From: MEDELMA@cms.cc.wayne.edu (Michael Edelman)
Subject: Re: The Real Voice of Adam Smith
Organization: Wayne State University, C&IT
Date: Tue, 29 Sep 1992 13:11:53 GMT

In article <1a94hkINN6lk@usenet.INS.CWRU.Edu>
au329@cleveland.Freenet.Edu (Ronda Hauben) writes:
 
>     [quoting Smith]
>  "The proposal of any new law or regulation of commerce which
>   comes from this order, ought always to be listened to with
>   great precaution, and ought never to be adopted till after
>   having been long and carefully examined, not only with the
>   most scupulous, but with the most suspicious attention.
>
>Smith explains why he says this:
>
>  "It comes from an order of men, whose interest is never
>   exactly the same with that of the public, who have
>   generally an interest to deceive and even to oppress
>   the public, and who accordingly have, upon many
>   occasions, both deceived and oppressed it."
>     Wealth of Nations (Modern Libary Edition) p. 250
>
 
What Smith is talking about here is the government acting in a way
so as to interfere with a free market. His interest in writing The Wealth
of Nations was to explain why the contemporary Mercantilist theory was
insufficient to explain the wealth of Holland. He realized in a way that was
not formalized until the latter twientieth century that monopolies cannot
exist without government intervention, and that some sought the intervention
of the state to create these monopolies for personal interest.
 
>Smith, on the contrary, maintains, that workers have the SAME INTEREST
>as the public and thus his interests should be supported by the public.
>Smith writes:
>
>  "The interest of the second order, that of those who live by wages,
>   is ...strictly connected with the interest of the society."
>               (Ibid., p. 249)
>
>So Smith differentiates between those class interests which benefit
>the public and those which don't and he finds that the interests of
>workers benefit the public and the interests of employers most often
>don't.
 
I don't think so. You're trying to rephrase Smith into endorsing a Ricardian
view he did not subscribe to.
>>
>
>The National Labor Relations Act was not, as far as I understand it,
>a minimizing of government interference, though that is the
>current trend of nonenforcement of the law that it carries out.
>To the contrary, it was the government interfering in the right of
>employers to create company unions, to pay the union dues of their
>workers, etc.
>
>Such government interference is very much needed or it is impossible
>for workers to have UNIONS that are other than COMPANY UNIONS.
 
Untrue. The UAW was organized without government intervention; perhaps
in spite of it. Ford, via influence through corrupt local government,
wielded a tremendous amount of quasi-governmental power, but could not
prevent the UAW from organizing his plants.
>
>When I worked at Ford, my union dues was paid by the employer. I
>took the case to the NLRB and to the State equivalent at the
>Michigan Dept of Labor. The National Labor Relations Act and the
>state equivalents forbid the employer from paying the union dues
>of their workers. This is a significant and important form of
>government regulations. (I was not allowed to pay my own union
>dues and thus I was not allowed to have a union that was other
>than a company union.) The NLRB found an excuse NOT to enforce
>the law. The case has been at the State level (with the Michigan
>Department of Labor) since 1986 and I haven't yet gotten a decision
>from them.
 
You have a conceptual mioosunderstanding. Saying that Ford paid your
dues is like saying Ford paid your income taxes. They distributed money
to you, some of which was redistributed to other agencies. The union dues
were paid directly to the union because the unions in Michigan have privileges
that go far beyond those in most other states. We have "Union Shop" laws
in which employees can be coerced into paying dues even if they choose not to
belong to a union.
 
What you experienced was not undue excercise of power by Ford, but by the UAW.
>
>But the point is that GOVERNMENT INTERFERENCE IS NEEDED FOR WORKERS
>TO BE ABLE TO HAVE UNIONS.
 
Again, nonsense. The historical records says otherwise. However, it is true
that government intervention has been used to force unionization in some
instances where the majority of the workers did not wish to be represented
by a given union.
 
>The relationship between employers and employees is not equal.
>The employer can threaten workers and deprive them of their
>livelihood if they want to stop them from joining unions.
 
