Freedom of association in union representation elections requires that workers be able to cast an informed vote. Workers must have access to both pro- and anti-unionization arguments. We can count on union organizers vigorously to present pro-unionization arguments. They start doing so long before any representation election is scheduled because they must get 30 percent of eligible workers to sign cards requesting unionization before the National Labor Relations Board (NLRB) will order an election.

We usually can count on employers vigorously to present anti-unionization arguments, but they have less time than union organizers have to make their case. They often don’t know about union organizing efforts until the union has collected the requisite signatures. The time between the NLRB’s order to have an election and the actual election is crucial if workers are to be able to hear the employer’s side of the story and thus be able to make an informed choice about how to vote.

In 1947 Congress amended Section 7 of the National Labor Relations Act (NLRA) to make explicit the right of workers to refrain from unionization. To give effect to that right, Congress added Section 8(c), which affirmed the right of employers to engage in free speech during election campaigns. Congress wanted workers to hear both sides of the debate over whether to unionize so that they could make informed decisions.

In 1948 the NLRB endorsed this intent of Congress by declaring, in General Shoe Corp., that its primary duty under the new law was to support workers’ right to “make a free and fair choice” on the question of whether to unionize. Absent force or fraud, election debate is, the Board asserted, the best way to enable workers to do so.

In Linn v. United Plant Guard Workers (1966) the Supreme Court noted approvingly that the NLRB does not “police or censor propaganda used in the elections it conducts, but rather leaves to the good sense of the voters the appraisal of such matters, and to opposing parties the task of correcting inaccurate and untruthful statements.” The Court went on to affirm that “debate . . . should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks.”

Notwithstanding the clear intent of the 1947 Congress, and the eager endorsement of that intent by the 1948 NLRB, and the 1966 Supreme Court, the present NLRB demurs. It takes its orders from unions, and unions seek to silence employer speech.

The failed card-check bill would have silenced employer speech because it would have forced an employer to recognize a union as the monopoly bargaining agent over his employees if it collected the signatures of at least 50 percent of them on cards requesting such recognition. There would be no election campaign during which employers could give their side of the debate.

Card Check by Fiat

Union cronies in Congress failed to deliver on card check, but on August 26, 2011, the pro-union NLRB troika—Mark G. Pearce, Craig Becker, and Wilma B. Liebman—created a limited form of card check by regulatory fiat. In its Lamons Gasket decision the troika overturned the Board’s 2007 decision in Dana Corp.

The NLRA permits an employer voluntarily to recognize a union as the monopoly bargaining agent over his employees if the union collects the signatures of at least 30 percent of them on cards that request such recognition. In Dana Corp. the NLRB ruled that when an employer chooses to grant recognition to a union without first letting the employees vote on whether to be subjected to union rule, the affected employees could immediately demand an election to challenge the employer’s voluntary recognition.

In Lamons Gasket the troika declared that the affected employees would have to wait for at least six months, and in some cases up to one year, before they could hold a challenge election. This means that union rule over workers, lasting at least six months, can be achieved by a 30-percent card check rule.

Why would an employer choose to turn his workers over to union rule without a secret ballot election? Because he fears a “corporate campaign.” Following Saul Alinsky’s Rules for Radicals, a union picks a target enterprise to unionize and demands that the target not resist. If the target chooses to defend itself and its workers against unionization, the union forms coalitions with leftist community-activist groups to try to destroy the target’s standing in the community and its relationships with lenders, suppliers and customers. The union and its allies smear the target and its officials as monsters who want to take away their employees’ freedom of association. The union and its allies, often including benighted clergy, claim the moral high ground. But employers who choose to resist really occupy the moral high ground. They promote their employees’ freedom of association.

Shortened Election Process

In another attack on employer campaign speech, in June 2011 the NLRB troika decided to cut the representation election process from its present median of 38 days to ten days. With less time to speak, employers will speak less.

There are several reasons for workers to choose to be union-free. For example, union-free enterprises offer more job security than their union-impaired counterparts because the latter are too sclerotic to frequently changing global market conditions. Union-free firms can reward workers on the basis of productivity. In union-impaired firms pay is based on job classifications and seniority. Union-free workers are free to excel, while union-impaired workers are chained to a contract. Unions promote an adversarial relationship between workers and employers, while union-free employers are free to enlist workers as partners in building durable and growing value.

The NLRA illegitimately forces workers into representation elections. To make matters worse, the current NLRB seeks to obstruct the access of workers to arguments in favor of remaining union-free. Employers are the most reliable conveyors of those arguments. Employers must be free to speak.

