own uniform.
Now, I'm not saying that's cause and effect, right?
I mean, I mean, it's not like the union necessarily caused management to become intransigent or recalcitrant.
It could be that management was intransigent and recalcitrant to begin with, and that's why there was a, quote, need for a union or whatever.
So I'm not saying it's causal, but it was to me interesting that where there was no union, there was much better working conditions.
And where there was a union, the working conditions were much, much worse.
But... Unions, of course, right?
The myth is something like this.
So the myth is that...
And it's never any particular starting point, but, you know, in the 19th century, people don't go back and talk about the 15th century and the need for unions, although workers were much more exploited.
I mean, they were serfs in the 15th century.
So you don't talk about, really, the exploitation of the workers in the 15th century.
But sort of starting around the 19th century, there was this idea that capitalists drove down wages...
And in order to have a countervailing balance to that force that the capitalist wanted to pay his workers as little as possible and extract as much value from them as possible.
And the workers were, you know, helpless, pitiable victims and so on.
And as a result, they needed to band together and then the myth is that the capitalists got together with the state and smashed all the unions so the unions had to politicize.
And get power and protection from the state, and so on.
And what is interesting to me...
I mean, there's so much that's interesting about unionism, but what's most interesting to me is what is never talked about, at least to my knowledge, which is that everything that the unions accuse the employers of the unions are doing themselves, in a way. And worse, in a way.
Right, so... The worker usually has a desire for the longevity of the institution, for the longevity of the company.
Because you don't want the company to fold.
I mean, you may leave, but you don't want to be laid off because the company folds.
Now, the union... Does not have the same incentive for the longevity of any one company in particular.
So if you had a union that was just for Hostess, then that union would face an elimination of its union dues if Hostess went under.
But what happens is you get this amalgamation of the brotherhood of whatever-whatever, right?
Secret handshakes and endless healthcare.
And so they have no particular driving financial interest in the success of any particular company.
So if you are a union and you represent workers in 200 companies, if one of those companies goes under, it is a tiny dent in your income.
But of course, it is a catastrophe for each single employee.
And that's very much the same as being a capitalist or a factory owner and having some factory...
Let's say there's some really good factory worker, but you just, for whatever reason, you don't like him.
You just really don't like him. And so what you do is you fire him.
Now, you lose his productivity and...
You have to retrain and dip morale or whatever.
But relative to you, and let's say you have 200 employees, you fire one guy who's good, but you just don't like him because you're a jerk.
In fact, you're a jerk. You fire him.
Well, that's a dip in your income, but it's nothing really.
But of course, it's a threat to each individual worker, right?
So the capitalist is going to lose a couple of tenths of a point of income for a tiny bit of time, a month or two, and...
What happens then is...
But for the worker, of course, the loss in income is huge.
It's 100% of his income for an indeterminate amount of time.
And no good reference.
It's really bad.
But exactly the same dynamic is at work with the union.
If the union, through insatiable demands, drives one company out of business, then for, what is it, the $18,000 workers for hostess, that's hugely problematic.
But for the union as a whole, it's not particularly negative.
Now, the union, of course, also says that one of the reasons that capitalism is a big problem is because the capitalist takes a percentage of the union workers' wages.
But, of course, so does the union.
Now, the union, of course, would say, yes, but we do it to increase his wage, and so on.
Whereas the capitalist is trying to use it to decrease his wage.
But there's, of course, a fundamental misunderstanding, or maybe an understanding but simply an ignoring, of the basic reality that the capitalist is not able to drive down wages at will.
I mean, they must know this.
I mean, they must know this. A capitalist is not able to drive his wages down at will.
I mean, I've been an employee, an owner, a capitalist, and you can't do it because people will just leave.
And you want your workers to be productive and happy and you want them to stay, particularly the more value they have and the longer it takes to train them, the more you want them to stay.
And so you can, you don't have the capacity to willy-nilly lower people's wages because other capitalists will pay them a little more and get them and so on, right?
Now, there is an asymmetry, of course, between the workers and the owner.
In that if the owner decides to quit or whatever and shut down the factory, that's really bad for all the workers.
But if one worker decides to quit, that is not really bad for all the other workers.
Or for the capitalist.
But as is so often the case, when people try to solve the problem of low wages, they go to threats and coercion.
And like everybody who wants...
The effect without the cause will use threats and coercion.
Violence, I think, fundamentally is a way of wanting the reward without putting in the effort or challenging whatever is in the way of your achievement.
I mean, so obviously, if you don't earn an iPad but go steal an iPad, then you want the effect of having an iPad without the cause of actually going out and earning or trading for an iPad.
And that's a problem, right?
Similarly, if you go and rape someone, then you want the effect of sexual...
Now, wages is a very complex calculation based on, I mean, a near infinite number of factors.
Now, you end up with a dollar figure, which is sort of a mutually agreed-upon exchange, Of services for money.