And a union can close down a company. The company may not use any
extra-legal means to stop them. The UAW, in particular, has greater
privileges under the law than do the auto companies. It has a near-
monopoly on automotive labor in this country, across all companies.
It has managed thereby to acheive a premium on unskilled labor estimated
at 40-60% over similar industries.
 
>Hence the government has to INTERFERE boldly on the side of workers
>and regulate that the employers DO NOT INTERFERE WITH THE WORKER'S
>RIGHT TO FORM AND HAVE UNIONS.
 
Nope. Nonsense.
>
>As long as the U.S. govt doesn't enforce these regulations (and I
>found that they weren't enforcing them) the right of workers in the
>U.S. to join unions is severely limited. If the worker who wants to
>be in a union is fired once the employer realizes that the worker is
>pro union - there is no right to be in a union. That's what happened
>when I was at Ford. The government still hasn't imposed its force
 
What? Fired from an auto company for being pro-Union? When was this?
1912? The opposite is true today. You can't work for Ford without being in
a union- a union whose monopoly is protected by the government.
 
>letting Ford know that it could not interfere with my right to be
>in a union. The right to belong to unions thus is not available to
>many workers at companies that act to terminate workers when they
>try to form unions.
 
And Ford is supposed to be an example of this? This is a joke, right?
>
>The thousands of pages of testimony at the LaFollette Committee hearings
>     [...]
>It is myth that the marketplace works - it doesn't and Adam Smith
>clarifies that it doesn't.
>
This is a gross misreading of Smith, and a gross misunderstanding of the
history of the labor movement in the US and its position and power today.
Smith was describing how the newly emerged capitalist system, in which people
were free to trade among themselves, was superior to the earlier mercantilist
system, in which the right to engage in a given activity was a monopoly
strictly controlled by the Crown, and individuals were not allowed to contract
freely for their services.
 
The modern parallel is Clinton's plan for an "Industrial Policy" in which
capital markets will be heavily taxed, effectively destroying them, and
the proceeds will be used to attempt to re-create these markets through
government planning. This is what Smith was talking about in the first
quote- the interests of those who would profit by these manipulations, and
the state's interference to benifit a few rather than the many who are
benifitted by a free and open market for goods and labor.
 
Monopolies need two things to exist: A single producer, and high entry
costs. You can have anti-monopolistic market pressures even when there is
a single producer if the price to enter a market is low enough. In that
instance the single producer must keep prices low enough to make the
profit from entering a market below the costs associated with entry.
 
Effectively that means the only real monopolies in the world are those
created by actual physical constraints- the DeBeers Diamond monopoly is
often cited here- or by government constraints. Examples of the second are
public utilities, cable TV franchises and a number of large labor unions.
 
Unions are losing membership today in large numbers. The claim from the unions
is that the government is destroying them, despite the very strong legal
privileges that unions enjoy in this country, such as the union shop
rules mentioned above. The real reason unions are shrinking is that the US
job market has become increasingly skilled in the post-WWII era, and highly
skilled people are far more job-mobile and able to contract individually
for their services. As a systems analyst I do not need a union to protect
my interests- there are many competing firms who would bid for my services.
Nonetheless, because this is Detroit, I pay "agency fees" to the UAW to
represent me!
 
Unions will always be needed for those who having no specific job skills to
barter, but as we move to a more skilled work force the main function of the
labor unions will increasingly be one of obtaining protection for their
members from the increasing competition from the new emerging industrial
nations who are human-capital intensive.
-----------------------------------------------------------------
 Michael Joseph Edelman           Wayne State University
 medelma@cms.cc.wayne.edu         Computing & Information Technology
 mje@pookie.pass.wayne.edu        Detroit, Michigan
 medelma@waynest1.bitnet          (313) 577-0742
 KE8YY
Xref: sparky alt.amateur-comp:68 sci.econ:7955 soc.culture.usa:7627 alt.activism:17184