Basic Economics: A Citizen's Guide to the Economy

By Thomas Sowell | Go to book overview

Chapter 10
Controlled Labor Markets

Pay and employment conditions are not always a result of free market competition. Either or both may be controlled by law, custom, or organizations of employers or employees. Among the major factors behind such controls have been desires for job security and for collectively-set limits on how high or how low pay scales will be allowed to go in particular occupations or industries.

Here as elsewhere, we are concerned not so much with the goals or rationales of such policies, but with the incentives created by these arrangements and the consequences to which such incentives lead. These consequences extend beyond the workers themselves to the economy as a whole, where labor is one of the scarce resources which have alternative uses.


JOB SECURITY

'Virtually every modern industrial economy has faced issues of jot) security, whether they have faced these issues realistically or unrealistically, successfully or unsuccessfully. At the most simplistic level, some people advocate that every worker be guaranteed a job, with the government if necessary. In some countries, laws make it difficult and costly for a private employer to fire anyone. Labor unions try to do this in many industries and in many countries around the world. Teachers' unions in the United States are so successful at this that it can easily cost a school district tens of 'thousands of dollars -- or even hundreds of thousands in some places -- to fire just one teacher, even if that teacher is grossly incompetent.

-149-

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Basic Economics: A Citizen's Guide to the Economy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgements xi
  • Chapter I - What Is Economics? 1
  • Part I - Prices 5
  • Chapter 2 - The Role of Prices 7
  • Chapter 3 - Price Controls 21
  • Chapter 4 - An Overview 39
  • Part II - Industry and Commerce 57
  • Chapter 5 - The Rise and Fall of Businesses 59
  • Chapter 6 - The Role of Profits -- and Losses 73
  • Chapter 7 - Big Business and Government 89
  • Chapter 8 - An Overview 105
  • Part III - Work and Pay 125
  • Chapter 9 - Productivity and Pay 127
  • Chapter 10 - Controlled Labor Markets 149
  • Chapter 11 - An Overview 167
  • Part IV - Time and Risk 173
  • Chapter 12 - Investment and Speculation 175
  • Chapter 13 - Risks and Insurance 193
  • Chapter 14 - An Overview 207
  • Part V - The National Economy 213
  • Chapter 15 - National Output 215
  • Chapter 16 - Money and the Banking System 223
  • Chapter 17 - The Role of Government 237
  • Part VI - The International Economy 267
  • Chapter 19 - International Trade 269
  • Chapter 20 - International Transfers of Wealth 283
  • Chapter 21 - An Overview 297
  • Part VII - Popular Economic Fallacies 303
  • Chapter 22 - Non-Economic Values 305
  • Chapter 23 - Prices and Purchasing Power 315
  • Chapter 24 - Business and Labor 329
  • Chapter 25 - An Overview 343
  • Sources 347
  • Index 359
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