And the great temptation, of course, is to move the slider of that number up and down.
And, of course, to the great benefit of everyone who gains and to the great loss of everyone who loses.
So, if some guy's making ten bucks an hour...
The really important and interesting question is what goes into him making $10 an hour versus somebody who's making $20 an hour?
And what information about the society is contained in that $10 an hour versus $20 an hour?
And people want to just grab that money figure, that number, and just move it around, just slide it up and down.
But that's not...
A helpful or rational or a peaceful thing to do because you can only move that around through force.
What's interesting to me is, let's say that, I mean, the average person coming out of high school has the capacity to earn seven or eight bucks an hour.
I'm just going to say ten in case I have to do any complex math on it.
I don't want to take my shoes off. To me, what's really interesting is if you want to raise what people make, that's actually quite easy.
I mean, it's easy to diagnose.
It's hard to create.
And like all things that are actually effective in changing society, it has to do with things that occur a long time in the past.
This is one of the reasons why politics makes these kinds of changes so really almost impossible to achieve, because politics is all about the next election cycle.
I want more money. I want more wages for the next election cycle.
I want this politician to promise me or this union to promise me more wages now.
And so the long-term causes of these things are never discovered, are never discussed, and are never solved.
And you end up chasing effects with a gun rather than curing causes with philosophy.
So why is a high school student who's now been educated for 12 years straight, why is he only worth a couple of bucks an hour?
That is the essential question.
Now, if society looks at that essential question and says, so somebody who graduates from high school at 17 or 18 has been in a school system for 12 years, why is he worth so little?
Right, I mean, that's the fundamental question.
Now, of course, public sector unions...
Can't ask that question because they represent public school teachers, right?
But why is a person's economic value so tiny after they come out of high school?
Well, of course, it's largely because high school won't teach you anything of economic value.
In order to teach you anything of economic value, you actually have to teach you something Rational about economics and all other kinds of cool and useful and helpful things which would require more competent teachers, which would result in a more informed electorate.
So wages, the low wages of the young is telling us something very important about the investments that we're making in public school.
Right, so if I trained your dog for two years straight, full-time, and then when I gave you your dog back, he, you know, shit on your pants and attempted to have sex with your Ming Vaz, you would not feel that my training had been particularly effective or good.
And actually, if he was worse behaved when he graduated, then you would say that I was not only not doing good, but I was actively doing harm.
And to my understanding, to my experience, people coming out of high school are less competent than children going in to grade 2.
Children going into grade 2 are rational, empirical, and when they come out of high school, they're confused and addled and they've been actively harmed.
It's not even neutral. The other thing, of course, is that the competence of the young is always a grave threat to the economic interests of the older and the entitled.
I made this case in my three-part series, Why You're Unemployed, which is why are you not allowed to choose a trade?
A trade is a fine, fine occupation to be in.
A builder, an electrician, a plumber.
Why are you not allowed to choose a trade, if you want, when you're 14 or 15?
Apprentice for a year or two, graduate, you're a full-on.
Well, because plumbers out there who are making $80,000, $90,000, $100,000 a year, well, they don't want 18-year-olds coming into the marketplace with no kids, no mortgage, no particular health care requirements and so on, and to be underbid by them.
That's natural, right? So, the economic...
The value of the young is quite high because they've got youth, they've got energy, they've got a lack of financial commitments and obligations, they can work like maniacs, they're enthusiastic and so on.
And of course, they lack seasoning, they lack salt and pepper skills and so on.
Sorry, that refers to the hair, not the table.
And so the young are a grave threat to the economic entitlements of older people.
And that's fundamentally one of the reasons that high school is so ridiculous, is it keeps the young from competing and then when they come out to compete with the elderly or the middle-aged, they are economically useless.
So then you have to go to school for another couple of years, thus keeping you out of competing with the marketplace, and then you come out with your little mortgage or your not-so-little mortgage called student debt, and then after...
What is that? 16 years of training.
You graduate still with very few job skills and with a big debt, and then you're finally able to compete with the people who want to keep their higher income.
The reality, of course, is that if we unshackled the young, everybody's income would go up in general, but that harms specific people who don't get it, right?
So, the minimum wage and unions are a way of wallpapering over The mental catastrophes and economic hobbling of the young through public schools.
Because if you were really interested in raising wages, there's a very simple thing to do.
It's hard to enact, but it's simple to conceive of.
If you want to raise people's wages, what you have to do is to raise their value.
I mean, that's the actual way to raise people's wages is to make them more valuable, to find ways to increase their human capital.
And that would actually be fairly easy.
You just get entrepreneurs into high schools to teach entrepreneurial classes.
You have assignments called being an entrepreneur, that sort of risky business stuff.
And you do all this cool stuff Around getting kids to have more economic value as they get older, as they grow up.
