Milton Friedman - The Real World Effects Of Unions — Transcript

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1. 0:03[Music]
2. 0:12Now, unions do protect some workers.
3. 0:17Unions protect two classes of workers.
4. 0:21Those of their members who are employed
5. 0:26and the union officials who run the
6. 0:28unions.
7. 0:33But if you're going to look at this as a
8. 0:36general answer, you have to recognize
9. 0:40that only about 15th of all the workers
10. 0:45in the United States are members of
11. 0:47trade unions.
12. 0:49And many of those are members of wholly
13. 0:52ineffective trade unions of trade unions
14. 0:54that have had very little effect on the
15. 0:57wages of their members or the working
16. 0:58conditions of their members.
17. 1:01It's very interesting to consider the
18. 1:04actual experience of unions and compare
19. 1:07it with the talk about unions that
20. 1:10emanates from union leaders, union
21. 1:13headquarters and defenders of unions.
22. 1:17If you listen to the talk, you will get
23. 1:20the impression that unions exist to
24. 1:23protect
25. 1:25the workers who are way down on the
26. 1:28income scale. The talk is always about
27. 1:31the necessity of protecting or helping
28. 1:35the lowskilled workers against
29. 1:37exploitation by employers.
30. 1:41But suppose I were to ask you which are
31. 1:43the strongest unions in the United
32. 1:45States? Which unions in the United
33. 1:47States are strongest in the sense of
34. 1:50having been most successful in raising
35. 1:54the wage rates the earnings of their
36. 1:57members?
37. 1:59The answer is very s clear and very
38. 2:01definite. Probably the single most
39. 2:04successful union in the United States
40. 2:06from this point of view is the airline
41. 2:08pilots union.
42. 2:11Now, this is a union whose members
43. 2:13typically receive salaries or wages
44. 2:16somewhere around $50 to $100,000.
45. 2:19They are hardly the poor, deprived,
46. 2:21exploited workers of union literature.
47. 2:26They have been very successful
48. 2:28because they have been able to have a
49. 2:30very strongly organized union which is
50. 2:34and they have for reasons which I will
51. 2:36come to later been in a position to
52. 2:38limit entry into the union and into the
53. 2:40occupation.
54. 2:42In my opinion, the next strongest union
55. 2:44in the United States is an organization
56. 2:46that the people in this room will not
57. 2:48regard as a union. But that's what it
58. 2:51is. In my opinion, the next strongest
59. 2:53union in the United States has been the
60. 2:55American Medical Association.
61. 3:03Now, the American Medical Association is
62. 3:05not a traditional union, but it is a
63. 3:08union from an economic point of view. It
64. 3:10is an organization of people pursuing a
65. 3:13particular trade
66. 3:15which has tried to control the practice
67. 3:18of medicine in such a way as to improve
68. 3:20the conditions of its members.
69. 3:22If you ask a union leader what is the
70. 3:26function of a union? He will agree with
71. 3:29you and he will emphasize and rightly
72. 3:31that the first and primary function of a
73. 3:34union is to improve the working
74. 3:37conditions of its members.
75. 3:40Well, from this point of view, the
76. 3:42American Medical Association is on the
77. 3:44whole done very well.
78. 3:49Again, let me emphasize,
79. 3:52I am not I am not I do not mean in any
80. 3:55way to be invidious. I am not
81. 3:57criticizing the airline pilots. I am not
82. 4:00criticizing the members of the American
83. 4:02Medical Association. I am only trying to
84. 4:04understand and analyze the situation.
85. 4:07Adam Smith in that great book on the
86. 4:10wealth of nations brought home to all of
87. 4:12us that the way in which the the world
88. 4:15runs is mostly
89. 4:17by people seeking to pursue their
90. 4:19self-interest and there's nothing wrong
91. 4:21with that. That's the way in which we
92. 4:24run. And he pointed out that in the
93. 4:26right kind of a structure in the right
94. 4:28kind of a world people in pursuing their
95. 4:31own self-interest would also promote the
96. 4:33general interest.
97. 4:35So I'm not complaining or criticizing at
98. 4:38the moment but only analyzing
99. 4:40if there's any fault to be found. It is
100. 4:43not to be the fault is not to be found
101. 4:47with the members of the pilots union or
102. 4:49the members of the AMA but with the rest
103. 4:51of us for letting them get away with it.
104. 4:57Now the third strongest groups of unions
105. 5:01are undoubtedly the craft unions.
106. 5:04the carpenters,
107. 5:06the plumbers, the plasterers and the
108. 5:09like. And they again are a group that
109. 5:13have always been extremely high paid
110. 5:16that have always been among the elite of
111. 5:19the working community. And finally, as
112. 5:22my fourth class, and this is a newly
113. 5:25developing class,
114. 5:27the strongest unions have in recent
115. 5:29years, in the past decade in particular,
116. 5:32become the municipal unions. The unions
117. 5:36who have played a considerable part in
118. 5:39reducing New York City to its present
119. 5:41state of bankruptcy.
