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Stock Market Trend Forecast March to September 2019

Unions - Another Form of Collectivism Gone Awry

Politics / Social Issues Oct 23, 2012 - 06:32 AM GMT

By: Jeff_Berwick


Best Financial Markets Analysis ArticleAs the snow already has begun to fall across much of the expanse of Canada, the weather has settled into a deep freeze (-20C, -4F overnight in Calgary this week) and the sun shrinks into the distance, a faint light mocking you for living so far away from it, there is usually one thing that makes living in North America's version of Siberia possible.  Hockey.

While I comfortably watch the sport from my outdoor living room on the beach in Acapulco most Canadians have to slog through the snow and mud for eight months of the year just to get a few hours of live entertainment.  But this year the NHL has locked out the players in a dispute over salaries.  If they can't come to an agreement soon it threatens to wipe out the entire season.

You may think this is a rarity, but in fact this happens quite a bit.  There was a player's strike in 1992, a lockout in 1994-1995 and in 2004-2005 the entire season was lost over another lockout.  In my opinion, the biggest problem is unions.

Collectivism in almost all things is usually a bad thing and with the most recent NHL lockout, it is once again rearing its ugly head.

To briefly give a summary on what has been going on: the game of hockey has been on a massive upswing over the last few decades.  A look at the salary cap increases in just the last few years shows that the total paid to players has nearly doubled in the last 8 years.  And that was after rising tremendously during the '90s as well.  To show the difference, Wayne Gretzky, the best player to ever play the game, made $1.7 million in 1990.  Today, the top paid player is Shea Weber at $14 million.  Even allowing for inflation and decreases in real purchasing power, this is a tremendous increase.  According to official figures, a basket of goods that cost $100 for Gretzky in 1990 costs about $155 today or about 50% more for Shea Webber who is earning over 700% more money.  Bobby Orr, who was the top player of his day in the 1960s made $35,000/year in 1967! That's not even a quarter million dollars today and would have been less than the equivalent of a tenth of Gretzky's salary in 1990.

So, with the total amount of money in the game at massive levels relative to a few decades ago, why can't they seem to get along?  If you can believe it, this whole dispute has come down to the owners wanting the players to take a pay cut of 12%.  How can a dispute over 12% of pay turn into an entire hockey season lost?  Collectivisim!

While I have no problem with people entering into voluntary groups that pretend individual abilities and motivations don't exist... I still think it is pretty stupid to do!  And the NHL lockout just adds to my argument.  An entire season, and nearly $1.8 billion in total salaries may all go to waste fighting over a 12% pay cut.  This would obviously not happen without collectivism.  If each player considered himself to be a literal "free agent" and private contractor, then each of them could individually decide, when approached by the owner, whether they want to take the pay cut or decide not to play.  Not many people individually would decide not to play over such a relatively small amount, but in unison, and with union "bosses", anything is possible!


As often is the case in the increasily socialist and economically illiterate West, much of the public blames the "greedy owners".  But perhaps the funniest comment I saw posted on a newspaper website in relation to the lockout was one man who stated with conviction, "The players should just start their own league!"

Of course there is absolutely no chance of the players starting their own league.  That would take a lot of capital, a lot of work and a lot of risk to do.  You know, the things those greedy capitalists do.  I doubt there is one player in the entire league who would be willing to forfeit his salary every year in order to "invest" it in his own team and to pay everyone's salaries.  18 of the NHL's 30 teams lost money last year... that's a better than 50% chance of losing money.  Anyone want to risk their salary on a coin flip?  I didn't think so.


Of course, while private unions are mostly terrible there is something even worse.  Public unions!  And I had the pleasure of working within one at the tender age of 18.

Public unions are ridiculous because the whole concept of unions, according to mostly leftist leaning statists, is that capitalism is evil and the workers/labor must band together or they will get taken advantage of and "exploited".  But these same people also say that the reason we need government is because we also cannot allow the markets to be free (capitalism) so we need government to keep greedy capitalists in order by making all kinds of rules and regulations.  But, if that is what they really believe, then they should never believe in a public union because the workers work for the government... and according to them, government is good and is actually there to make sure companies don't take advantage of their workers.  So, if those people believe in public unions, then they are saying that the government doesn't work to protect workers... so why have it?