Thomas Friedman agrees in his New York Times column “The Earth is Full” (June 8, 2008), in which he says, “[P]opulation growth and global warming push up food prices, which leads to political instability, which leads to higher oil prices, which leads to higher food prices, and so on in a vicious circle.”

In his article “What Nobody Wants to Hear, But Everyone Needs to Know,” University of Texas at Austin biology professor Eric R. Pianka wrote, “I do not bear any ill will toward people. However, I am convinced that the world, including all humanity, WOULD clearly be much better off without so many of us.”

However, there is absolutely no relationship between high populations, disaster, and poverty. Population-control advocates might consider the Democratic Republic of Congo’s meager 75 people per square mile to be ideal while Hong Kong’s 6,500 people per square mile is problematic. Yet Hong Kong’s citizens enjoy a per capita income of $43,000 while the Democratic Republic of Congo, one of the world’s poorest countries, has a per capita income of $300. It’s no anomaly. Some of the world’s poorest countries have the lowest population densities.

Planet earth is loaded with room. We could put the world’s entire population into the United States, yielding a density of 1,713 people per square mile. That’s far lower than what now exists in all major U.S. cities. The entire U.S. population could move to Texas, and each family of four would enjoy more than 2.1 acres of land. Likewise, if the entire world’s population moved to Texas, California, Colorado, and Pennsylvania, each family of four would enjoy a bit over two acres. Nobody’s suggesting that the entire earth’s population be put in the United States or that the entire U.S. population move to Texas. I cite these figures to help put the matter into perspective.

Let’s look at some other population density evidence. Before the collapse of the Soviet Union, West Germany had a higher population density than East Germany. The same is true of South Korea versus North Korea; Taiwan, Hong Kong, and Singapore versus China; the United States versus the Soviet Union; and Japan versus India. Despite more crowding, West Germany, South Korea, Taiwan, Hong Kong, Singapore, the United States, and Japan experienced far greater economic growth, higher standards of living, and greater access to resources than their counterparts with lower population densities. By the way, Hong Kong has virtually no agriculture sector, but its citizens eat well.

One wonders why anyone listens to doomsayers who have been consistently wrong in their predictions—not a little off, but way off. Professor Paul Ehrlich, author of the 1968 bestseller The Population Bomb, predicted major food shortages in the United States and that by “the 1970s . . . hundreds of millions of people are going to starve to death.” Ehrlich forecasted the starvation of 65 million Americans between 1980 and 1989 and a decline in U.S. population to 22.6 million by 1999. He saw England in more desperate straits: “If I were a gambler, I would take even money that England will not exist in the year 2000.”

Expert Poverty

By a considerable measure, poverty in underdeveloped nations is directly attributable to their leaders heeding the advice of western “experts.” Nobel laureate and Swedish economist Gunnar Myrdal said (1956), “The special advisors to underdeveloped countries who have taken the time and trouble to acquaint themselves with the problem . . . all recommend central planning as the first condition of progress.” In 1957 Stanford University economist Paul A. Baran advised, “The establishment of a socialist planned economy is an essential, indeed indispensable, condition for the attainment of economic and social progress in underdeveloped countries.”

Topping off this bad advice, underdeveloped countries sent their brightest to the London School of Economics, Berkeley, Harvard, and Yale to be taught socialist nonsense about economic growth. Nobel laureate economist Paul Samuelson taught them that underdeveloped countries “cannot get their heads above water because their production is so low that they can spare nothing for capital formation by which the standard of living could be raised.” Economist Ranger Nurkse describes the “vicious circle of poverty” as the basic cause of the underdevelopment of poor countries. According to him, a country is poor because it is poor. On its face this theory is ludicrous. If it had validity, all mankind would still be cave dwellers because we all were poor at one time and poverty is inescapable.

Population controllers have a Malthusian vision of the world that sees population growth outpacing the means for people to care for themselves. Mankind’s ingenuity has proven the Malthusians dead wrong. As a result we can grow increasingly larger quantities of food on less and less land. The energy used to produce food, per dollar of GDP, has been in steep decline. We’re getting more with less, and that applies to most other inputs we use for goods and services.

Ponder the following question: Why is it that mankind today enjoys cell phones, computers, and airplanes but did not when King Louis XIV was alive? After all, the necessary physical resources to make cell phones, computers, and airplanes have always been around, even when cavemen walked the earth. There is only one reason we enjoy these goodies today but did not in past eras. It’s the growth in human knowledge, ingenuity, and specialization and trade—coupled with personal liberty and private property rights—that led to industrialization and betterment. In other words human beings are immensely valuable resources.

