Some 7,500 dock workers representing the International Longshore and Warehouse Union (ILWU) went on strike on July 1 after they failed to reach an agreement with the British Columbia Maritime Employers Association. This concerns Americans, because about two-thirds of Canada’s global trade is with the United States. Transportation strikes cause the two evils of macroeconomics: inflation and unemployment. They are also discriminatory. The best way to solve the problem is to eliminate self-interest by encouraging competition.
In many of my classes and lectures, I highlight how unions cause disunion. Labor unions are a form of cartel, defined in economic terms as competitors who collaborate. Labor suppliers aggregate their supply and force businesses to accept all or none. The clearly stated purpose of unions is to raise wages. That’s half the definition of inflation, which is, “The increase in prices and wages.” Greg Ip at the WSJ called it “greedflation” recently.
This artificial increase in wages naturally forces consumption goes down. As wages for longshoremen go up, there will be less demand for their services. The result is higher unemployment. Considering the economic turmoil, this has many secondary effects from supply chain disfunction to credit card debt hovering around an all time high.
Though unions claim to fight for the lower and middle class, their stated goal is to actually form a class system. Those in the union are in a higher wage class, those who supply labor outside the union are discriminated against by accepting lower wages. Additionally, unions discriminate against consumers, because consumers pay a higher price for union-produced goods and services than they do for non-union made goods and services. All goods get distributed, some further than others. Longshoreman are out to raise the price of goods that cross their docks. That’s good for the people in their group, not good for people outside the group.
Adam Smith pointed out that everyone who participates in the market is self-interested. So how do we convince self-interested people to serve the interests of others? Well, it’s pretty simple. Make them compete.
If you watch the classic movie, It’s a Wonderful Life each Christmas season, you will remember the scene toward the end where the little girl says, “Teacher says every time a bell rings an angel gets its wings.” I tell my sophomores at Dallas Baptist University, that every time you hear that “beep” of a product moving across the Wal-Mart check-out scanner someone got richer.” That’s because Wal-Mart is in a competitive market. Would they like to put their competitors out of business, so they can raise prices? Of course. And that’s where the government comes in. Enforcing antitrust laws that maintain competition. Matter of fact, that’s about the only economic policy the government should have. But liberal government bureaucrats not only allow unions, they encourage them through the National Labor Relations Board.
It is shocking to think that you pay taxes to fund an organization that causes unemployment, inflation, and encourages discrimination. Maybe President Reagan was correct when he said, “Government is not the solution to our problem, government is the problem.”
Dave Arnott, PhD is the author of Biblical Economic Policy. His work can be found at www.davearnott.com and the Christian Economist YouTube Channel.