About thirty years ago, when I immigrated to the United States, I thought that the United States had a free market economy, including free labor markets. Many immigrants (and those born in the United States) still think so. Unfortunately, the changes in laws and regulations instituted during the 20th century created a mixed economy that is far from a free market.
The first time I had to deal with labor unions in the United States, I was shocked to learn that they could represent me without my consent—and, in some states, could make me pay for that representation. I could neither choose which labor union represented me nor whether unions could represent me at all. Not surprisingly, as labor unions did not need my consent, they showed little concern for my interests. As long as labor unions received the majority of votes and won elections in units defined by professions or locations, they had a right and an obligation to represent all employees in those units. So much for the rights of minorities and voluntary relationships between people…
I am not the only one disappointed with modern U.S. labor unions. During the second half of the 20th century, labor union membership in the U.S. private sector has declined to about 10 percent and remained low in recent years—a serious condemnation of modern labor unions. Most private sector workers prefer no representation at all to the representation they would receive from modern unions.
On the surface, it may seem that public sector labor unions are doing better: union membership is higher among public sector workers than in the private sector. However, the reasons for this are not good ones. On average, public administrators are more abusive than private managers, as administrators do not have strong incentives to hire and retain the best employees. Thus, public sector employees have stronger incentives to unionize. Moreover, the access to taxpayer and newly printed money makes it easier for unions (and administrators) to get away with wasting resources for a longer time.
What happened to the U.S. economic system and its labor laws? Unfortunately, those who wanted to earn their living honestly were not the only immigrants to the United States. Some of the people who were making a living through exploitation of native people of European (and other) countries also moved here.
Immigration from the Union of Soviet Socialist Republics (USSR), where I lived my first 20 years, is one such example. Following the traditions of serfdom, the USSR limited individuals’ freedom to leave the country. Nobody could leave the USSR without government permission; however, groups that had closer ties with communists—including fascists, who often collaborated with communists as both groups wanted a government-controlled economy—had more opportunities to leave the USSR. During those periods when collaboration between communists and fascists deteriorated or communists fought among themselves, members of the losing group had additional incentives to leave. Moreover, the most corrupt collaborators had more financial resources for leaving the USSR. Thus, the United States was likely to receive a disproportionate number of members of these groups.
The changes in the U.S. economic system started with changes in the education system. Statists (e.g., communists, fascists) brought in their education system created in possibly the most despotic European country—the new Prussia. It is easier to mislead people when one controls what information they receive starting at an early age. Through a public education system, statists could promote their values and provide misinformation not only to their own children but also to other American children.
Mark Twain is credited with saying that he never allowed schooling to interfere with his education. However, after several generations being subjected to the Prussian schooling system, many people do not even realize that schooling and education are not the same thing. The Prussian public schooling system promotes the idea that people should surrender their rights to government and let government make decisions about their lives: government experts educated in the Prussian university system tell people what to do. They teach that, instead of the state serving the people, people should serve the state. That is the opposite to the principles of limited government and voluntary relationships between people on which the United States was founded.
If the well-being of workers was a major consideration of political activists, politicians, and bureaucrats, they would have easily noticed that in the early days of the United States, poor people were immigrating to the United States, not emigrating from it. Opportunities not only for farmers but also for factory workers were better in the United States than in European, Asian, or African countries at the time. It would have made more sense for those countries to copy the U.S. model than for the United States to copy their models if they cared about opportunities for poor people. However, if some people wanted to distribute more resources to themselves and to feel superior to other people by ruling over them, then copying the Prussian model made sense.
The United States has adopted many laws and regulations regarding labor unions, work conditions, and certifications for jobs that follow the spirit of the Prussian model instead of the American model. These laws and regulations make it harder for people to protect themselves. Moreover, too many of them are poorly defined, as it is impossible to define laws and regulations well when government starts interfering in everything. This gives a competitive advantage to the most corrupt; if one has friends among powerful bureaucrats, one does not need to be careful about not violating their regulations. These laws and regulations increase business costs and push many people into unproductive government-created jobs, destroying the economy and leaving fewer opportunities for people to prosper.
These consequences should not be surprising as the new Prussia remained a poor, despotic country during its entire existence. We should not expect different results when we keep repeating the same. Moreover, while often referred to as progressive ideas, the Prussian ideas are better referred to as regressive ideas; as far back as we have recorded history, we read about despotic rulers who want to control the lives of their subjects and promise to take care of them. That never works well for their subjects.
A legitimate government job is to protect people against the use of force, not to coerce them into relationships that are based on force. Laws should not violate the inalienable rights of Americans, whether they be employees or employers. The labor laws that force the Prussian model on the American people should be repealed. Free markets are better at protecting workers than politicians or bureaucrats. People treat each other better when they must rely on voluntary contracts.
Dr. Dalia Marciukaityte is an associate professor of finance at Illinois State University. She is also a policy advisor for the Heartland Institute.
