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Certain falsehoods about unions and their leaders

Dear Sir,

The following is a recasting of a letter published in 2010, which informs that the more things change, the more they stay the same:

Labour Day is September 6, and tradition means big crowds at Bernard Park to hear self-serving speeches from leaders of the labour movement, all praising the wonderful work they undertake on behalf of the workers.

For more than 100 years, labour unions have been praised, almost worshipped, in folk songs, television specials, movies and speeches as fearless champions of the downtrodden while the bosses are depicted as cold-hearted and exploitive users of slave-labour tactics, and as implacable enemies of their employees by earning huge profits at the expense of workers.

The standard tale that everyone learns with their mother’s milk is that before the advent of unions, workers were horribly exploited by employers, and their wages kept falling. Any improvement in the financial condition of workers is entirely because of the Bermuda Industrial Union and other unions, and had it not been for unions, workers would be on starvation wages, doing an 80-hour week, with no holiday pay and no medical coverage.

This frequently repeated caricature is almost the exact opposite of the truth.

Another misconception is that disputes concerning wages are conflicts between employees and employers. It ascribes to employers the exclusive power to determine the level of wages. This error fails to understand that the employer is not independent in this respect, but is subject to the directions of their customers. Paying too much and having to increase prices means that customers will go elsewhere — as we have seen in the hotel industry.

The Bermuda Industrial Union organised two days of protest this week with the threat of more to come (Photograph by Blaire Simmons)

Such myths have a powerful hold on the psyche of the public and union members, and when they are repeated year after year by union leaders and politicians, they gain widespread acceptance. Key facts are ignored in favour of delusions.

Indeed, just about everything that union members believe about how wages are determined is wrong — but then muddle-headed notions about economics are never in short supply. Alas, economics is not an area in which illusions can be sustained for very long.

Unions are simply cartels with compulsory membership that exist to institutionalise envy, impede efficiency and restrict competition in labour markets — all to the detriment of the general public.

Historically, it has been shown that the only way wages can be increased is capital investment and that will occur only when employers are convinced that it is worthwhile to do. The financial fate of employees is always aligned with the prosperity of their employer’s business.

The reason why Bermuda has a high per capita income (about $92,000 pa, 2010 figures) is the staggering amounts of capital available, which significantly increases the productivity of every worker. In Haiti and Bangladesh, per capita income is $480 pa, substantially below that of Bermuda. The main reason is there is a dearth of capital in these two countries.

If unions had the power to increase wages, it would be a simple matter for the governments of Haiti and Bangladesh to pass legislation empowering unions, and poverty there would be banished instantaneously. Why does that not happen? For the simple reason that union activities do not lead to increased incomes — indeed, based on studies from all over the world, they have the opposite effect.

In short, the belief that labour unions have benefited workers at the expense of wicked Bermudian capitalists is tooth-fairy economics. It is one of the great delusions of today’s Bermuda. Any elementary economics textbook will tell you that unions cannot raise the wages of their membership; the only way that can be done is for productivity to increase, something unions tend to oppose.

Lest I sound too critical, let me add that unions perform significant social functions for their members such as a credit union, advice on pensions, provide educational opportunity, publicly exposing renegade employers, co-operate on safety, are an informal source of job information, and so on. Without unions, life would be made more difficult for their membership.

However, their main reason for existing is the misguided belief that they can and have increased wages above normal. That is total nonsense.

What we should remember in response to the orgy of self-congratulatory hogwash on Labour Day are the following four points:

1, The belief that unions are responsible for workers’ high wages is a myth

2, Union pressure does not lead to increased wages and benefits. The only way this can be done is for employee productivity to increase, and that can be done largely by increasing the amount invested in individual businesses

3, Compelling employers by threats of strikes to pay wages they cannot afford leads to job losses, as we have seen all too clearly in the tourist industry

4, Unions stoke the fires of envy, one of the strongest, ugliest and most destructive of emotions — and one of the seven deadly sins

Bermudians gave up superstitions with the ducking stool. Is it not time to give up worshipping false gods?



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Published September 02, 2021 at 8:00 am (Updated September 01, 2021 at 3:24 pm)

Certain falsehoods about unions and their leaders

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