I wish to lay out some hypothetical arguments to consider before identifying my point in making them—please don’t jump ahead.
- Let’s imagine that Walmart, K-Mart, Kohl’s, et al. decided they weren’t making enough profit. The companies met and agreed to hike their prices by 10% across the board to address the issue. If they unite together, they can all raise their prices equally, make more money, and the consumer is left no choice but to pay the increased costs. It’s a genius idea for the stores of course, but there is one problem. There’s a name for such shenanigans—it’s called collusion. It is highly illegal because it violates the competitive principle of free-market capitalism.
- In the world of contract law, in order for a contract to be valid, it must have a quid pro quo. Meaning that if I write a contract that simply said I’d give you a million dollars with nothing in the contract I get in return, that contract is unenforceable—a contract must be beneficial to both parties. Why? Because there’s no logical reason for a person to sign a contract where only the other party benefits. It either implies something illegal that is unwritten, or someone who is mentally disadvantaged in such a way that they cannot fully understand what they are agreeing to.
In the 1800’s, as Standard Oil rose to be arguably the most powerful company the world has ever seen, they kept buying up all the smaller oil companies who dared compete with them, making it so no one could get oil unless they got it from Standard. As a result, Standard could charge whatever they wanted, they could treat employees like dirt, and they didn’t have to concern themselves with the quality of their product. Why? Because there was no competition for consumers or employees to force Standard to be better. This is called a monopoly, and is also highly illegal—now. Mostly because of Standard Oil.
- If I owned an automotive chassis manufacturing business but needed to find an engine builder to help me produce a car I want to bring to market, I would meet with several and begin to work on deciding who best suits my needs. After picking a few who show promise, I’d choose the one I liked best from the group and enter into contract negotiations with them. If none of them were to my liking, no contract would be agreed upon. I’d be back to square one and they’d be out of a job, but at least neither of us entered into an agreement we didn’t want—that’s how contract negotiations work. But more importantly, the option for both parties to walk away is the one and only thing that ensures contract negotiations are fair and mutually beneficial.
In an illegal tactic known as a protection racket, if I were to say, “You pay me to protect your business or else…” you would either do it, or you risk me destroying your business’ property or physically attacking you. It’s a tactic made famous by organized crime. Such a contract would be a contract signed under duress, also highly illegal and unenforceable. It is similar to the quid pro quo issue, but the people doing the threatening present the act of not harming you as the thing they are giving you in return.
So now that we’ve covered these tactics, why do I mention all of them? Because labor unions violate each one.
How is this possible?
Government officials over time, courting the unions and the powers they possess to help them get elected, have carved out laws to allow these otherwise illegal practices to be employed by unions. In doing so, it gives the impression they are helping the populace, even though the large majority of Americans are actually non-union.
There was a quid pro quo here, but it wasn’t between the unions and the employers who have a contract with each other, it was between the unions and the politicians. The people and the employers merely got the shaft.
So how do they violate these rules?
Collusion, protection racket, and contracts signed under duress: Union employees unite together to force employers to pay them more instead of competing with each other in a free employment market. They don’t ask for a raise on their individual merits, they demand them as a collective “or else.”
No quid pro quo: They force companies to sign contracts that are beneficial to the union at the detriment of the employer. They insinuate that their quid pro quo is that they provide a good work force to the employer, but if you asked any employer if they wanted a union versus a non-union workforce off the record, I defy you to find employers who would prefer union-workers. Let there be no doubt that if any unionized business was given the option to get out of a union contract and peacefully hire a new non-union workforce, they’d do it without hesitation. The idea that unions provide a service to the employer is a myth perpetuated by unions to overcome the fact that there is not a proper quid pro quo in their contracts. There is no logical argument one can make whereby a contract between an employer and a labor union is mutually beneficial.
Monopoly: No business or employee gets to choose between which union it deals with, nor are there multiple unions competing with each other in an industry. The applicable union a business is compelled to do business with merely dictate they are the ones to be dealt with whether you like it or not. In non-right to work states, they don’t even have a choice as to whether or not to participate as a condition of employment.
Contracts signed under duress: A business owner has no option to just walk away. This is called union-busting, and there are actually laws to prevent it, which effectively strong-arm business into making a deal by legislative force, also a form of duress. Union workers don’t just threaten to quit and find employment elsewhere if their demands aren’t met, they stand outside your business and prevent, deter, and/or interfere with customers and other workers from going in and doing business there. It’s not a Let’s-Do-Business-Together contract, it’s a Do-Business-With-Us-Or-Else contact.
The list of companies that were made healthier and more profitable by the addition of a unionized work force is so minimal as to be non-existent. Much like socialism, it’s sold as a system designed to serve the greater good, but also much like socialism, I have yet to see an effective example where the greater good has truly been served. Until labor unions are forced to operate under the same rules as everyone else, they continue to be illegal enterprises only made legal by selective legislation—our economy will suffer until American’s elect honorable politicians who care more about the moral high ground than election results and put an end to this.
2 thoughts on “Illegal Organizations Operate Legally, But Why?”
The only true fix to this problem is twofold. 1) We clearly need to reduce the power of unions. 2) We also as a society need to be smarter, more ethical and more educated as consumers. Everyone needs to stop taking the path of least resistance and start learning about what the corrupt businesses like Standard Oil of the past are doing with our money. If the business is behaving unethically, it should pay the price on the open market. People can’t be forced to behave in this way, so enlightened individuals need to work harder on spreading this message.
Well, that’s my two cents.
The current situation of laws giving unions special privileges does stink; however, it’s important to differentiate between the ins and outs of legality and morality. There’s still a free market place for unions.
Unions came about as a free market response to workers seeking bargaining power against the power of employers to unilaterally set the terms of employment. Landless immigrants often literally faced the choice of agreeing to the terms of their employer or starving to death (duress). So workers colluded to form a more powerful bargaining entity than individual employees, collusion may be currently illegal, but it’s basically just exercising the freedom to work together.