And then they come out with good entrepreneurial skills, good people skills, good management skills, good money skills, good work ethic.
And then they're sort of automatically worth more.
I mean, heck, let's just at least have them be able to read, write, and do some basic math.
A percentage or two wouldn't hurt.
That's how you would actually raise people's wages.
Now, of course, that doesn't help the people who are already 18 and have their brains mashed by public schools.
And that's the problem, right?
When you have politics, you just go and move the number up.
Well, make the minimum wage $8 or $10.
And that's called solving the problem.
And the reason people do that is because the people who will benefit from a true solution, which is increasing human capital...
Are yet to be. They don't vote, right?
They are yet to be.
And that would run you straight into the system that we have of public school education.
That would run you straight into attempting to change that, which is impossible.
And, of course, I mean, the altering the public school system is like a scorpion at a party, you know?
Everybody... It just kind of veers around it and nobody pretends not to see it and talks as if it's not there and is never part of the equation.
People talk about how dumb Americans are.
They don't talk about the public school system.
I mean, if I were suddenly king of the world tomorrow or president or whatever or had some sort of dictatorial authority or capacity...
You know, I wouldn't be able to do a damn thing of any use.
Because you're running straight into the blinding ignorance and entitlement and narcissism and, frankly, ever-increasing sociopathy of the average citizen.
Can't reason with them, can't get them to see...
And then everybody who's older is all entitled and doesn't want the young to have opportunities because that's going to cut into their profits and so on.
You know, almost all social problems can be solved...
Through changing how we treat the young, we have inherited a system where the young have no voice.
And everybody's immediate economic, political, and emotional self-interest is invested in maintaining the status quo with the young.
I mean, this is why society is so slow to change.
The only way to change society is to change the way we treat the young, but our entire society is set up With spears pointed towards any charging horses to do with changing the young.
Changing how the young are treated.
And this is the great tragedy of society and this is why it's so painfully slow for it to change.
It does. It does over time.
Reason and truth will run out as they always do in the long run.
But I think that's very...
It's a very interesting thing to me to look at how all of this...
Politics is just around shifting and changing the effects rather than getting to the root causes.
Which, of course, only ensures that the root causes are going to continue to fester and produce problems.
And certainly with regards to how children are treated, it seems to be heading in the wrong direction.
There was a study in 1990 that said that from 1975 to 1990, the population of sociopaths in the United States doubled.
Doubled. To 4%, one in every 25 people, more or less.
And that's just what psychologists would call sociopathic.
Of course, another 60-plus percent will go all the way to murder if an authority figure tells them to.
Very convenient for those in power, for us to have no integrity.
And this entitlement thing, too, I mean, I just think it's quite fascinating.
This entitlement thing is quite fascinating because...
I mean, I in particular feel that I have to scrabble and pedal like mad just to ride comfortably along a flat surface.
I don't feel that anybody owes me any kind of downhill momentum, or that I'm owed things from people.
I can genuinely get enraged with people who owe me things, and I know the vast majority of you all don't donate.
I think that's a shame. I think that's more a shame for you than it is for me.
I don't sort of get enraged about it.
I feel entitled to people's donations.
So that is something that I find fascinating.
It's a fascinating phenomenon. That you just feel owed stuff.
I mean, I feel like I have to work for everything.
I guess, you know, my first job when I was, Lordy, 10.
And I've been working pretty much ever since.
And that is... I just don't feel...
I don't feel like I'm owed my wife's love.
I don't feel like I'm owed my daughter's respect or allegiance.
I don't feel like I'm owed listenership.
I don't feel like I'm owed donations.
I'm happy to get what I get.
I'd like to get more, make the documentary prettier, but I just feel that I have to earn this stuff.
And I just... To me, the entitlement phenomenon is just fascinating.
It's just fascinating to me how people can just angrily feel that they're entitled.
It does seem to me to have some sort of narcissistic element to it.
I want, I am owed, I deserve.
Statism is fundamentally about narcissism because you can't trace your money beyond the shadow in front of the gun.
You can't sort of say, well...
It's all the people who are retiring who say, well, I paid into this system.
I am owed that money back.
I mean, that's lunatic.
It's like saying, well, I studied for the wrong test, but I deserve an A anyway.
I studied biology, it turned out it was an algebra test, but because I studied...
I deserve an A. Well, you made a mistake.
You studied the wrong thing. You gave your money to the wrong entity.
I mean, the baby boomer generation had no shortage of skepticism with regards to state power in the 60s or the 70s.
But suddenly now, the state is a benevolent entity that, okay, well, it did start the Vietnam War and bombed Cambodia and overthrew Iran and messed up countries in South America and invaded Granada and, you know, all these kind of run up this terrible death and so on, throws all these people in jail and threatens everyone all the time.
But now when it comes to my retirement, I'm going to demand that it act like an honorable entity and give me back every penny I gave to it.
