Although I usually heavily disagree with President Barack Obama on economic policy, the man sure knows how to play the political game.
On Labor Day, the president gave a heartwarming speech to the popular workers union AFL-CIO in which he attributed modern labor developments, such as paid leave and the minimum wage, to trade unions.
As a political move, this was perfect for Obama. Union members very often vote democrat, and politicians have to cater to the people who give them money and votes. But what people want to hear may not be the best thing for our economy.
Obama saying unions are responsible for the rising wages of workers is nonsense. In fact, my economics textbook (I add “textbook” to emphasize that this is economic law, not opinion) points out that one of the principles of economics is that a country’s standard of living depends on its productivity, not what its unions do. When a country’s people are able to produce more goods and services per hour of work, they are paid more and can enjoy a higher standard of living.
This can be seen in union-dominated South America. But many people are still poor despite the minimum wages and regulations. People are too unproductive to get paid for a higher standard of living. They must do this through technological innovation spurred by a free-market system. A union can even stifle competition from outside union workers and make working conditions even worse.
For example, in South Africa, during Apartheid, racism against blacks was rampant. But white unions actually supported a minimum wage, saying they didn’t want employers taking advantage of black, low-skilled workers. Unfortunately, unions had not had a change of heart. It was found that the union was actually trying to prevent black workers from undercutting whites’ pay by forcing employers to pay everyone above a certain wage. Since many blacks at the time were not productive enough, they stayed unemployed.
Some would argue that I’m only talking about wages. Some workers had to fight (and write big fat checks to Congress) to get time off and benefits. Economic theory, however, would also tell us that if a person makes enough money, they would rather take weekends off or take a paid vacation. I’m willing to bet that if you made one million dollars an hour, you wouldn’t work a regular, eight-hour day.
Don’t get me wrong, unions can be a wonderful thing. If people want to peacefully assemble and work with their employers on what they want, then that is completely fine. However, what has happened is unions have now stuck their hands into the pockets of legislators and have had laws enacted that do not support all workers, but merely their own workers, many times at the expense of the consumer and society.
Michael Lauck is a sophomore broadcast journalism major from Houston.