Liberty. Economics. Common Sense. These are the guiding posts for this blog, and we hope, for the way most of us live our lives. This blog comes to the conclusion that the proper direction for society is one of personal liberty, both economic and political, and limited government that follows sound economic policy.

This blog will offer economic analysis on many political issues of the day along with political theory from time to time. The major inspirations for this blog are writers and thinkers like John Locke, Adam Smith, David Ricardo, Alfred Marshall, F.A. Hayek, Milton Friedman and James Madison among others.

Friday, December 11, 2009

Which Side Are You On?

"Which Side Are You On" by Florence Reece
Come all of you good workers,
Good news to you I’ll tell,
Of how that good old union
Has come in here to dwell.

Which side are you on?
Which side are you on?
Which side are you on?
Which side are you on?

My daddy was a miner,
And I’m a miner’s son,
And I’ll stick with the union,
Till every battle’s won.

They say in Harlan County,
There are no neutrals there.
You’ll either be a union man,
Or a thug for J.H. Blair.

Oh, workers can you stand it?
Oh, tell me how you can.
Will you be a lousy scab,
Or will you be a man ?

Don’t scab for the bosses,
Don’t listen to their lies.
Us poor folks haven’t got a chance,
Unless we organize.
I like this song. It's obviously pro-union, and I definitely don't support unions, but I do like the history lesson. This is a good illustration of why sometimes it's hard to implement sound economic policy, especially in times of trouble. When emotions are running so high, as they were when this song was written, it's almost impossible to talk people down and explain why unions might be economically damaging.

In the Great Depression, people were desperate for work and for money. In their desperation, they chose the most obvious path to secure jobs and high wages - unions. While it seemed like the right thing to do, it was probably one of the worst things they could have done.

It was around this time that unions started turning into the type of organizations we know today. They were given collective-bargaining power by the government and started using strikes and coercive tactics to accomplish their goals. By demanding higher wages than was justified by the economy, they severely weakened their companies' profitability which limited growth and job-creation. Also, by raising the wage above the market rate, businesses demanded less labor. So while the goal of unions was to secure jobs, and it accomplished this for a select few, all they really accomplished was to curb employment and limit companies' growth, helping to prolong the depression.

In times of perceived crisis we must be extra-vigilant and guard against emotion-driven policies that, when scrutinized, don't hold up economically.

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