After I finally escaped from high school after my 12-year sentence my Dad thought he was doing me a favor by helping me get a job with the city in the mail department.  It was only my second week when I proudly walked into the manager's office to let her know I had already found tons of areas of wastage that could save the department a lot of money.  In fact, I told her, she probably only needs maybe 2 or 3 people out of the 15 total who worked there.  She did agree that someone would have to go.  It turned out that person was me for trying to improve the productivity of the mailroom!

I was happy to go.  Working inside a union was like living in the Soviet Union.  I'd ask, "So, what can I do to get ahead?  Take some courses?  Work harder?" to which the reply was always a negative.  The only way to move up, make more money and have more responsibility was just to be there the longest.

Around the mailroom no one ever seemed happy.  They were just putting in their time and waiting for their retirement pension.  There was no incentive to work hard... and even if you wanted to, you'd feel like a fool for doing it because the guy beside you who does nothing will make the same or more than you just because he had been there longer. 


In the end, unions are about gangsterism and price-fixing.  Unions get the state to help force workers into the union collective by making it a condition of employment and thus give up their individual ability to contract with the employer.  Unions then get the state to interfere with negotiations between the mob of employees and the employers.  The employers lose the right to fire outright the mob of unruly workers when they throw tantrums and refuse to work.  Striking workers can refuse to work as they parade around in picket lines...then expect the employers to take them back with their deliberately unreasonable demands met at least halfway. 

Unions also demand compensation above what the market says their labor is worth.  This is supposed to be to combat the "greed" of the employer, but it just ends up making things more expensive for customers and worse for other non-union workers.

As TDV senior analyst Ed Bugos points out:

"Basically, Rothbard calls unions an instance of a labor 'monopoly'.  In a nutshell they can't raise living standards, even by force.  All they do is force unemployment, and wage violence against their competition.  This causes the displaced labor to depress wages in other industries where unions don't have power, which displaces more workers, etc."

And with union "protections" in place, you can rest assured that incentive to provide quality will be less services and finished goods will be of lower quality than they would without the unions.  In short, unions are a bunch of thugs with state guns who abuse customers.  They are not protectors of the working poor.  Anyone who's spent time as a union employee, especially during a labor strike, can attest to this. 


A freed market is going to naturally encourage "workers" to see themselves as independent contractors, not part of a violent, crybaby mob demanding more than the prevailing market rate for their work and using the state to help them get it.  If you felt an employer weren't paying you enough or treating you'd find another employer.  Remember that this is a voluntary economic relationship goes both ways and the employer isn't a parent.  You are free to find someone else with whom to exchange value (service for money).  And finding someone else with whom to exchange value shouldn't involve having your whole life turn topsy turvy because your employer is tied to you with various insurance plans and "benefits"!  Unionism is an outgrowth of a childish, slave mentality, or more accurately somewhere between slavery and childhood dependence.  The union member wants to the right to act up, yet still be coddled, no matter how much they insist they just want what's "fair" and "diginified".  It's the way a spoiled adolescent would understand how to earn a living.  If they wanted dignity and fairness, they'd put down the state guns and try to create value as best they could and change their economic relathionships when they deemed it necessary.

Again, Ed Bugos (who contributes to the TDV Newsletter):

"Like minimum wage laws: unionism hurts the people that it is apparently intended to help the most.  It slows progress and change.  It keeps people lazy and keeps them from finding better jobs because the price mechanism is destroyed."

Of course, most modern-day Americans or Canadians can't imagine working in a real free market.  They either want to be in a union getting paid unfairly high rates backed by violence...or they want to be corporate drones who depend on their employer for stability and various benefits.  Dependence and violence.  That's how they view the working world.  But it's not entirely their faults.  They are in a sense victims of a system that robs them of at least half their income while robbing them of what's left through inflation and economic regression.  They are indebted and scared and can't imagine being able to act like independent adults when it comes to employment.  Truly sad.  It's the rare person who doesn't think like this nowadays.  These people tend to be entrepreneurs or if not true entrepreneurs, at least they are very anarcho-libertarian or voluntaryist in their outlook.  They're the kind of people for whom we write our weekly newsletter.  We really don't know if there are enough of these folks left in the USSA --or even the world-- to prevent general economic collapse, but we aim to make sure that no matter what calamity befalls the world, folks like these get every advantage to thrive no matter what


Jeff Berwick

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2012 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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