Labor Day? Happy Means of Production Day

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Praise Capital

Labor Day is the day Americans proudly proclaim labor the force which made America great. Sounds great and we get puffed chests thinking about the laborer. Between TV and social media, memories of high school history, and our friends, there is a lot of boasting.

What is almost certain is the impressive amount of news stories and social media posts are boasting wrong information spouted as fact about why labor is so very important and is the backbone to the American experience and all her grandeur.

Well, I’ll allow that labor played a part. But a far smaller part than the fans of labor, which will also mean fans of unions, will think right.

In his article, “Why Not Capital Day,” economist Scott A Kjar writes how labor was made faster and more efficient with capital goods.

Capital goods for us will be those items that help make production faster and more efficient with less labor. So, as Kjar points out, think of the first farmer poking holes in the soil with his finger then graduating to a stick. That stick is a capital good. Find a way to make 5 sticks poke 5 holes with the effort of making 1 hole and you are on your way to increased seed planting.

We can see the same kind of advancement play out with farm tools to the tractor. The horse and buggy became the automobile to transport goods. There are more and more examples of capital goods making production faster and efficient, both in business at in the house. Clothing and dishwashers are two such examples. More machines meant more goods or more leisure, lowering the prices and further innovation or improving the quality of life.

But, the workers

Capital goods are fine, a skeptic might say, but machines don’t have families to feed or bills to pay. Labor is people and the people have to be protected.

This idea that people need protection is a good one. Let’s stipulate that here, protection means a guarantee to the job that the worker currently holds.

When the worker finds the terms of employment unsatisfactory, he can quit, speak to the boss about how to fix the issue, or suck it up. Those three options seem the most likely and least esoteric.

Part of our challenge in this scenario is the labor/management discord. Labor can quit and that’s a pinch on both the worker and the boss. Labor can bargain for a better deal. Or, labor can stick it out and see what comes.

As it is, all of this is voluntary and each party, regardless of the outcome, agrees to a condition and accepts the terms of that outcome.

The Third Party

Enter a union, which says no. No, you cannot accept those terms and, in fact, we say you must strike because you deserve a better wage, job, working condition, benefit, something. So, labor strikes.

A few things happen. Labor might not be earning a check since labor is not working. Management is not making money, or as much, since production is not at peak. And here’s the rub in the third, the so-called scab. This laborer is willing to do the work for a rate. That rate is more than $0.00 and that’s a step up from sitting at home not working.

We’ve seen this play out in real life enough times to know what happens next. The scabs are at least called names but some have been killed.

The union, so concerned for their ranks of men, see this unaffiliated laborer not as a laborer. He is, in this scene, hardly even a human. He’s taking our job, they might say, and for that deserves a baseball bat to the head.

Wrong. It was not the striker’s job. It was the employer’s job and the employer may “give the job”-the wage-to whomever he decides. The union, which is ultimately picking winners and losers by the application and membership process, excludes those laborers it finds unacceptable.

This is an interesting point. The union has excluded certain men from work. During a strike, these men return to the plant willing to work the job the union deemed them unfit to perform.

Unions are not all that

The union brings a variety of problems and most salient to this issue is that it has no part in producing wealth or efficiency of production.

In fact, in some cases, the unions have destroyed the product, the property of the vendor, or killed the customer-the New York Daily News strike and the Greyhound strike, respectively.

That unionized labor is so willing to harm non-union workers, vendors of the product or kill customers of the service, why does labor still hold so vaulted a place in history?

Let’s put production back on top

Taking the farmer of old with a horse and hand tools we can imagine the amount he can harvest, transport to market, and earn is restricted entirely by how much he alone can work, haul, and sell. Even the most efficient man has limits.

Introduce a tractor and a truck and that same one farmer can tend substantially more land, haul more product to markets further away and earn more for the greater quantity.

The one farmer and his tractor may have replaced 10 men and 10 horses. Excepting the initial expense of the tractor (the horse is not free of costs) the farmer can tend more and earn more at less cost.

Transfer that concept to clothing or automobiles or cell phones or any product purchased from a factory that employs machines. Production is increased, costs are decreased and more customers can purchase the goods.

Profit as a 4-letter word

Does the businessman wish to make a profit? Of course. Does he wish to make more profit next year? Almost certainly. To do that, he must invest the profits into more or better machines, more production facilities or more transportation. At the minimum, he must keep the machines operating by preventative maintenance. For daring to keep profit after all expenses and liabilities are paid some will call him greedy.

When the consumer shops prices and buy functionally the same item for less, that’s greed, too. Keeping more money in our pockets as customers is how we shop. Those low prices are possible, Automation, not labor, increased supply, and lowered the price.

What’s old is new again

Bernie Sanders once proposed a new plan which would, in part, make it illegal to hire non-union workers during a strike. This is not his idea, but one which has been tried before. In fact, very little of his plan seems to be actually his plan.

Forced union membership with higher union wage rates, increased benefits and perks means higher prices for goods at purchase. No one is opposed to the right pay for the job and benefits and perks as possible, but mandating them by force of a legislative gun makes only one group better: the politicians.

To paraphrase from Tom Woods’ book, if, as the critics might note, the unions help pay, how do we account for the workers before 1938 earning anything at all? If the unions save the laborers wage, how do we explain businesses paying their workers at all?

The irony of not laboring on Labor Day

Laborers labored yes, but labored increasingly with machines and better tools. Labor Day might be more aptly called Means of Production Day.

This Labor Day enjoy your day off from work. If you think about why you are not paid today instead of grilling lunch and watching college football, remember it was innovation and automation which made such amazing things as Weber grills and charcoal briquettes and a cold bottle of brew so easy to purchase and for such a good price.  As you labor over your grill, pull weeds and harvest tomatoes from the garden-for free-remember the irony of today, Labor Day, you are laboring for no rate.

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