Free To Choose: a personal Statement

Airline Pilots, George Hopkins writes, "Today's incredibly high
pilot salaries result less from the responsibility pilots bear or the
technical skill they possess than from the protected position they
have achieved through a union."
2
The oldest traditional unions in the United States are the craft
unions—carpenters, plumbers, plasterers, and the like—again
workers who are highly skilled and highly paid. More recently,
the fastest growing unions—and indeed almost the only ones that
have grown at all—are unions of government workers, including
schoolteachers, policemen, sanitation workers, and every other
variety of government employee. The municipal unions in New
York City have demonstrated their strength by helping to bring
that city to the verge of bankruptcy.
Schoolteachers and municipal employees illustrate a general
principle that is clearly exemplified in Great Britain. Their
unions do not deal directly with the taxpayers who pay their
members' salaries. They deal with government officials. The
looser the connection between taxpayers and the officials the
unions deal with, the greater the tendency for officials and
the unions to gang up at the expense of the taxpayer—another ex-
ample of what happens when some people spend other people's

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Who Protects the Worker?
233
money on still other people. That is why municipal unions are
stronger in large cities such as New York than in small cities, why
unions of schoolteachers have become more powerful as control
over the conduct of schools and over educational expenditures
has become more centralized, further removed from the local
community.
In Great Britain the government has nationalized many more
industries than in the United States—including coal mining,
public utilities, telephones, hospitals. And labor unions in Britain
have generally been strongest, and labor problems most serious,
in the nationalized industries. The same principle is reflected in
the strength of the U.S. postal unions.
Given that members of strong unions are highly paid, the
obvious question is: are they highly paid because their unions
are strong, or are their unions strong because they are highly
paid? Defenders of the unions claim that the high pay of their
members is a tribute to the strength of union organization, and
that if only all workers were members of unions, all workers
would be highly paid.
The situation is, however, much more complex. Unions of
highly skilled workers have unquestionably been able to raise
the wages of their members; however, people who would in any
event be highly paid are in a favorable position to form strong
unions. Moreover, the ability of unions to raise the wages of
some workers does not mean that universal unionism could raise
the wages of all workers. On the contrary, and this is a funda-
mental source of misunderstanding, the gains that strong unions
win for their members are primarily at the expense of other
workers.
The key to understanding the situation is the most elementary
principle of economics: the law of demand—the higher the price
of anything, the less of it people will be willing to buy. Make
labor of any kind more expensive and the number of jobs of that
kind will be fewer. Make carpenters more expensive, and fewer
houses than otherwise will be built, and those houses that are built
will tend to use materials and methods requiring less carpentry.
Raise the wage
of
airline
pilots,
and air travel
will become more
expensive. Fewer people will fly, and there will be fewer jobs for

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234
FREE TO CHOOSE: A Personal Statement
airline pilots. Alternatively, reduce the number of carpenters or
pilots, and they will command higher wages. Keep down the num-
ber of physicians, and they will be able to charge higher fees.
A successful union reduces the number of jobs available of the
kind it controls. As a result, some people who would like to get
such jobs at the union wage cannot do so. They are forced to look
elsewhere. A greater supply of workers for other jobs drives down
the wages paid for those jobs. Universal unionization would not
alter the situation. It could mean higher wages for the persons
who get jobs, along with more unemployment for others. More
likely, it would mean strong unions and weak unions, with mem-
bers of the strong unions getting higher wages, as they do now,
at the expense of members of weak unions.
Union leaders always talk about getting higher wages at the
expense of profits. That is impossible: profits simply aren't big
enough. About 80 percent of the total national income of the
United States currently goes to pay the wages, salaries, and
fringe benefits of workers. More than half of the rest goes to pay
rent and interest on loans. Corporate profits—which is what
union leaders always point to—total less than 10 percent of
national income. And that is before taxes. After taxes, corporate
profits are something like 6 percent of the national income.
That hardly provides much leeway to finance higher wages, even
if all profits were absorbed. And that would kill the goose that
lays the golden eggs. The small margin of profit provides the
incentive for investment in factories and machines, and for devel-
oping new products and methods. This investment, these inno-
vations, have, over the years, raised the productivity of the
worker and provided the wherewithal for higher and higher
wages.
Higher wages to one group of workers must come primarily
from other workers. Nearly thirty years ago one of us estimated
that on the average about 10 to 15 percent of the workers in this
country had been able through unions or their equivalent, such as
the American Medical Association, to raise their wages 10 to 15
percent above what they otherwise would have been, at the cost
of
reducing the wages earned by the other 85 to 90 percent by
some 4 percent below what they otherwise would have been.

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