I mean, what madness. But that entitlement, I mean, part of it comes from the desperation that simply comes from not having earned it.
If you didn't earn it but you need it, then you have to do all these emotional, tricky, dicky, bullshitty things to get what you want.
And... That, to me, is all sorts of fascinating entitlement.
It's a different species, I swear to God.
It is a different species, the entitled, the narcissistic, in particular the sociopathic, of course.
Again, I'm no expert.
My understanding is that the narcissistic aspect of things is that you only are aware of your own needs, your own emotions.
You experience deep emotions and so on, but you don't really get that other people have these emotions as well.
You do go through genuine suffering and you may end up in therapy because your relationships keep crashing and burning and so on.
So... You may end up in therapy and you genuinely do suffer, but you just can't process other people's emotions.
Sociopathy is quite different. I mean, it's stone cold.
You just don't process emotions other than sort of base reptilian ones of fear and greed and dominance and so on.
But you actually don't. You need to process other people's emotions, nor your own emotions, and that's actually quite well verified.
You and I will respond to emotional-laden words differently and quicker and with more blood moving in the brain.
But the sociopaths, they won't.
They react to all words the same.
Murder is the same as mother is the same as mudu.
They don't react.
Different species. Predatory.
Predation. So, I'd like to also talk about...
So the entitlement thing is just fascinating to me.
But let me talk about something that I think is also quite interesting.
This is, you know, all theorizing.
I'm not sure how you prove this stuff, but I think it's a good and interesting theory.
Because I've always been fascinated by how when you mess up one aspect of a complex system, I'm always quite fascinated at how it messes up everything else in the system.
I mean, the economy is a massively complex ecosystem.
And I've always found it to be interesting to see the hidden effects of big economic decisions.
And in particular, the vacuum that is created when force is used.
The vacuum that is created when force is used.
So, you know, for instance, if you go steal everything rather than buy things, then you create a vacuum.
In other words, your own work ethic diminishes and you gain skills in thieving rather than producing and these are opposite skills.
So you create a kind of tendency and, of course, it has an effect on, you know, shoplifting adds 15% to the price of everything you buy.
It's a Kind of an evil, nasty little tax that goes on.
So I'm really quite fascinated by the vacuums that are created and the movement of goods and services that goes to fill in the vacuum.
So think of the amount of money that's spent on anti-shoplifting measures, right?
All those little tags and those machines and all that prosecution and so on, right?
So when you have the shoplifters, you create this vacuum or this need for anti-shoplifting measures.
And what I find really fascinating is to try and think of, or picture, or imagine the effects of raising the wages of lower- to middle-class manufacturers.
I mean, we're just... I know there's unions all over, right?
Let's throw in the public sector unions too, right?
Manufacturing and public sector unions are the big ones, right?
What effect does that have on the economy, right?
When you raise these wages.
And, I mean, they've gone pretty high.
I mean, if you count sort of wages and pensions and other benefits and healthcare and so on, I mean, I would just say it's probably double.
Now, it's not double where it would be if they hadn't been raised.
But it's double, and then people probably got double what they would have otherwise.
When the unions came in, not immediately, but over a decade or two.
They got double and then it stuck.
Now, of course, they'd have triple or quadruple if they had gone with voluntarism, but they got double, right?
What effect does that have when you take tens of millions of workers and double their salaries?
Well, the first thing that I would...
What I really suggest is that doubling significant portions of the population's wages, what's that going to result in?
Well, that's going to result in a huge increase in the price of everything.
Because it's not an increase in value, it's an increase in wages.
That's very important.
Because it's not an increase in value, but rather an increase in wages, it is going to lead to an increase in price.
I mean, the whole point of investment from a capital standpoint is to improve quality, reduce price, or some combination of those things.
Right, so why do companies invest in Machines to build their stuff.
Well, they invest in machines to build their stuff because it's going to be more efficient, faster, and machines don't take sick days, and machines don't unionize, and so on.
So, that's what they do it for, to reduce price or increase quality.
I mean, I think that's basically it, maybe a couple other things, but that's really the basics of it.
So, when I was in the software realm, I wrote a program called the Database Builder, where we would get specifications from clients and It would grind through the whole database, change all the fields, create new tables, remove fields that they didn't want.
It would create the front end.
It would create the internet interface, the web interface, and so on.
And all of that became automated.
And we did that because it was less error-prone.
It gave us a nice log. We could give a quick prototype to the client.
And once we had debugged the software as a whole, then it worked out actually quite well.
So, that was an automated process.
It took me a couple of weeks to write it, but it saved a week or two per project, and we were doing dozens of projects.
So, it improved quality, it reduced...
And, of course, it replaced the dumbest labor.
I wanted people to be coding, not changing fields in a database.
So, if people have more value...
Then they have more value because they can do something to either reduce costs or increase quality.
