The Liberal vs Libertarian Healthcare Stalemate

"There are two health policies that liberals and libertarians would both prefer to the status quo. The first is a free market plus redistribution for the poor. The second is bare bones, high-deductible national health care, with a free market for all add-ons.

The reason neither are likely to happen is mistrust. Liberals think that if they sign on for the free market plus redistribution, the redistribution won’t actually happen. Libertarians think that if they sign on for bare bones national health care, the cost will quickly increase." - via Bryan Caplan

Capitalism And Slavery

 

DON BOUDREAUX
DECEMBER 15, 2016
FREE MARKETS & CAPITALISM

Wrongheaded notions about the economy are always in high supply. Most calamitous was the idea that central planning outperforms the market. The pulverizing poverty and tyranny of the former Soviet Union, North Korea, and similar Workers’ Paradises have ended that particular illusion.

Other less disastrous but equally mistaken notions about the economy remain on the loose — for example, that tariffs promote prosperity.

But the most far-fetched myth that I’ve encountered recently is that the wealth of the modern Western world, especially that of the United States, is the product of slavery.

I first encountered this notion during a talk I gave in Toronto. I explained to the college-age audience how extraordinarily wealthy all of us are today compared to our preindustrial ancestors. I wanted them to understand the great benefits of capitalism. During the Q-&-A session, a young woman informed me that the wealth we enjoy today is the product of slavery.

At first I thought she was speaking figuratively, as in “workers under capitalism really are slaves.” Having heard such an argument before, I was half-expecting it. But no. What she meant is that the modern world’s prosperity is the product of the pre-20th-century enslavement of Africans in the Americas.

“But slavery ended in the United States in 1863!” I responded. “Look at all the wealth produced since then — telephones, automobiles, antibiotics, computers. None was built with slave labor.”

She anticipated my response. “Not directly. But the capital that made these innovations possible was extracted from slave labor. The wealth accumulated by slaveholders is what financed the industrialization that makes today’s wealth possible.”

I looked at her in raw disbelief. (Not a good strategy, by the way, for a public speaker.)

Collecting my thoughts, I pointed out that slavery had been an ever-present institution throughout human history until just about 200 years ago. Why didn’t slaveholders of 2,000 years ago in Europe or 500 years ago in Asia accumulate wealth that triggered economic growth comparable to ours? Why is Latin America so much poorer today than the United States, given that the Spaniards and Portuguese who settled that part of the world were enthusiastic slavers? Indeed, the last country in the Americas to abolish slavery was Brazil — in 1888, a quarter-century after U.S. abolition. By American and western European standards, Brazil remains impoverished.

And why, having abolished slavery decades before their Southern neighbors, were Northern U.S. states wealthier than Southern states before the Civil War?

I don’t recall my young challenger’s response. I recall only that I was as little convinced by it as she was by my answers.

The fact is that slavery disappeared only as industrial capitalism emerged. And it disappeared first where industrial capitalism appeared first: Great Britain. This was no coincidence. Slavery was destroyed by capitalism.

To begin with, the ethical and political principles that support capitalism are inconsistent with slavery. As we Americans discovered, a belief in the universal dignity of human beings, their equality before the law, and their right to govern their own lives cannot long coexist with an institution that condemns some people to bondage merely because of their identity.

But even on purely economic grounds, capitalism rejects slavery because slaves are productive only when doing very simple tasks that can easily be monitored. It’s easy to tell if a slave is moving too slowly when picking cotton. And it’s easy to speed him up. Also, there’s very little damage he can do if he chooses to sabotage the cotton-picking operation.

Compare a cotton field with a modern factory — say, the shipyard that my father worked in as a welder until he retired. My dad spent much of his time welding alone inside of narrow pipes. If you owned the shipyard, would you trust a slave to do such welding• While not physically impossible to monitor and check his work, the cost to the shipyard owner of hiring trustworthy slave-masters to shadow each slave each moment of the day would be prohibitively costly. Much better to have contented employees who want their jobs — who are paid to work and who want to work — than to operate your expensive, complicated, easily sabotaged factory with slaves.

Finally, the enormous investment unleashed by capitalism dramatically increases the demand for workers. (All those factories and supermarkets must be manned.) Even if each individual factory owner wants to enslave his workers, he doesn’t want workers elsewhere to be enslaved, for that makes it more difficult for him to expand his operations. As a group, then, capitalists have little use for slavery.

History supports this truth: Capitalism exterminated slavery. 

The Increasing Invisibility of Income Inequality

by DON BOUDREAUX on MAY 9, 2004

Take a thoughtful libertarian and a thoughtful left-liberal for a latte, listen to them converse, and you’ll find agreement on a surprisingly wide range of issues. One issue, though, that will almost certainly not be agreed upon is the significance of income inequality. The left-liberal’s deep concern about this issue, and the libertarian’s (and conservative’s) relative unconcern about this issue is striking.

This issue is too big to grapple with fully over a leisurely latte (or in a blog post). But I here suggest that economic growth, even as it might generate ever-larger income inequality, increasingly renders these same differences in money income or wealth less and less relevant as a measure of differences in quality of life. Some examples:

– Inexpensive consumer electronics enable almost all Americans, even the poorest, to listen at their leisure to the world’s finest orchestras perform great music; contrast now with, say, 1880, when only the relatively rich could afford to hear great music – and only the superrich (by hiring their own chamber orchestras) could enjoy listening to such music whenever they wished.