120. 5:44the garbage workers unions,
121. 5:48the school teachers unions,
122. 5:51all of the unions of municipal
123. 5:52employees.
124. 5:55Now these municipal unions of course are
125. 5:58illustrate a very important general case
126. 6:01that we will expand more. Why are they
127. 6:04so strong?
128. 6:07Because the people who arrange
129. 6:10employment with them are not the people
130. 6:12who pay their salaries.
131. 6:14It's the taxpayers of New York who pay
132. 6:17the salaries of the people, but it's the
133. 6:19officials of New York City who make the
134. 6:22deals with the unions.
135. 6:24Now, that illustrates a general
136. 6:26principle which has reached its most
137. 6:28extreme form in Great Britain.
138. 6:32Unions are much stronger in Great
139. 6:33Britain than they are in the United
140. 6:35States. And one of the major reasons
141. 6:37they are stronger is because the
142. 6:40government of Great Britain has
143. 6:42nationalized a great many more
144. 6:44industries. In particular, coal mining,
145. 6:47railroads, electric public utilities,
146. 6:50telephones are all nationalized
147. 6:52industries. And the worst labor problems
148. 6:55in Britain have almost invariably been
149. 6:57in those industries which are
150. 6:59nationalized by the government. Just as
151. 7:03in the New York City and other municipal
152. 7:05cases, the growing
153. 7:10role of government has tended to expand
154. 7:14the importance and the role of the
155. 7:15unions. One of the strong unions unions
156. 7:18in the United States for the same reason
157. 7:20are the postal workers unions. And so we
158. 7:23go down the line. But the most important
159. 7:26thing about all of these is that the
160. 7:28strong unions tend to be among the high
161. 7:30paid workers.
162. 7:34Now you have to ask yourself,
163. 7:37are they high paid because they are
164. 7:38strong unions
165. 7:42or are they strong unions because they
166. 7:44are high paid?
167. 7:46It's a very important distinction and
168. 7:49the fundamental answer is
169. 7:52the people who are in a high paid
170. 7:53position are in far better position to
171. 7:55have a strong union
172. 7:58and the strong unions then reinforce
173. 8:00their position. So both things are true.
174. 8:04Part of their high pay position today
175. 8:07derives from their union existence, the
176. 8:10existence of strong unions. But they
177. 8:12have been able to have strong unions
178. 8:14because they are highly skilled people,
179. 8:17relatively few in number, and therefore
180. 8:21far more effective in being able
181. 8:24to organize in such a way as to raise
182. 8:27their pay. Because you must recognize
183. 8:31that the only way in which any group of
184. 8:34workers
185. 8:36through union organization
186. 8:38can increase the amount of its pay
187. 8:42is to make sure that there are fewer
188. 8:44jobs available.
189. 8:46There is no way in which a union can
190. 8:50simultaneously increase the number of
191. 8:52jobs and the pay.
192. 8:54The law of economics,
193. 8:57the law of demand in economics is
194. 8:59inescapable. You can't get out of it.
195. 9:02Raise the price of anything
196. 9:04and fewer people will want to buy it.
197. 9:07Make labor more expensive in any area.
198. 9:10Make carpenters more expensive,
199. 9:13the number of jobs available for
200. 9:15carpenters will be less. Make physicians
201. 9:18more expensive.
202. 9:20The number of jobs available for
203. 9:22physicians will be less. make airline
204. 9:24pilots more expensive. The number of
205. 9:27jobs available for airline pilots will
206. 9:29be fewer.
207. 9:32As a result, the gains of the group of
208. 9:36workers I've been talking about or other
209. 9:37union workers are at the expense
210. 9:41the union workers gain at the expense of
211. 9:43other workers.
212. 9:47The only way as I say in which they can
213. 9:49get a higher pay is by arranging things
214. 9:51so that there end up being fewer jobs.
215. 9:53And that means that other people who
216. 9:55might be perfectly competent who might
217. 9:58be perfectly available for such jobs are
218. 10:01denied their job those jobs
219. 10:06as consumer not only is so the effect of
220. 10:10the higher pay of unions is lower pay
221. 10:13for all other workers. I once made the
222. 10:15estimate this was 20 odd years ago but
223. 10:17since there have been a number of
224. 10:18studies that have confirmed this
225. 10:20judgment that on the average about 10 to
226. 10:2415% of the workers in this country had
227. 10:28been able through a union organization
228. 10:30to raise the level of their pay by
229. 10:32something like 10 to 15%.
230. 10:35that this had been the at the cost
231. 10:38of a roughly 4% reduction
232. 10:42in the wages earned by the other 85%.
233. 10:45So the effect has been to raise the pay
234. 10:48of high paid workers and lower the pay
235. 10:51of low paid workers.