I mean, if you're the head of neurosurgery, you can hire a janitor and you need a neurosurgeon or you need someone to do neurosurgery, you can hire a janitor or you can hire a neurosurgeon.
If you hire a janitor, you might get cleaner floors, but you ain't going to get people cut open and fixed.
And that aspect of things is, I think, pretty important to understand.
So if people have more human capital, their wages go up, but only because their productivity has gone up, their value has gone up, and their value being to reduce cost or to increase quality or both.
I'll just say to improve, whatever it is.
So let's say that you've got some group of workers and they're a cost center and one of the workers decides to go to night school and become a reasonably decent accountant and then you can offload whatever it is to that worker.
Well, you'll pay that worker more because he can do that job part-time and that will free up an accountant or you can let go of an accountant and so on.
So he's more valuable to you.
He's going to end up reducing costs for you or improving quality overall.
Maybe because he's right in there, he knows all the numbers better than communicating to some accountant or whatever, right?
So, normally when people's human capital increases, it's because they have the capacity to improve quality, reduce price.
And this, of course, means for sales as well, to improve quality in sales.
Maybe they can sell more, right? Or maybe some coder or some team lead takes a project management course and your costs of project management are cut by...
Your cost of your projects is cut by 20% and the clients are happier.
Well, you'll pay him more because you get it, right?
So once you improve human capital, once you increase the value of your human capital, then it's because you're worth more.
But if you increase wages without increasing your human capital...
Well, I find that quite fascinating.
If you increase somebody's wages without increasing his or her human capital, then you create a vacuum.
Because what happens is, the price goes up rather than the price goes down.
Or the quality remains the same rather than gets improved.
Raising wages without...
That being the result of increased human capital raises costs.
Increased human capital reduces costs and increases quality.
Which is another way of saying reducing the cost of quality, but anyway.
Same thing. Reduces costs, we'll just say that.
Now, if a whole bunch of people get wage increases and that drives costs to go up, drives inflation, Then the lie is kind of revealed, right? This driving up of wages is hugely important because the costs to everyone else are kind of revealed.
So let's say that the public sector workers and all the manufacturers get double their wages.
Well, what happens without increases in productivity or quality?
What happens? Well, of course, what happens is the price of everything skyrockets.
Skyrocket, I tell you. Money penny.
And that's kind of significant.
Because what happens then is that the workers who get more money find that the price of everything they buy is going way up.
This assumes no deficit financing on the public sector.
We'll get to that in a sec. But the price of everything goes way, way up.
So the car that used to cost $10,000 now costs you $14,000.
And the cereal that used to cost you $2 now costs you $2.50 or $3 and everything goes up.
So you're like, okay, well I've got double my wages, but my costs have gone up by 50% or 75%.
It's not exactly the same, because there are a lot of people who don't get those wages, but all those people are going to have to ask for wages too, because the price of everything, even if you're not part of anyone getting these raises, the price of everything you buy is going up, so you have to ask for more money.
And so, in the long run, it gets spread around enough in the economy that you say, well, this price increase, my wage increase has led to price increases, and therefore my wage increase is not really that great.
And of course, it leads to a lot of destabilization.
It leads to a lot of misallocated investments because a formerly relatively stable situation has become an enormously unstable situation.
The wages double over a decade or whatever.
And that is really confusing to everyone and all the money that was put into place assuming particular rates of interest or inflation, that all gets screwed up and massive amounts of capital get wasted.
Burned up, blown up.
So what happens is you actually end up, I would argue, and who knows what the actual numbers are, but I would imagine that it's pretty close to you end up with less because a whole bunch of wages are going up and a whole bunch of capital is being misallocated, which means less growth, less productivity. So relative to if wages had simply accumulated as a result of greater investment in human capital, you end up with this completely messy hodgepodge.
Where people's salaries might have actually gone up 50% over 10 years, they actually have lost money.
This really has been the case, even with all the prop-ups and all of that, with all the deficit financing and all the rejigging of interest rates and all that.
Wages have stagnated and declined since the late 1970s.
So, when you change an effect and not a cause, when you raise wages rather than invest in increasing human capital, well, a whole bunch of demons are pried out of Pandora's box.
And people end up, you know, you're caught in a vicious cycle.
Like, if you steal everything, you end up less able to work and more competent at stealing.
Or you end up with a prison record and therefore less able to work and more, you know, your social circle.
You end up greasing the wheels of immorality.
Of entitlement, of desperation.
And so when people start to take this path, well, they just say, oh, good.
The devil's going to offer me double my wages in 10 years or, you know, 20% more next year or whatever.
I'll take it. Well, you set into motion a vast array of events, right?
