Henry Hazlitt on Unions

Article excerpt

Henry Hazlitt wrote often on unions, and what he did write was significant." In 1971, after carefully analyzing several economic effects of unions, he summed them up in his usual forthright style:

The net overall effect of unions and of union policy has been to exclude nonunion members, to drive them into less attractive and lower-paid jobs, to distort the structure and balance of production, to increase inflation, to reduce productivity, to discourage new investment, to retard capital formation, and hence to reduce the total production for all of us and the total real wages of the whole body of workers below what it would otherwise have been. It is altogether probable that even the highest real wages now received by members of strong unions are lower than such wages would have been if the unions and their historic policies had never existed. (The Strike, p. 74)

Hazlitt's explanations for each of these conclusions are brilliant, but in this limited space all I can do is commend them to you. Hazlitt held that the reason unions are able to wreak such economic havoc is that politicians placed them outside the rule of law.

In addition to the economic effects of unions summarized above, Hazlitt discussed several other important aspects of American union law. Here are three of them.

Exclusive representation means that a union (usually chosen by majority vote of workers) is the monopoly representative of all workers in a bargaining unit within a firm. The union represents its voluntary members, but it also, perforce, represents workers who want nothing to do with it. Individuals are forbidden to represent themselves. Mandatory good-faith bargaining means that an employer must bargain with the monopoly representative on wages and salaries and other terms of employment, and he must bargain in "good faith," which, in practice, means that he must make concessions to the union.

I argue that exclusive representation is an illicit extension of democracy (mandatory submission of a numerical minority to the will of a numerical majority) into the private sphere of human action where it does not belong. I also hold that forced bargaining is never justified. In ordinary contract law a necessary, but not sufficient, condition for a contract to be valid is that all the parties agree both to bargain and to the final terms that emerge from the bargaining. A contract is an agreement, and "forced agreement" is oxymoronic. Hazlitt agreed on both points. On mandatory bargaining: "The employer, like the employee (or any of the rest of us in all our other business relations) must have the unequivocal right not to bargain, the clear right to terminate negotiations if he considers a given union's demands unreasonable, the clear right to bargain with whomever and in whatever peaceable manner he chooses. The specious insistence on 'collective bargaining' is simply a denial of the right of individual bargaining" (The Strike, pp. 76-77).

On exclusive representation, he argued that the National Labor Relations Act should at least be amended to "restrict unions to bargaining only for their own members and no longer designate them as the exclusive bargaining agent for all employees in a unit" (p. 77).

Here Hazlitt seems to have changed his mind between 1946 and 1971. Earlier he held that because "competition of workers for jobs, and of employers for workers, does not work perfectly," any individual worker "may be in a weak bargaining position." He went on to explain that a worker's "whole means of livelihood is involved" in the hiring decision, while to the employer a decision regarding one worker is of little consequence when "he may employ a hundred or a thousand men. …