– Today’s inexpensive Chevrolets and Kias are more reliable and better equipped than were top of the line Cadillacs of 40 years ago.

– Fifty years ago European vacations were a luxury enjoyed mostly by the rich and upper middle classes; today – chiefly because of inexpensive air travel – such vacations are within the means of a much greater proportion of the population.

– The clothing worn by wealthy Americans is virtually indistinguishable from the clothing of ordinary Americans; Bill Gates, Tom Hanks, and Laura Bush are not distinguished from the vast majority of Americans by their clothing. In both quality and quantity, clothing is nearly super-abundant in modern western society.

The further back you go in history, the greater were the material differences that separated rich from poor. Many of these distinctions were evident to the untrained eye (for example, the rich rode in carriages; the poor walked). Fewer of the distinctions today between rich Americans and middle-class Americans – even poor Americans – are as palpable, as salient, as stark, as were the distinctions of generations past.

Bill Gates has many more zeroes in the accounts of his finances than I have in the accounts of my finances. But I don’t see these; no one sees these. What is seen, what is experienced, what is palpable, as differences between Gates’s financial status and that of ordinary Americans is increasingly disappearing.

Blarney

by DON BOUDREAUX on JULY 6, 2005

Dear Mr. Ebnet:

You are "saddened" that Ireland is becoming economically prosperous. No, that’s not quite right (or fair of me): You are "saddened" because Ireland is losing its "identity" as its people cooperate ever more closely with more and more peoples from around the world in a process that improves their standards of living.

The sight of "foreign manufacturing plants" in Ireland burdens you with "oppressive melancholy." You regret that Gaelic is fading today everywhere as a spoken language, save in the western coast of Ireland – the part that remains poorest and that hasn’t yet been much affected by globalization.

You expressly hope that other countries don’t follow Ireland’s recent path, lest they lose their "identities."

Reading your letter reminds me of a conversation I had about five years ago with a friend – a dear and good friend – who just returned from her first trip to Ireland. She was disappointed because Ireland "looks a lot like America."

This American friend of mine wanted Ireland to be filled with cute little thatched-roof cottages inhabited by gentle peasant-folk tending their gardens, feeding their pigs, and looking about merrily in verdant meadows for four-leafed shamrocks. My American friend was appalled that the Irish share her taste for material wealth – for houses with solid roofs – for modern appliances – for automobiles and broad, smoothly paved roads – for shopping centers, airports, fusion-cuisine restaurants, and all the other blessings of a worldwide market.

Of course, my American friend didn’t quite see herself in this way. She simply didn’t see or think. To her – a middle-class American woman for whom material wealth is the norm – the expected opportunity to gaze first-hand upon simple peasants going about their peasant-ways in their peasant-clothes in their peasant-settings was almost something of a right. "How dare they not be as I expect them to be!" was her unsaid theme. "How dare they enjoy similar things to those that I enjoy! How dare their country look like mine! This unexpected set of affairs makes my vacation to Ireland less pleasant."

In other words, this friend of mine – like you, Mr. Ebnet – selfishly wants other people to be museum pieces for her enjoyment. You and she dislike signs of material progress in Ireland because you live in the United States, with ready access to an abundance of material wealth that the Irish are just now beginning to enjoy themselves.

You blithely wish that the Irish had remained poor so that you would have continued, during your visits from America, to luxuriate in their quaint languages and enjoy gazing upon Ireland’s natural vistas unaffected by advanced commerce.

And you want other peoples to reject the wealth that the Irish (and Americans) now enjoy so that they retain their "identities" – identities as poor, peasant-dominated societies.

Why should other people want to make these sacrifices for you, Mr. Ebnet? Are you willing to make like sacrifices for them? Are you, for example, willing to go off to live in the Minnesota woods in an unheated log cabin with no running water or electricity? No car? No supermarkets? After all, I’m sure that visitors to America would really appreciate gazing upon a true American pioneer, living just the way our great-great-grandparents lived.

If you’re not willing to take this step, Mr. Ebnet, please tell me why you expect the Irish and other peoples in places less affluent than the U.S. to do so? Or, at least, please explain why your selfish desires about how Ireland and other countries should look and sound deserve a hearing given that the people who live in these places obviously want more material prosperity.

Sincerely,

Don Boudreaux (whose grandmothers were born Teresa Flanagan and Estella Ryan)

Where Would General Motors Be Without the United Automobile Workers Union?

 04/19/2006 George Reisman

This is a question that no one seems to be asking. And so I've asked it. And here, in essence, is what I think is the answer. (The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I've singled out General Motors because it's still the largest of the three and its problems are the most pronounced.)

First, the company would be without so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do. Without the UAW, General Motors would simply have fired such workers and replaced them with ones who would do the jobs they were paid to do. And so, without the UAW, GM would have produced more reliable, higher quality cars, had a better reputation for quality, and correspondingly greater sales volume to go with it. Why didn't they do this? Because with the UAW, such action by GM would merely have provoked work stoppages and strikes, with no prospect that the UAW would be displaced or that anything would be better after the strikes. Federal Law, specifically, The National Labor Relations Act of 1935, long ago made it illegal for companies simply to get rid of unions.