So all the capital that was going to be used to actually increase your salary through either training you or investing in machinery or whatever it was, investing in getting cheaper raw materials through some sort of automated process of mining or extraction or whatever it is, all the capital that was going to – a whole bunch of the capital investing in getting cheaper raw materials through some sort of automated process of mining or extraction or whatever it is, all the capital that was going to – a whole bunch of the capital that was going to be used to actually increase your wages is now burned up and destroyed because inflation and interest rates have made
Which doesn't do anybody any good.
So all of this stuff occurs.
Thank you.
And it's really, really not good.
And because the prices of everything are increasing, I mean, why was it that Nixon had to impose wage and price controls?
Well, a lot of it had to do with the massive unionization of the public sector in the 1960s.
Which, as Rothbard has pointed out, and I've said before, should never have happened according to Left-wing theory, right?
You should never need to socialize or unionize the public sector because the public sector doesn't have a profit motive.
But, you know, the termites that promise heaven and deliver long-term hell to the workers jump from the private sector when they destroy those companies to the public sector, where they're busy destroying that, too.
So, when all these prices go up, everybody needs...
More union activity.
Violence is a drug. It creates a vacuum.
It fundamentally alters everything.
And unless you stop really quickly, you end up permanently addicted.
So all the union workers say, well, I want more money and the union's going to give it to me and they're going to use the power of the state to enforce a monopoly and they're going to use the power of the state to ban imports and they're going to use the power of the state to force my employer to deal with me and all these kinds of things.
And do all that. Then your wages go up and your productivity declines and all that kind of stuff because of the things we've just talked about.
And what happens then? You're like, man, there's a lot of inflation.
I better get me some more raises.
I'm going to feed this fire I'm not aware that I'm feeding.
So you go to a union, union promises, wow, yeah, look, there's all this inflation because the capitalists are greedy.
Keep raising prices. Those rat bastards.
I hate raising prices.
I really do. Unless I could clearly show that there was more value.
Raising prices is not fun.
You understand, raising prices is about as much fun as cutting wages.
And... So they say, well, we need more raises because the price of everything is going up, so you get more wages, the price of everything keeps going up, there's further misallocation of capital, and then there becomes a sort of business paralysis, or regime uncertainty, they call it, which is currently happening under the regime of one B. Hussein Obama, which is businesses that are just sitting on money because Obama's government is producing like 60 new regulations a day and nobody knows what the hell's going on.
So they're not going to make investments because they know that the current system is unsustainable and very large changes are going to have to be made.
But let's look at two other effects that occur when you get an artificial wage increase among tens of millions of workers.
The first, of course, is that the government and force as a whole is very adept At doing something that the thief doesn't have to do.
I mean, the thief is just an incompetent government.
Now, the government is very adept at giving you something now and having the domino effect of whatever it gives you now take away everything later.
Now, the giving now, it's like, it's exactly the Dr.
Faust's story, right? Where a man sells his soul in return for money, wealth, and power.
So you get all this stuff in the here and now, and what happens is you lose your soul in the future.
I mean, this is a metaphor for statism, or cons as a whole, but statism fundamentally in that.
So if you're some 50-year-old worker, and you make a deal with the government to get double your wages before you retire, and then Healthcare and pensions and benefits and all that kind of stuff.
But then you're dead by the time the bill comes due.
By the time the economically crippling effects are everywhere.
And the young, of course, the next generation pays.
But people don't make their decisions based on that.
I mean, this is the whole problem of statism.
It's that you're asking people to be far more virtuous than we may ever be capable of being.
Because people take what they want, and then they make up a story about why it's virtuous.
I paid into the system.
I'm entitled. It's in the contract.
It's in the union contract. I'm a working man.
You're a greedy capitalist Wall Street pig.
And this is how it goes.
It's terrible. Terrible.
But people are not going to say, no, I am not going to get...
Double my wages, massive pensions and benefits and all that.
I'm not going to take that now because the children of strangers will be inconvenienced in 30 years.
Right? That's just not how it works.
Especially when people...
I mean, I think deep down everyone gets that you get something for nothing and there's a price.
We all... There's tons of stories about that.
You think something's free, but it's not.
But when everyone's telling them that they're entitled and that they deserve it and that they're worth it and all that kind of L'Oreal bullshit.
So nobody... Almost nobody is going to make a decision called, I will reject massive increases in wages and salary in order to help protect the potential economic interest of children 10 years away from even being born yet.
That's asking for too much of an abstract dedication to principles, and that would actually be kind of weird.
You know, from a mammalian standpoint, from a resource acquisition standpoint, that would be kind of weird.
A weird kind of self-sacrifice.
But there are huge effects when people take this unearned stuff, and very few people can connect these dots.
Hey, maybe I can't either, but these are my thoughts on the subject, and I think that they're worth having a listen to, because I think it explains a lot about why the world is the way it is.
So the two effects of unionization, I would argue, are...
I mean, the two ones that aren't talked about very much, are...
Foreign trade and immigration.
