In order to achieve the widest possible distribution of political power, financial contributions to political campaigns should be made by individuals and individuals alone. I see no reason for labor unions—or corporations—to participate in politics. Both were created for economic purposes and their activities should be restricted accordingly.
Economic Freedom. Americans have been much disturbed in recent years by the apparent power of Big Labor to impose its will on the nation’s economic life whenever the impulse strikes. The recent steel controversy, and the terms of its settlement, are the latest illustration of Labor’s ability to get its way notwithstanding the cost to the rest of society. When the strike began, neutral observers—including government economists normally friendly to the unions—agreed that the Steel Workers’ wage demands were exorbitant and would inevitably cause further inflation; and that the steel companies were quite right in insisting that certain “work rules” promoted inefficiency and retarded production. Nevertheless, the steel companies were forced to accept a settlement that postponed indefinitely revision of work rules and granted a large portion of the union’s wage demands.
The reason the union won is quite simple: it posed to the country the choice of tolerating stoppages in steel production that would imperil national security, or of consenting to an abandonment of the collective bargaining process. Since neither the steel companies nor the country at large wanted to resort to compulsory arbitration, the alternative was to give the unions what they asked. In this situation, the only power superior to union power was government power, and the government chose to yield.
One way to check the unions’ power is for the government to dictate through compulsory arbitration, the terms of employment throughout an entire industry. I am opposed to this course because it simply transfers economic power from the unions to the government, and encourages State Socialism. The other way is to disperse union power and thus extend freedom in labor-management relations.
Eighty years ago the nation was faced with a comparable concentration of economic power. Large corporations, by gaining monopoly control over entire industries, had nullified the laws of competition that are conducive to freedom. We responded to that challenge by outlawing monopolies through the Sherman Act and other antitrust legislation. These laws, however, have never been applied to labor unions. And I am at a loss to understand why. If it is wrong for a single corporation to dictate prices throughout an entire industry, it is also wrong for a single union—or, as is the actual case, a small number of union leaders—to dictate wages and terms of employment throughout an entire industry.
The evil to be eliminated is the power of unions to enforce industry-wide bargaining. Employees have a right, as we have seen, to select a common agent for bargaining with their employer but they do not have a right to select a national agent to bargain with all employers in the industry. If a union has the power to enforce uniform conditions of employment throughout the nation its power is comparable to that of a Socialist government.
Employers are forbidden to act collusively for sound reasons. The same reasons apply to unions. Industry-wide price-fixing causes economic dislocations. So does industry-wide wage-fixing. A wage that is appropriate in one part of the country may not be in another area where economic conditions are very different. Corporate monopolies impair the operation of the free market, and thus injure the consuming public. So do union monopolies. When the United Automobile Workers demand a wage increase from the auto industry, a single monolith is pitted against a number of separate, competing companies. The contest is an unequal one, for the union is able to play off one company against another. The result is that individual companies are unable to resist excessive wage demands and must, in turn, raise their prices. The consumer ultimately suffers for he pays prices that are fixed not by free market competition—the law of supply and demand—but by the arbitrary decision of national union leaders. Far better if the employees of Ford were required to deal with Ford, and those of Chrysler with Chrysler and so on. The collective bargaining process will work for the common good in all industries if it is confined to the employers and employees directly concerned.
Let us henceforth make war on all monopolies—whether corporate or union. The enemy of freedom is unrestrained power, and the champions of freedom will fight against the concentration of power wherever they find it.
VII
Taxes and Spending
We all have heard much throughout our lifetimes, and seen little happen, on the subject of high taxes. Where is the politician who has not promised his constituents a fight to the death for lower taxes—and who has not proceeded to vote for the very spending projects that make tax cuts impossible? There are some the shoe does not fit, but I am afraid not many. Talk of tax reduction has thus come to have a hollow ring. The people listen, but do not believe. And worse: as the public grows more and more cynical, the politician feels less and less compelled to take his promises seriously.
I suspect that this vicious circle of cynicism and failure to perform is primarily the result of the Liberals’ success in reading out of the discussion the moral principles with which the subject of taxation is so intimately connected. We have been led to look upon taxation as merely a problem of public financing: How much money does the government need? We have been led to discount, and often to forget altogether, the bearing of taxation on the problem of individual freedom. We have been persuaded that the government has an unlimited claim on the wealth of the people, and that the only pertinent question is what portion of its
