Friday, August 22, 2008

Sen. Barack Obama recently said, “Let’s allow our unions and their organizers to lift up this country’s middle class again.” Its ironic that he says that at a time when in the past 10 years Detroit‘s Big Three have been laying off unionized workers by the tens of thousands and Toyota has been hiring similar amounts of nonunion U.S. auto workers.

He obviously misses the point that one major problem with labor unions, like the government, is that they can change prices - in this case, the price of labor - but without changing the bedrock reality that prices convey.

The productivity of workers is not changed by either unions or minimum wage laws. All they can do is forbid the employer from paying less than what the union or the government wants the employer to pay.

Statements such as his help politicians get elected while workers who are already on the payroll may get a windfall gain before the market adjusts. Unfortunately in market-based economies there is no free lunch and sooner or later, the chickens come home to roost with a price tag.

They have been coming home to roost big time in the automobile industry, where hundreds of thousands of jobs have been lost over the years.


Royal Oak, Mich.

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