In honour of Fake Labour Day, Tom DiLorenzo writes:
As every good free market economist knows, the only way unions have ever been able to raise wages above market-clearing wages is by the use of violence.
Okay, but whence this assumption that unions raising wages means raising them above (rather than to) the market-clearing price?
Employers of labour form firms in order to, e.g., reduce transaction costs and take advantage of economies of scale, but (except to the extent that they get government help in doing this, which of course they often do) we don’t describe this as lowering their costs below the market price for their services; instead, we say that that’s part of the process by which the market price is determined.
Why should different rules apply to the sellers of labour? If association enables employers to get a better deal without necessarily relying on government intervention, why should we assume that any benefits that workers derive from like association must somehow involve the state?