Second, without the UAW, GM would have been free to produce in the most-efficient, lowest cost way and to introduce improvements in efficiency as rapidly as possible. Sometimes this would have meant simply having one or two workers on the spot do a variety of simple jobs that needed doing, without having to call in half a dozen different workers each belonging to a different union job classification and having to pay that much more to get the job done. At other times, it would have meant just going ahead and introducing an advance, such as the use of robots, without protracted negotiations with the UAW resulting in the need to create phony jobs for workers to do (and to be paid for doing) that were simply not necessary.

(Unbelievably, at its assembly plant in Oklahoma City, GM is actually obliged by its UAW contract to pay 2,300 workers full salary and benefits for doing absolutely nothing. As The New York Times describes it, "Each day, workers report for duty at the plant and pass their time reading, watching television, playing dominoes or chatting. Since G.M. shut down production there last month, these workers have entered the Jobs Bank, industry's best form of job insurance. It pays idled workers a full salary and benefits even when there is no work for them to do.")

Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota. Toyota makes a profit of about $2,000 per vehicle, while GM suffers a loss of about $1,200 per vehicle, a difference of $3,200 per unit. And the far greater part of that difference is the result of nothing but GM's being forced to deal with the UAW. (Over a year ago, The Cincinnati Enquirer reported that "the United Auto Workers contract costs GM $2,500 for each car sold.")

Fourth, without the UAW, the cost of employing a GM factory worker, including wages and fringes, would not be in excess of $72 per hour, which is where it is today, according to The Post-Crescent newspaper of Appleton, Wisconsin.

Fifth, as a result of UAW coercion and extortion, GM has lost billions upon billions of dollars. For 2005 alone, it reported a loss in excess of $10 billion. Its bonds are now rated as "junk," that is, below, investment grade. Without the UAW, GM would not have lost these billions.

Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets. (It believes that $140,000 is less than what they will steal if they remain.)

Seventh, without the UAW, GM would not now have healthcare obligations that account for more than $1,600 of the cost of every vehicle it produces.

Eighth, without the UAW, GM would not now have pension obligations which, if entered on its balance sheet in accordance with the rule now being proposed by the Financial Accounting Standards Board, will leave it with a net worth of minus $16 billion.

What the UAW has done, on the foundation of coercive, interventionist labor legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labor-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations.

Ninth, without the UAW tens of thousands of workers — its own members — would not now be faced with the loss of pension and healthcare benefits that it is impossible for GM or any of the other auto companies to provide, and never was possible for them to provide. The UAW, the whole labor-union movement, and the left-"liberal" intellectual establishment, which is their father and mother, are responsible for foisting on the public and on the average working man and woman a fantasy land of imaginary Demons (big business and the rich) and of saintly Good Fairies (politicians, government officials, and union leaders). In this fantasy-land, the Good Fairies supposedly have the power to wring unlimited free benefits from the Demons.

Tenth, Without the UAW and its fantasy-land mentality, autoworkers would have been motivated to save out of wages actually paid to them, and to provide for their future by means of by and large reasonable investments of those savings — investments with some measure of diversification. Instead, like small children, lured by the prospect of free candy from a stranger, they have been led to a very bad end. They thought they would receive endless free golden eggs from a goose they were doing everything possible to maim and finally kill, and now they're about to learn that the eggs just aren't there.

It's very sad to watch an innocent human being suffer. It's dreadful to contemplate anyone's life being ruined. It's dreadful to contemplate even an imbecile's falling off a cliff or down a well. But the union members, their union leaders, the politicians who catered to them, the journalists, the writers, and the professors who provided the intellectual and cultural environment in which this calamity could take place — none of them were imbeciles. They all could have and should have known better.

What is happening is cruel justice, imposed by a reality that willfully ignorant people thought they could choose to ignore as long as it suited them: the reality that prosperity comes from the making of goods, not the making of work; that it comes from the doing of work, not from the shirking of it; that it comes from machines and methods of production that save labor, not the combating of those machines and methods; that it comes from the earning and reinvestment of profits not from seizure of those profits for the benefit of idlers, who do all they can to prevent the profits from being earned in the first place.

In sum, without the UAW, General Motors would not be faced with extinction. Instead, it would almost certainly be a vastly larger, far more prosperous company, producing more and better motor vehicles than ever before, at far lower costs of production and prices than it does today, and providing employment to hundreds of thousands more workers than it does today.

Few things are more obvious than that the role of the UAW in relation to General Motors has been that of a swarm of bloodsucking leeches, a swarm that will not stop until its prey exists no more.

It is difficult to believe that people who have been neither lobotomized nor castrated would not rise up and demand that these leeches finally be pulled off!

Perhaps the American people do not rise up because they have never seen General Motors, or any other major American business, rise up and dare to assert the philosophical principle of private property rights and individual freedom and proceed to pull the leeches off in the name of that principle.

It is easy to say, and also largely true, that General Motors and American business in general have not behaved in this way for several generations because they no longer have any principles. Indeed, they would project contempt at the very thought of acting on any kind of moral or political principle.

