Don't worry. John Howard is solving this problem about what is the value of unions by insisting that everyone learn the History of Australia. This will show how much unions have been essential in struggling for fair wages and conditions, as well as where power can corrupt any social organization, top or bottom, and what needs to be done.

If Australians also abandon a bit of chauvinism, and teach the History of the World in schools, we can all learn about living in societies where workers have had no unions, and what that is like, and the long struggles for social justice.

I’ve been thinking of the Liberals anti-union ad, you know the one that says 70% of the Labor front bench are unionists and implied that they were also union officials. The one that some OLO posters have been touting – stupidly without checking the validity of the ‘facts’ in the ad.

The Liberal’s advertisement features several Labor front-benchers who, in fact, have never been employed by unions - Wayne Swan, Julia Gillard and Craig Emerson. Every time the stamp comes down say 'Unionist', the Liberals repeat the lie.

The Liberal ad doesn’t mention that Kevin Rudd worked as a diplomat, Stephen Conroy worked for an employer organisation, that Nicola Roxon worked for a High Court judge or that Tony Burke ran his own small business and spent six months working for Malcolm Turnbull.

It doesn’t mention that Anthony Albanese worked as a bank officer, Arch Bevis and Kim Carr as teachers, Craig Emerson and Chris Bowen as an economist. It doesn’t mention that several of Labor’s front benchers are lawyers by training and experience .

Talking of lawyers, if the ALP cared to run an equivalent advertisement, the Coalition’s Cabinet of 18 would be shown to come from an extraordinarily narrow background – 11 lawyers, 3 farmers, 1 doctor, 1 economist, 1 journalist (a failed seminarian) and a former military officer.

This ‘team’ is hardly a match for the breadth of experience of the ALP. Perhaps if the Liberals had more people who'd had more down-to-earth experience then they would never have introduced Workchoices.

Even if the Liberals could get their facts right in their ad, focussing on what ALP people did in the past may be seen as the Liberals' way of hiding their embarrassment that they have nothing much to say about the future.

The notion that Unions 'bought' or established better conditions and pay, is a notion fostered by economic novices. It is in fact the old "post hoc ergo propter hoc", which is to say: "after the fact, therefore because of the fact".

Pay and conditions for individuals increased after the fact of unions, but not because of the fact of unions. The increases simply followed wealth created by new technologies. The unions just went along for the ride, saw political mileage in it, and sucked out some of the wealth for themselves on the way through. Just like they do today.

Things are the way they are for reasons, and no reason is valid unless it agrees with fundamentals, in this case, fundamentals of economics. The most fundamental economic principle is that wealth can never be artificially or arbitrarily created, any more than energy can be created or destroyed. It is extremely naive to think that the intersection of supply and demand in the market place is arbitrary, resulting in arbitrary wage and price levels: as though profits employers make are somehow artificially set, and can be eroded away arbitrarily by any energetic union.

What is rather the case, is that any 'win' by a union, simply results in a future lag in wage rises, or a hidden compensation back to the employers. For example, the overwhelming majority of people think that Superannuation is paid by their employer. It is not. Superannuation is paid (all of it) by the employee. The supposed contribution by employers is simply a portion of wage held back from the employee, and which the employee would normally get as a result of market forces. To think that the government just came along and said "hey, employers, we think you have too much profit, so we want you to donate some money into your employees' super funds", and that the employers said "awwww! shucks! awwww! ok then!" is admit to not knowing anything about economics.

Nothing, I say again NOTHING is received, unless first of all paid for in some form or other.

Liberty puts it well and I agree with most of what was said. However, I have a slight quibble with one quote: "Pay and conditions for individuals increased after the fact of unions, but not because of the fact of unions."

What happens when there are a number of individuals who have all worked hard for an employer, but who, because they have insufficient negotiating clout in the marketplace, do not get the remuneration they deserve given what they've put in? In cases like these, I think the above quote is wrong: they definitely do get a wage rise because of the fact of unions. This is true because the union acts as a counterweight against employers: the string that tethers the helium balloon from leaving planet earth and disappearing upwards.

To give an example of the converse, many Aboriginals who worked on stations around Australia over the past 100 or so years have had their wages permanently withheld. By Liberty's argument, because they helped create wealth by their labour, they should get some economic benefit. So why haven't they? Because they didn't have a sufficiently strong or committed political collective or advocate who helped them. And they still haven't had one to this day. So unionism (ie weight of numbers) of one form or another is a necessary precondition in the world we live in to getting wage justice for many people.

RobP,

Unions are useful in their dissemination of information on terms and conditions amongst workers of like trade. In this they do perform the function of raising wages to the NORM for that sort of work, and so cause pockets of uniformed and therefore exploited workers, to receive the normal terms and conditions. So they perform the legitimate task of equalising wages and conditions across particular trades.

They do not, however, raise the norm. And this is the lie I have addressed. The norm is achieved via market forces, and no amount of robbing Peter to pay Paul, or artificially and arbitrarily reducing supposedly unnecessary, superfluous profits of employers to pay employees, is ever successful. Ultimately, the guy at the bottom will always pay for it. That is the 'beautiful predictability' of being at the bottom.

So your point concerns more the equalisation of terms and conditions across particular trades, and therefore does not undo the fundamental economics of what I have related in my previous post.

If you are interested, may I suggest a brilliant little paperback by a famous economist, Henry Hazlitt, entitled: "Economics in one lesson". Henry unravels all the fallacies.

Liberty

Let's see if I understand your economic theory.

Employers generously offer top wages because of new technologies. No coercion. They just do it because they can.

Then along come the pesky unions and find workers that the employers seem to have overlooked. The unions then provide information to these workers who have missed out and they are brought up to the NORM.

How am I doing so far? OK?

Then along comes this thing called market forces and lo and behold, these market forces raise the NORM, right?

So along comes the unions and equalise everything again (being careful not to raise the NORM, of course). Then it's time for market forces again, right?

Now I haven't had time to read the brilliant little paperback you recommend by your famous economist, Henry Hazlitt, entitled: "Economics in one lesson". And I know Henry will answer all my stupid questions because, as you say, "Henry unravels all the fallacies."

To tide me over until I can read "Economics in One Lesson", can you give me a clue on these silly questions:

1. If the employers offer top wages how do these "pockets of uniformed and therefore exploited workers" get into existence?

2. Can you tell me more about your theory: "That is the 'beautiful predictability' of being at the bottom"?

3. And I didn't quite get what you mean by: "Ultimately, the guy at the bottom will always pay for it". Please explain.

4. What would happen if the unions raised NORM higher than market forces?