Now, when you create an artificially high wage through the state, then you create an implicit demand for an artificially low wage to compensate.
I mean, we all get this, right?
So, if everybody got double their salary...
It would be worse than meaningless.
I mean, obviously it would be meaningless like the price of everything just doubles, but that's not the reality.
The reality is that if I just tickle some guy, then he laughs.
But if I tickle some guy juggling a bunch of knives, then that's quite different, right?
And changing economic...
The effects through force means that all of the contracts and the balls that are in the air and the assumptions and the investments and the approaches taken and the R&D, it all gets blown up.
And because it all gets blown up, uncertainty and fear and anxiety grips the investment population and so on.
So when you change effects, like if you doubled everyone's salary, it would be worse than useless.
I mean, obviously it would be useless for inflation, but because it would just blow up 90% of what had been planned.
And that effect would be to cause regime uncertainty, investment paralysis.
And that's really important to understand.
You change the effects, it's not revenue neutral.
It's a huge net loss, but that net loss takes a long time to show up.
And it's also invisible.
People stop investing in R&D. You never know the products that would have been developed otherwise.
If the government had nationalized telecommunications in 1979, and we never had cell phones, we wouldn't be sitting there reaching for our pockets saying, damn, there's no cell phone there.
Damn, there's no internet.
We wouldn't know what was missing. So the effects take a long time to be shown, and the effects are in things that aren't there which can't be quantified and remain invisible to most people.
People didn't wake up in the Middle Ages saying, damn, I can't believe I don't have a car.
This guild union control of the economy.
We've been down this road so many times before.
So sad. So sad.
Let's get something for nothing.
And I can't really blame people for it.
I mean, how do you say no? I mean, Ayn Rand took Social Security and Medicaid or whatever it was.
I mean, it's hard to say no to free stuff.
And expecting people to say no to free stuff, which is really statism, is never going to happen.
Never going to work. So, what happens is you create, when you create artificially high wages, you create a vacuum in the state which requires artificially low wages to cover up the inflation.
This is really, I mean, you can't understand immigration, particularly illegal immigration, without understanding the effects of unionization.
Whatever it is that artificially increases people's wages.
You can't grasp immigration without grasping artificially high wages.
Because if you don't get people to come in and work for artificially low wages, to counteract the inflation being generated by the artificially high wages, Then the artificially high wages are very quickly revealed as delusory bullshit.
Right? So, if you can't get illegal aliens to pick your fruit, but rather you would require unionized People to pick your fruit.
Then the price of fruit would be like three or four times what it is, and then all the wage gains, quote, wage gains of the union movement would be revealed as fraudulent.
And the wage decline, the wage stagnation and decline would begin almost immediately.
So if the real effects of artificial wage increases were allowed to ripple through the economy, then the lie of artificially increased wages would show up very quickly.
The long-term effects would take, you know, the reduced R&D regime uncertainty and so on would take longer and would be visible to most people.
Because you can't prove it, are you?
Amen.
You look at the FDA, you can't say, well, there'd be a cure for your liver disease for sure if there hadn't been an FDA. You can't prove that.
So you create a vacuum for low-wage workers.
Now, unions, of course, are constantly trying to target low-wage workers and give them this Faustian bargain of high wages.
But the more they do that, the more they drive the state to want to or to need low-wage workers in the mix.
If everyone was unionized, then there would be no benefit to being unionized, and the lie of artificially increasing your wages would be revealed very quickly.
But if you can let some people be unionized, and then you can find lower-wage workers to bring goods in, then the Artificially increased wages can seem to be sustainable for a longer period of time.
Certainly not for very long, a decade or two, but it can sustain that in the same way that Everybody loves and praises the teachers because they don't get hit with a bill when the teachers' salaries go up.
That's the basic equation.
People can afford to love and praise the teachers because when the teachers get a 10% raise, it's not like you get a 5% raise in your property taxes.
And it's not like the teachers...
So what happens is the teachers get a raise and the government prints for taxes and it's never direct, right?
There's no direct correlation.
And so you can afford to have all of this sentimentality because the direct costs are never visible.
If the direct costs were visible, then people might say, well, wait a minute, I'm paying 10% more for my teachers, but I'm not getting any better returns.
In fact, the results of the children's test scores are going down.
So that's not good.
And so the reason that people can have all this sentimentality about public sector workers is for the simple and obvious reason that it's deficit financing and money printing and the postponement of the true costs of public sector workers to retirement.
which is decades away from most of the politicians and union workers who are negotiating those contracts.
So, when you artificially increase a large section of workers' wages, you create a vacuum which, to sustain the illusion that they're actually making more money, it creates a vacuum which needs to be filled by lower-wage workers.
And those lower-wage workers occur in two ways.
One is through foreign trade, and the other is through Off the book, illegal, under the table, immigration.
If you don't have access to those two things...