One of the ugliest consequences of the loss of economic freedom and respect for property rights is that it makes such spinelessness and gutlessness on the part of businessmen — such amorality — a requirement of succeeding in business. Business today is conducted in the face of all pervasive government economic intervention. There is rampant arbitrary and often unintelligible legislation. There are dozens of regulatory agencies that combine the functions of judge, jury, and prosecutor in the enforcement of more than 75,000 pages of Federal regulations alone. The tax code is arbitrary and frequently unintelligible. Judicial protection of economic freedom has not existed since 1937, when the Supreme Court abandoned it, out of fear of being enlarged by Congress with new members sufficient to give a majority to the New Deal on all issues. (Try to project the effect of a loss of judicial protection of the freedoms of press and speech on the nature of what would be published and spoken.)

Any business firm today that tried to make a principled stand on such a matter as throwing out a legally recognized labor union would have to do so in the knowledge that its action was a futile gesture that would serve only to cost it dearly. And a corporation that did this would undoubtedly also be embroiled in endless lawsuits by many of its stockholders blaming it for the losses the government imposed on it.

But none of this should stop anyone else from speaking up and making known his outrage at what the UAW has done to General Motors.

This article is copyright © 2006, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author's web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His book is available through Mises.org, Amazon.com, and on his web site. See his Mises.org Daily Articles Archive and read his interview in the Austrian Economics Newsletter. You can contact him by mail. To comment on this piece, go to the blog.

The Real Public Service

The Real Public Service

Thomas Sowell
|
Posted: Jun 01, 2010 12:01 AM

Every year about this time, big-government liberals stand up in front of college commencement crowds across the country and urge the graduates to do the noblest thing possible-- become big-government liberals.

That isn't how they phrase it, of course. Commencement speakers express great reverence for "public service," as distinguished from narrow private "greed." There is usually not the slightest sign of embarrassment at this self-serving celebration of the kinds of careers they have chosen-- over and above the careers of others who merely provide us with the food we eat, the homes we live in, the clothes we wear and the medical care that saves our health and our lives.

What I would like to see is someone with the guts to tell those students: Do you want to be of some use and service to your fellow human beings? Then let your fellow human beings tell you what they want-- not with words, but by putting their money where their mouth is.

You want to see more people have better housing? Build it! Become a builder or developer-- if you can stand the sneers and disdain of your classmates and professors who regard the very words as repulsive.

Would you like to see more things become more affordable to more people? Then figure out more efficient ways of producing things or more efficient ways of getting those things from the producers to the consumers at a lower cost.

That's what a man named Sam Walton did when he created Wal-Mart, a boon to people with modest incomes and a bane to the elite intelligentsia. In the process, Sam Walton became rich. Was that the "greed" that you have heard your classmates and professors denounce so smugly? If so, it has been such "greed" that has repeatedly brought prices down and thereby brought the American standard of living up.

Back at the beginning of the 20th century, only 15 percent of American families had a flush toilet. Not quite one-fourth had running water. Only three percent had electricity and one percent had central heating. Only one American family in a hundred owned an automobile.

By 1970, the vast majority of those American families who were living in poverty had flush toilets, running water and electricity. By the end of the twentieth century, more Americans were connected to the Internet than were connected to a water pipe or a sewage line at the beginning of the century.

More families have air-conditioning today than had electricity then. Today, more than half of all families with incomes below the official poverty line own a car or truck and have a microwave.

This didn't come about because of the politicians, bureaucrats, activists or others in "public service" that you are supposed to admire. No nation ever protested its way from poverty to prosperity or got there through rhetoric or bureaucracies.

It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader.

Those who have helped the poor the most have not been those who have gone around loudly expressing "compassion" for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.

The wonderful places where you are supposed to go to do "public service" are as sheltered from the brutal test of reality as you have been on this campus for the last four-- or is it six?-- years. In these little cocoons, all that matters is how well you talk the talk. People who go into the marketplace have to walk the walk.

Colleges can teach many valuable skills, but they can also nourish many dangerous illusions. If you really want to be of service to others, then let them decide what is a service by whether they choose to spend their hard-earned money for it.

Ending slavery

Thomas Sowell|Posted: Feb 08, 2005 12:00 AM

To me the most staggering thing about the long history of slavery -- which encompassed the entire world and every race in it -- is that nowhere before the 18th century was there any serious question raised about whether slavery was right or wrong. In the late 18th century, that question arose in Western civilization, but nowhere else.

It seems so obvious today that, as Lincoln said, if slavery is not wrong, then nothing is wrong. But no country anywhere believed that three centuries ago.

 A very readable and remarkable new book that has just been published -- "Bury the Chains" by Adam Hochschild -- traces the history of the world's first anti-slavery movement, which began with a meeting of 12 "deeply religious" men in London in 1787.

The book re-creates the very different world of that time, in which slavery was so much taken for granted that most people simply did not think about it, one way or the other. Nor did the leading intellectuals, political leaders, or religious leaders in Britain or anywhere else in the world.

 The dozen men who formed the world's first anti-slavery movement saw their task as getting their fellow Englishmen to think about slavery -- about the brutal facts and about the moral implications of those facts.

Their conviction that this would be enough to turn the British public, and ultimately the British Empire, against slavery might seem naive, except that this is precisely what happened. It did not happen quickly and it did not happen without encountering bitter opposition, for the British were at the time the world's biggest slave traders and this created wealthy and politically powerful special interests defending slavery.

The anti-slavery movement nevertheless persisted through decades of struggles and defeats in Parliament until eventually they secured a ban on the international slave trade, and ultimately a ban on slavery itself throughout the British Empire.

