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Originally, workers didn't have too many options because there were no labor laws nor specific rights. It's very simple, they had none.  Company owners had all the rights simply because they owned their property in a seemingly unlimited manner and the law was on their side.  They were using those rights to apply pressure on the contracts that the workers signed and so, keeping wages depressed and denying workers any support system. That did indeed happen.  We would be reluctant to paint these facts in any other way because we promised to you that above all we will be truthful. 

Currently, Unions are not only allowed, but protected.  In practice, this means that just because a worker is part of a union it cannot be fired for that very reason.  Workers now have the right to negotiate collective contracts.  However, during most of the industrial revolution, collective bargaining and unionization was outlawed.  Union people will tell you that through the battles organized labor fought in the 1800’s unionization and collective bargaining rights were won. Those are indeed the historical facts.

What we are saying is that the very same system that existed before the Unions and was so harsh then, can now work much better in today's world. Actually, we are saying more than that. We are saying that yesterday’s system working in an Absolute Austro-Libertarian environment can easily achieve much higher levels of quality of life for all people, not just workers. There must be valid reasons for us to say so, and they are. Let’s explore them.



We explained very clearly that the most important reason why Unions were created in the first place, were wages. The Absolute Austro-Libertarian system must demonstrate that it can deliver wages at least equivalent, if not superior, to the ones delivered today; for it to be a viable system. It must also demonstrate that it can do so without the need for Unions. To task.

The question is not whether or not unions generated  workers’ rights. They did.  The question is, are those rights meaningful or meaningless in an Absolute Austro-Libertarian system?  A system where everybody can contract freely? 

The answer is that they are meaningless.  But they are meaningless not because they're bad but because there is tradeoff that supersedes the necessity for their existence. 

In a free market there would not be minimum wages but there will be much more employment, much more competition.  Which means that in order to survive, in order to hire and maintain employees, companies will have to increase wage levels.  Supply and demand. When demand rises and supply remains the same prices go up. Through this process, minimum wages would become mostly obsolete.

Take a look at China for example. China's economy is booming but most of the new employees working in different companies have very very low wages indeed. In addition, there is almost no social security of any kind and the taxes that companies pay to the state are very low. 

Many companies are heavily subsidized, but there are many other companies in China that are viable in and by themselves simply because they are creating good products at good prices.  People working in those companies made the conscious decision to go to there from the previous jobs.  Typically previous jobs involved farming where there were dying of disease, starvation and exposure.  So, for these workers even though the wages are low it's been a pretty good deal.

And if you also look at Brazil and India you will notice that wages have been rising steadily even considering inflation.  Which tells you that as the number of employees start to decrease companies increase wage bidding for them. Supply and demand.  Originally, workers’ supply was very high but now it started to drop and with every drop if you want a worker you need to pay more to have it and to keep it. 

Statistics tells us that some people will indeed have wages lower than current minimum wages, but at the same time most people will have higher ones. Unemployment will be much, much lower. And so, if a few people have to endure wages lower than the minimum, that is a small price to pay for widespread prosperity. There is no free lunch. You can’t have it both ways. You can either have minimum wages and high unemployment or you can have only a few people under minimum wages and widespread prosperity. Realistically, those are the only two choices.



When it comes to providing other benefits, different countries have different laws but most countries tax the employer for those benefits. In other words, today’s system is not shifting money for benefits such as health and dental directly into employees’ pockets.  Most of the time the government takes the tax money and decides which benefits workers may or may not have.  Which is ridiculous because the obligation to pay is on the owner, the need is on the worker but a third party that has nothing to do with them takes the money and makes all the decisions!

Let's assume for a second we can magically eliminate all the governments and all the laws and implement an Absolute Austro-Libertarian system.  What would happen to all employee benefits?

Those will be fully and freely negotiable, which brings the question: why would companies provide those benefits since from their point of view a benefit is a loss? The answer is they wouldn’t.

But then again, as the market grows and employees become scarcer, companies will start to entice employees with other benefits, which the companies themselves will bring in just because it is in their best interest to do so.  Even the smallest and the cheapest companies will start to do that in some way or another simply because selecting and training a new employee and keeping a trustworthy employee is difficult and expensive. And so, they would rather pay extra and make sure that they actually get a proficient employee that would generate profits as opposed to having losses because of lack of employees.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Diamonds May Be Forever But Unions Are Not - Part 3


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