So you notice, of course, that free trade is pursued by governments that have recently increased union wages, particularly in the public sector.
And they do that so that they can shift...
The agony to the least wealthy, most vulnerable among us, right?
So the only thing that is keeping inflation from exploding is the fact that electronics are being put together by serfs slash slaves in China and other places where you can get a 12-year jail sentence for even trying to form a union.
So the relative wealth of the Western worker is only sustained by a predation upon migrant workers, immigrants, and a predation upon underpaid workers overseas.
And that's what happens when you screw with an effect rather than creating a cause, when you raise people's salaries without increasing them.
Their value, then prices go up.
And how are you going to prevent prices from going up?
Well, of course, the government can prevent prices from going up by causing deflation.
The government doesn't want to cause deflation.
Of course, right? And this is why governments will continue to pursue free trade agreements with poorer countries.
And also...
Why governments will not act very strongly against illegal immigration.
So what's funny, of course, is that the sort of lower middle class, the typical union guy is like, I'm union, I'm worker proud, and he's against illegal immigration.
But of course, he doesn't, nobody connects these dots for him.
But the reason that illegal immigration is necessary and not acted against very strongly by the government It's, of course, partly because of the Latino vote in the U.S. and other ethnic votes and so on.
But fundamentally, it's because...
I'm not saying everybody gets this consciously, but, you know, we have amazing economic engines in our head.
Even if we've never studied a day of economics, that's been fairly well established.
But it's fundamentally because they know that if they can't find a way to keep the prices down to compensate for the inflation caused by artificially high wages, if they can't find a way to keep those prices down, Then they're toast.
That's really important to understand.
And so everybody who's...
Because in the left you tend to be...
The lefties tend to be sort of pro-union and also against the exploitation of foreign workers.
And these two are incompatible.
You can't be pro...
I mean, I don't mean pro-union like, you know, voluntary thing.
I mean, pro sort of government-controlled government-forced unions, not voluntary unions.
You can all get together with co-workers and threaten to quit if you don't get improvements.
That's fine. But when you gain the government monopoly in the public sector and so on...
So you can't be pro-government union...
And against the exploitation of foreign workers, because the two go hand in hand.
You can't give increased wages to one person without suppressing wages to other people.
And you can't directly suppress wages in your own country, because that will cause all the lefties to scream, but you can...
Sort of give soft permission to illegal immigrants, and you can create free trade, quote, free trade agreements.
I mean, they're not really free trade, right? A free trade agreement is repealing laws.
It's not, like, I think the free trade agreement between Canada and the U.S. was 2,500 pages long.
That's not a free trade agreement.
That is just another bunch of crappy-ass government regulations.
But... These things are all sort of put hand in hand.
The other thing, of course, that happens when you increase people's wages artificially is you draw in less competent people into those positions.
Right? So nobody's trying to unionize the board of Microsoft or Apple.
I mean, these companies, or Google, these companies are worth a lot.
And... Those people know, of course, they don't need...
They have stocks and massive salaries and golden parachutes.
They don't need a union to negotiate wages on their behalf.
So once you artificially raise wages, you draw people into that profession who will be satisfied with having other people negotiate on their behalf and who want more than they can get, right? So like that they could get in the free market.
In other words, less confident people, less confident people.
And this, of course, is pretty key when it comes to understanding why quality has just kind of declined, particularly in the public sector.
I mean, teachers obviously used to be better.
I mean, they were better in the free market and then they were better in the public sector before everything got unionized and you couldn't fire anyone anymore.
But now, the only people who want that kind of Permanent job.
The only people who want that kind of security are people who are insecure, are people who don't feel that they have the capacity to create value in the long run under their own recognizance, so to speak.
Those people are drawn to particularly in the public sector.
So, I mean, less competent people are drawn to these kinds of environments.
And that, of course, creates a huge problem as well.
Again, that further drives down the value and it draws the worst people to, in many ways, the most necessary occupations.
Anyway, that's it for my thoughts about unionization.
Please, this is all just hopefully semi-coherent rambling if you have facts, pro or I just want to reiterate that people don't misunderstand my union position.
I'm entirely for fighting bad capitalists with voluntary association.
I think that's great. I think that workers should try and do that if they can.
I think it's a very powerful thing to do.
I think it's important to sort of understand that Uh, unions, you know, the modern unions, they don't really want worker-owned stuff, right?
Because, um, I mean, they were offered, uh, I think, uh, they were offered, uh, in, um, the Hostess case, they were offered 25% of the company and, uh, I think with GM as well, they offered, offered the company and so on, but they just didn't, uh, they didn't want to take it because, you know, that's too much like, uh, like working for a living.
Yeah, so that's it. Uh, sorry about that.
Uh, So that's it.
Thank you very much. As always, freedomainradio.com forward slash donate if you would like to help out with the conversation.
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