Even more remarkable, Britain took it upon itself, as the leading naval power of the world, to police the ban on slave trading against other nations. Intercepting and boarding other countries' ships on the high seas to look for slaves, the British became and remained for more than a century the world's policeman when it came to stopping the slave trade.

 "Bury the Chains" carries this incredible story forward only to the time of the banning of slavery in the British Empire. One can only hope that either Adam Hochschild or someone else writes an equally dramatic and compelling book on the saga of the worldwide struggle against slavery.

Chances do not look good. The anti-slavery movement was spearheaded by people who would today be called "the religious right" and its organization was created by conservative businessmen. Moreover, what destroyed slavery in the non-Western world was Western imperialism.

Nothing could be more jolting and discordant with the vision of today's intellectuals than the fact that it was businessmen, devout religious leaders and Western imperialists who together destroyed slavery around the world. And if it doesn't fit their vision, it is the same to them as if it never happened.

 As anti-slavery ideas eventually spread throughout Western civilization, a worldwide struggle pitted the West against Africans, Arabs, Asians and virtually the entire non-Western world, which still saw nothing wrong with slavery. But Western imperialists had gunpowder weapons first and that enabled the West to stamp out slavery in other societies as well as in its own.

The review of "Bury the Chains" in the New York Times tried to suggest that the ban against the international slave trade somehow served British self-interest. But John Stuart Mill, who lived in those times, said that the British "for the last half-century have spent annual sums equal to the revenue of a small kingdom in blockading the Africa coast, for a cause in which we not only had no interest, but which was contrary to our pecuniary interest."

 It was a worldwide epic struggle, full of dramatic and sometimes violent episodes, along with inspiring stories of courage and dedication. But do not expect Hollywood to make a movie about anything so contrary to their vision of the world. (Published: Feb 08, 2005)

Hunger Strikes For Raised Wages

Several students at Georgetown University staged a hunger strike to shame the University into raising the wages it pays to its janitors. Today that strike ended when the University agreed to increase janitors’ wages and fringe benefits.

I have nothing against Georgetown U. raising the amount it pays to its janitors. But the full picture of this little episode is different than the cropped snapshots that I see in the newspapers and hear on the local radio stations. The pop image is of selfless, concerned students making a noble sacrifice to help voiceless, hapless janitors get a better deal from a penny-pinching University bureaucracy.

This pop image is distorted.

Why was the pre-strike janitorial wage as low as it was? Answer: because Georgetown University discovered that, at that wage, it got as many janitors as it needed, of sufficient quality, to perform the desired cleaning services. To pay more would have been an act of charity to the janitors and not a act of commerce.

Now there’s nothing wrong with charity; I applaud it (when it’s done wisely). But why, in this case, did the hunger-striking students single out Georgetown University as an alleged malefactor? Why was the janitors’ employer targeted for its failure to extend charity?

Why didn’t the hunger-strikers demand that George Mason University or Catholic University extend charity to Georgetown University’s janitors? Or why didn’t these strikers demand that all merchants in Northwest DC extend charity to these janitors? Why didn’t the strikers give their own money as charity to the janitors? (They’re students, you say; so they don’t have much extra cash. Well, they can take out loans to give charity today to the janitors and then work after graduation to repay these loans.) Or why didn’t these hunger-striking students demand that Georgetown University increase its charitable contributions, not to its relatively well-off janitors, but to seriously poor people in sub-Saharan Africa?

I’m not being flippant. I’m quite serious. Because Georgetown University is no monopsonistic buyer of janitorial services, it must compete in the market to buy these services. The wages it pays for its janitors are, therefore, competitive. Paying anything more than these wages to secure the desired number of janitors is, therefore, charity. And while there’s nothing wrong with Georgetown University extending charity to its janitors (or to anyone else), there’s also nothing obligatory about it. The fact that Georgetown paid its janitors what it did was not, contrary to the hunger-striking student’s claims, a moral breach.

Post can be found here. 

Where Would General Motors Be Without the United Automobile Workers Union?

Where Would General Motors Be Without the United Automobile Workers Union?

04/19/2006 George Reisman

This is a question that no one seems to be asking. And so I've asked it. And here, in essence, is what I think is the answer. (The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I've singled out General Motors because it's still the largest of the three and its problems are the most pronounced.)

First, the company would be without so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do. Without the UAW, General Motors would simply have fired such workers and replaced them with ones who would do the jobs they were paid to do. And so, without the UAW, GM would have produced more reliable, higher quality cars, had a better reputation for quality, and correspondingly greater sales volume to go with it. Why didn't they do this? Because with the UAW, such action by GM would merely have provoked work stoppages and strikes, with no prospect that the UAW would be displaced or that anything would be better after the strikes. Federal Law, specifically, The National Labor Relations Act of 1935, long ago made it illegal for companies simply to get rid of unions.

Second, without the UAW, GM would have been free to produce in the most-efficient, lowest cost way and to introduce improvements in efficiency as rapidly as possible. Sometimes this would have meant simply having one or two workers on the spot do a variety of simple jobs that needed doing, without having to call in half a dozen different workers each belonging to a different union job classification and having to pay that much more to get the job done. At other times, it would have meant just going ahead and introducing an advance, such as the use of robots, without protracted negotiations with the UAW resulting in the need to create phony jobs for workers to do (and to be paid for doing) that were simply not necessary.

