Liberty,

Ultimately, the whole debate can be boiled down to two fundamental truths as you have said:

1. As a worker, you can only (sustainably) get what you have put in.
2. The unions do act as an agent to equalise wages up to a norm.

When looking at the big picture, the whole process tends to be like an articulated caterpillar movement: first, the front end moves up (industry going forward and making profits) and then the back end catches up (unions getting wage rises for the "laggards") thus scrunching the body of the caterpillar before going through the whole cycle again. In this analogy, if the front end goes too far, it splits itself in two: not a good idea.

Every time there is such an articulated movement in the economic sphere, of course, there will be a new set of winners and losers. However, like the caterpillar, the economy overall is at least making forward progress.

As to whether the unions do or do not raise "the norm" really depends on how you define "norm" as well as the previous history of the industry they're operating in. I'm sure that unions sometimes do raise wages above their sustainable limits and sometimes they don't. Sometimes raising them above the immediately sustainable limit is justified because they are making up for many years in the past where the industry's workers were underpayed, for example. Other times unions do it through pure power and greed. Eventually, all the employer/union toing and froing will reach parity and unity, regardless of who struck the first blow.

FrankGol, if the union raised its wages above market forces, one or more of the following would happen. The companies go out of business (bad for workers); the whole industry becomes unsustainable and it either reduces wages (bad for the next generation of workers in that industry) or it somehow offsets its losses onto other industries (bad for those workers); or you get lazy/contented workers (ie, why do anything different and be innovative when you're already getting a good wage?)

Frankgol,

I have had to answer you in 2 parts, owing to word count.

PART 1:

[[[[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.]]]]
No….they do it only when they have to. And they have to only when other employers threaten to attract their employees away from them. So in effect market forces provide the coercion.

[[[[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.]]]]
More fundamentally, the unions find employERS that have been overlooked by the MARKET PLACE.

[[[[Then along comes this thing called market forces and lo and behold, these market forces raise the NORM, right?]]]]
Market forces only raise the norm if the market force in question is “increased productivity”. So it is important to depart from the general “market forces”, and actually state what particular market force is in mind.

[[[[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?]]]]
Market forces operate independent of, or tangentially to, the benefit of unions. Market forces simply drive the norm up or down. Unions make sure that the norm is universally applied. If the norm is naturally universally applied in a particular society anyway, unions are redundant.

Frankgol,

PART 2:

[[[1. If the employers offer top wages how do these "pockets of uniformed and therefore exploited workers" get into existence?]]]]
Employers, acting out of a desire for profit rather than love, will only offer top wages (the NORM, or equilibrium determined by the intersection of supply and demand), when they have to. If they are aware that their employees are NOT aware of the NORM, they may actually offer less, hoping to get away with it. That is where unions come in.

[[[[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.]]]]
Because employers produce wealth before their employees who helped them produce it are paid for their contribution (ie because the product is necessarily produced before the workers are paid out of sales revenue), it is necessarily the case that employees will always bear any potential decrease in employers’ wealth, before the employers bear it, otherwise the employers will not produce in the first place. It is a point of logic/philosophy, which requires some contemplation.

[[[[4. What would happen if the unions raised NORM higher than market forces?]]]]
This is a contradiction in definitions. The NORM is always determined by market forces. What I think you might be asking is “what would happen if the unions raised wages above the NORM determined by market forces?”. RobP’s answer to you answers this question.

Liberty

Thanks for taking the time to give clarification. Now I understand.

1. The market place (let's call it MP) is like a giant machine independent of the people who benefit from it or are victims of it. I won't ask who made MP - that's like asking a Christian, who made God.

2. MP creates Normal Wages (NW) who has to obey MP's cousin Market Forces (MF). MP warns employers who are in danger of losing low-paid employees that they should pay higher wages, otherwise...MF will punish them.

3. But, unfortunately, MP is not perfect - there's a vision defect. MP sometimes overlooks employees who don't get the warning about Norm and MF.

3. So another powerful machine called trade unions (let's call them TU) comes along to alert employers who have been overlooked by MP. TU makes sure that Norm is "universally applied."

4. But MP can't be as powerful as first thought because, if they thought they could get away with it, employers would ignore MP's law about MF. If all employers put their heads together and decided they could get away with it, wouldn't MP and MF encourage them to pay less than Norm? TU couldn't keep up with its job of seeing that Norm is universally applied?

5. Now another conundrum. Employers can only pay workers when the workers have made things for employers to sell. But, if I follow your summary of Henry Hazlitt's "Economics in one lesson", here I can see a snag. What happens if the workers say, "No, you are not paying us the Norm so we won't make any more products until you have paid us the Norm"? Hasn't the giant machine MP started to move in the other direction, and won't it soon start to spin out of control?

You say, "Henry unravels all the fallacies." Is that when he says the Government steps in and bans TU from interfering with MF and MP?

FrankGol,

You've just said what Liberty said, but used baby language instead. Why bother?

Would it be too much to ask that you come up with something original and actually contribute to the furthering of the debate?

RobP says: "You've just said what Liberty said, but used baby language instead. Why bother?"

Is this the same RobP whose own posting told us that the whole process of market forces is like : "an articulated caterpillar movement: first, the front end moves up (industry going forward and making profits) and then the back end catches up (unions getting wage rises for the "laggards") thus scrunching the body of the caterpillar before going through the whole cycle again. In this analogy, if the front end goes too far, it splits itself in two: not a good idea."

I'm sorry, I thought this was the comedy debate not a discussion of unions and the economy. An irresistible image came unbidden to my mind of the caterpillar turning into a beautiful butterfly and flying away. Not good economics at all.