(Unbelievably, at its assembly plant in Oklahoma City, GM is actually obliged by its UAW contract to pay 2,300 workers full salary and benefits for doing absolutely nothing. As The New York Times describes it, "Each day, workers report for duty at the plant and pass their time reading, watching television, playing dominoes or chatting. Since G.M. shut down production there last month, these workers have entered the Jobs Bank, industry's best form of job insurance. It pays idled workers a full salary and benefits even when there is no work for them to do.")

Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota. Toyota makes a profit of about $2,000 per vehicle, while GM suffers a loss of about $1,200 per vehicle, a difference of $3,200 per unit. And the far greater part of that difference is the result of nothing but GM's being forced to deal with the UAW. (Over a year ago, The Cincinnati Enquirer reported that "the United Auto Workers contract costs GM $2,500 for each car sold.")

Fourth, without the UAW, the cost of employing a GM factory worker, including wages and fringes, would not be in excess of $72 per hour, which is where it is today, according to The Post-Crescent newspaper of Appleton, Wisconsin.

Fifth, as a result of UAW coercion and extortion, GM has lost billions upon billions of dollars. For 2005 alone, it reported a loss in excess of $10 billion. Its bonds are now rated as "junk," that is, below, investment grade. Without the UAW, GM would not have lost these billions.

Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets. (It believes that $140,000 is less than what they will steal if they remain.)

Seventh, without the UAW, GM would not now have healthcare obligations that account for more than $1,600 of the cost of every vehicle it produces.

Eighth, without the UAW, GM would not now have pension obligations which, if entered on its balance sheet in accordance with the rule now being proposed by the Financial Accounting Standards Board, will leave it with a net worth of minus $16 billion.

What the UAW has done, on the foundation of coercive, interventionist labor legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labor-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations.

Ninth, without the UAW tens of thousands of workers — its own members — would not now be faced with the loss of pension and healthcare benefits that it is impossible for GM or any of the other auto companies to provide, and never was possible for them to provide. The UAW, the whole labor-union movement, and the left-"liberal" intellectual establishment, which is their father and mother, are responsible for foisting on the public and on the average working man and woman a fantasy land of imaginary Demons (big business and the rich) and of saintly Good Fairies (politicians, government officials, and union leaders). In this fantasy-land, the Good Fairies supposedly have the power to wring unlimited free benefits from the Demons.

Tenth, Without the UAW and its fantasy-land mentality, autoworkers would have been motivated to save out of wages actually paid to them, and to provide for their future by means of by and large reasonable investments of those savings — investments with some measure of diversification. Instead, like small children, lured by the prospect of free candy from a stranger, they have been led to a very bad end. They thought they would receive endless free golden eggs from a goose they were doing everything possible to maim and finally kill, and now they're about to learn that the eggs just aren't there.

It's very sad to watch an innocent human being suffer. It's dreadful to contemplate anyone's life being ruined. It's dreadful to contemplate even an imbecile's falling off a cliff or down a well. But the union members, their union leaders, the politicians who catered to them, the journalists, the writers, and the professors who provided the intellectual and cultural environment in which this calamity could take place — none of them were imbeciles. They all could have and should have known better.

What is happening is cruel justice, imposed by a reality that willfully ignorant people thought they could choose to ignore as long as it suited them: the reality that prosperity comes from the making of goods, not the making of work; that it comes from the doing of work, not from the shirking of it; that it comes from machines and methods of production that save labor, not the combating of those machines and methods; that it comes from the earning and reinvestment of profits not from seizure of those profits for the benefit of idlers, who do all they can to prevent the profits from being earned in the first place.

In sum, without the UAW, General Motors would not be faced with extinction. Instead, it would almost certainly be a vastly larger, far more prosperous company, producing more and better motor vehicles than ever before, at far lower costs of production and prices than it does today, and providing employment to hundreds of thousands more workers than it does today.

Few things are more obvious than that the role of the UAW in relation to General Motors has been that of a swarm of bloodsucking leeches, a swarm that will not stop until its prey exists no more.

It is difficult to believe that people who have been neither lobotomized nor castrated would not rise up and demand that these leeches finally be pulled off!

Perhaps the American people do not rise up because they have never seen General Motors, or any other major American business, rise up and dare to assert the philosophical principle of private property rights and individual freedom and proceed to pull the leeches off in the name of that principle.

It is easy to say, and also largely true, that General Motors and American business in general have not behaved in this way for several generations because they no longer have any principles. Indeed, they would project contempt at the very thought of acting on any kind of moral or political principle.

One of the ugliest consequences of the loss of economic freedom and respect for property rights is that it makes such spinelessness and gutlessness on the part of businessmen — such amorality — a requirement of succeeding in business. Business today is conducted in the face of all pervasive government economic intervention. There is rampant arbitrary and often unintelligible legislation. There are dozens of regulatory agencies that combine the functions of judge, jury, and prosecutor in the enforcement of more than 75,000 pages of Federal regulations alone. The tax code is arbitrary and frequently unintelligible. Judicial protection of economic freedom has not existed since 1937, when the Supreme Court abandoned it, out of fear of being enlarged by Congress with new members sufficient to give a majority to the New Deal on all issues. (Try to project the effect of a loss of judicial protection of the freedoms of press and speech on the nature of what would be published and spoken.)

Any business firm today that tried to make a principled stand on such a matter as throwing out a legally recognized labor union would have to do so in the knowledge that its action was a futile gesture that would serve only to cost it dearly. And a corporation that did this would undoubtedly also be embroiled in endless lawsuits by many of its stockholders blaming it for the losses the government imposed on it.

But none of this should stop anyone else from speaking up and making known his outrage at what the UAW has done to General Motors.

This article is copyright © 2006, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author's web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His book is available through Mises.org, Amazon.com, and on his web site. See his Mises.org Daily Articles Archive and read his interview in the Austrian Economics Newsletter. You can contact him by mail. To comment on this piece, go to the blog.

Liberals, Race, and History: Left’s House of Cards Threatened

Liberals, Race, and History: Left’s House of Cards Threatened

By Thomas Sowell on June 1, 2005

If the share of the black vote that goes to the Democrats ever falls to 70 percent, it may be virtually impossible for the Democrats to win the White House or Congress, because they have long ago lost the white male vote and their support among other groups is eroding. Against that background, it is possible to understand their desperate efforts to keep blacks paranoid, not only about Republicans but about American society in general.

Liberal Democrats, especially, must keep blacks fearful of racism everywhere, including in an administration whose Cabinet includes people of Chinese, Japanese, Hispanic, and Jewish ancestry, and two consecutive black Secretaries of State. Blacks must be kept believing that their only hope lies with liberals.

Not only must the present be distorted, so must the past — and any alternative view of the future must be nipped in the bud. That is why prominent minority figures who stray from the liberal plantation must be discredited, debased and, above all, kept from becoming federal judges.

A thoughtful and highly intelligent member of the California supreme court like Justice Janice Rogers Brown must be smeared as a right-wing extremist, even though she received 76 percent of the vote in California, hardly a right-wing extremist state. But desperate politicians cannot let facts stand in their way.

Least of all can they afford to let Janice Rogers Brown become a national figure on the federal bench. The things she says and does could lead other blacks to begin to think independently — and that in turn threatens the whole liberal house of cards. If a smear is what it takes to stop her, that is what liberal politicians and the liberal media will use.

It’s "not personal" as they say when they smear someone. It doesn’t matter how outstanding or upstanding Justice Brown is. She is a threat to the power that means everything to liberal politicians. The Democrats’ dependence on blacks for votes means that they must keep blacks dependent on them.

Black self-reliance would be almost as bad as blacks becoming Republicans, as far as liberal Democrats are concerned. All black progress in the past must be depicted as the result of liberal government programs and all hope of future progress must be depicted as dependent on the same liberalism.

In reality, reductions in poverty among blacks and the rise of blacks into higher level occupations were both more pronounced in the years leading up to the civil rights legislation and welfare state policies of the 1960s than in the years that followed.

Moreover, contrary to political myth, a higher percentage of Republicans than Democrats voted for the Civil Rights Act of 1964 and the Voting Rights Act of 1965. But facts have never stopped politicians or ideologues before and show no signs of stopping them now.

What blacks have achieved for themselves, without the help of liberals, is of no interest to liberals. Nothing illustrates this better than political reactions to academically successful black schools.

Despite widespread concerns expressed about the abysmal educational performances of most black schools, there is remarkably little interest in those relatively few black schools which have met or exceeded national standards.

Anyone who is serious about the advancement of blacks would want to know what is going on in those ghetto schools whose students have reading and math scores above the national average, when so many other ghetto schools are miles behind in both subjects. But virtually all the studies of such schools have been done by conservatives, while liberals have been strangely silent.

Achievement is not what liberalism is about. Victimhood and dependency are.

Black educational achievements are a special inconvenience for liberals because those achievements have usually been a result of methods and practices that go directly counter to prevailing theories in liberal educational circles and are anathema to the teachers’ unions that are key supporters of the Democratic Party.

Many things that would advance blacks would not advance the liberal agenda. That is why the time is long overdue for the two to come to a parting of the ways.

Talkers versus doers

Thomas Sowell
|Posted: Jun 09, 2004 12:00 AM

Doctors and hospitals have helped but much of the improvement in our health has been due to pharmaceutical drugs that keep us from having to go to hospitals, and has been due to pharmaceutical drugs that keep us from having to go to hospitals, and have enabled doctors to head off many serious medical problems with prescriptions.

Yet the people who produce pharmaceutical drugs have been under heated political attack for years -- attacks which often do not let the facts get in their way. 

During the anthrax scare of 2001, for example, the maker of the leading antidote for anthrax was accused of making "obscene profits" even though (1) the total cost of treatment with their drug was just $50 and (2) the company actually operated at a loss while they were being denounced for obscene profits.

People who know nothing about advertising, nothing about pharmaceuticals, and nothing about economics have been loudly proclaiming that the drug companies spend too much on advertising -- and demanding that the government pass laws based on their ignorance.

Today, we take the automobile so much for granted that it is hard to realize what an expansion of the life of ordinary people it represented. There was a time when most people lived and died within a 50-mile radius of where they were born.

The automobile opened a whole new world to these people. It also enabled those living in overcrowded cities to spread out into suburbs and get some elbow room. Trucks got goods to people more cheaply and ambulances got people to hospitals to save their lives.

Yet who among the people who did this are today regarded as being as big a hero as Ralph Nader, who put himself on the map with complaints about cars in general and the Corvair in particular? Hard data on automobile safety and tests conducted on the Corvair both undermined Nader's claims. But he will always be a hero to the talkers. So will those who complain about commerce and industry that have raised our standard of living to levels that our grandparents would not have dreamed of.

Home-ownership is far more widespread among ordinary people today than in the past because of entrepreneurs who have figured out how to produce more, bigger and better houses at prices that more and more people could afford. But can you name any of those entrepreneurs who have been celebrated for their contributions to their fellow human beings?

Probably not. In California, anyone in the business of producing housing is more likely to be demonized as a "developer," a word that causes hostile reactions among Californians conditioned to respond negatively -- and automatically, like Pavlov's dog.

As for computers, no one made them more usable by more people around the world than Microsoft. And no one has been hit with more or bigger lawsuits as a result.

Why can't the talkers leave the doers alone? Perhaps it is because that would leave the talkers on the sidelines, with their uselessness being painfully obvious to all, instead of being in the limelight and "making a difference" -- even if that difference is usually negative.

The Hidden Danger of Seat Belts

By DAVID BJERKLIE Thursday, Nov. 30, 2006

If there's one thing we know about our risky world, it's that seat belts save lives, right? And they do, of course. But reality, as usual, is messier and more complicated than that. John Adams, risk expert and emeritus professor of geography at University College London, was an early skeptic of the seat belt safety mantra. Adams first began to look at the numbers more than 25 years ago. What he found was that contrary to conventional wisdom, mandating the use of seat belts in 18 countries resulted in either no change or actually a net increase in road accident deaths.


How can that be? Adams' interpretation of the data rests on the notion of risk compensation, the idea that individuals tend to adjust their behavior in response to what they perceive as changes in the level of risk. Imagine, explains Adams, a driver negotiating a curve in the road. Let's make him a young male. He is going to be influenced by his perceptions of both the risks and rewards of driving a car. The considerations could include getting to work or meeting a friend for dinner on time, impressing a companion with his driving skills, bolstering his image of himself as an accomplished driver. They could also include his concern for his own safety and desire to live to a ripe old age, his feelings of responsibility for a toddler with him in a car seat, the cost of banging up his shiny new car or losing his license. Nor will these possible concerns exist in a vacuum. He will be taking into account the weather and the condition of the road, the amount of traffic and the capabilities of the car he is driving. But crucially, says Adams, this driver will also be adjusting his behavior in response to what he perceives are changes in risks. If he is wearing a seat belt and his car has front and side air bags and anti-skid brakes to boot, he may in turn drive a bit more daringly.


The point, stresses Adams, is that drivers who feel safe may actually increase the risk that they pose to other drivers, bicyclists, pedestrians and their own passengers (while an average of 80% of drivers buckle up, only 68% of their rear-seat passengers do). And risk compensation is hardly confined to the act of driving a car. Think of a trapeze artist, suggests Adams, or a rock climber, motorcyclist or college kid on a hot date. Add some safety equipment to the equation — a net, rope, helmet or a condom respectively — and the person may try maneuvers that he or she would otherwise consider foolish. In the case of seat belts, instead of a simple, straightforward reduction in deaths, the end result is actually a more complicated redistribution of risk and fatalities. For the sake of argument, offers Adams, imagine how it might affect the behavior of drivers if a sharp stake were mounted in the middle of the steering wheel? Or if the bumper were packed with explosives. Perverse, yes, but it certainly provides a vivid example of how a perception of risk could modify behavior.


In everyday life, risk is a moving target, not a set number as statistics might suggest. In addition to external factors, each individual has his or her own internal comfort level with risk-taking. Some are daring while others are cautious by nature. And still others are fatalists who may believe that a higher power devises mortality schedules that fix a predetermined time when our number is up. Consequently, any single measurement assigned to the risk of driving a car is bound to be only the roughest sort of benchmark. Adams cites as an example the statistical fact that a young man is 100 times more likely to be involved in a severe crash than is a middle-aged woman. Similarly, someone driving at 3:00 a.m. Sunday is more than 100 times more likely to die than someone driving at 10:00 a.m. Sunday. Someone with a personality disorder is 10 times more likely to die. And let's say he's also drunk. Tally up all these factors and consider them independently, says Adams, and you could arrive at a statistical prediction that a disturbed, drunken young man driving in the middle of the night is 2.7 million times more likely to be involved in a serious accident than would a sober, middle-aged woman driving to church seven hours later.


The bottom line is that risk doesn't exist in a vacuum and that there are a host of factors that come into play, including the rewards of risk, whether they are financial, physical or emotional. It is this very human context in which risk exists that is key, says Adams, who titled one of his recent blogs: "What kills you matters — not numbers." Our reactions to risk very much depend on the degree to which it is voluntary (scuba diving), unavoidable (public transit) or imposed (air quality), the degree to which we feel we are in control (driving) or at the mercy of others (plane travel), and the degree to which the source of possible danger is benign (doctor's orders), indifferent (nature) or malign (murder and terrorism). We make dozens of risk calculations daily, but you can book odds that most of them are so automatic—or visceral—that we barely notice them.