What are called overpopulation problems result from socialistic government practices that reduce the capacity of people to educate, clothe, house, and feed themselves. Underdeveloped nations are rife with farm controls, export and import restrictions, restrictive licensing, price controls, plus gross human rights violations that encourage their most productive people to emigrate and stifle the productivity of those who remain. The true antipoverty lesson for poor nations is that the most promising route out of poverty to greater wealth is personal liberty and its main ingredient, limited government.

One instance of this law is the famous, or infamous, Detroit riot of 1967. After the riot various pundits “informed” the public that it had happened because so many of Detroit’s black inner-city residents were poor and hopeless. That became the accepted explanation and, to the extent that anyone remembers it, probably still is. But a close look at the record reveals a much more interesting story—of a government’s police force oppressing people who simply wanted to live their lives peacefully. This is not to say that the people who rioted bore no responsibility—everyone is responsible for his own actions. However, without the police force’s intrusion and without a previous federal program that had destroyed a community, the riot probably would not have occurred. And the evidence for this is hidden in plain sight.

During a five-day period in July 1967, 43 people were killed during the riot in Detroit’s inner city. Shortly after that, President Lyndon B. Johnson created the National Advisory Commission on Civil Disorders—the so-called Kerner Commission, named after its head, then-governor of Illinois Otto Kerner. (Kerner was later convicted of having taken a bribe while governor and served time in prison.) The Commission was tasked with determining the causes of that and other riots during the summer of 1967 and with making recommendations to prevent such riots in the future.

Its 1968 Report of the National Advisory Commission on Civil Disorders made a big splash, selling about two million copies. The report stated that black poverty was a big cause of the Detroit riots, and its recommendations for more government jobs and housing programs for inner-city residents were explicitly based on that assumption. These recommendations, plus the charge of white racism, received much of the publicity at the time and are what most people took away from the report. Publishers make a distinction between book buyers and book readers: The latter tends to be a small subset of the former. That distinction seems to apply here. It’s too bad that more people didn’t actually read the report. The Commission’s own account of the details of the Detroit riot tells a story that is fundamentally inconsistent with the Commission’s own conclusions and recommendations. Here’s the report’s first paragraph on Detroit: “On Saturday evening, July 22, the Detroit Police Department raided five ‘blind pigs.’ The blind pigs had their origin in prohibition days, and survived as private social clubs. Often, they were after-hours drinking and gambling spots.”

These “blind pigs” were places that inner-city black people went to be with their friends, to drink, and to gamble; in other words, they were places where people peacefully enjoyed themselves and one another. The police had a policy of raiding these places, presumably because the gambling and the unlicensed alcohol were illegal. The police expected only two dozen people to be at the fifth blind pig, the United Community and Civic League on 12th Street, but instead found 82 people gathered to welcome home two Vietnam veterans. The police proceeded to arrest them. “Some,” says the Commission report, “voiced resentment at the police intrusion.” Who’d have thunk it? The resentment spread and the riot began.

In short the triggering cause of the Detroit riot, in which more people were killed than in any other riot that summer, was the government crackdown on people who were going about their lives peacefully. For the rioters the last straw was the government’s suppression of peaceful, albeit illegal, black capitalism. Interestingly, in its many pages of recommendations for more government programs, the Commission never suggested that the government should end its policy of preventing black people from peacefully drinking and gambling.

This is par for the course. When a government intervention helps cause a problem, even those people who recognize that the intervention was somewhat to blame rarely call for an end to, or even a scaling down of, such intervention.

The government’s fingerprints show up elsewhere in the Commission’s report. Urban renewal “had changed 12th Street [where the riot began] from an integrated community into an almost totally black one,” says the report. It tells of another area of the inner city to which the rioting had not spread: “As the rioting waxed and waned, one area of the ghetto remained insulated.” The 21,000 residents of a 150-square-block area on the northeast side had previously banded together in the Positive Neighborhood Action Committee (PNAC) and had formed neighborhood block clubs. These block clubs were quickly mobilized to prevent the riot from spreading to this area. “Youngsters,” wrote the Commission, “agreeing to stay in the neighborhood, participated in detouring traffic.” The result: no riots, no deaths, no injuries, and only two small fires, one of which was set in an empty building.

What made this area different was obviously the close-knit community the residents had formed. But why had a community developed there and not elsewhere? The report’s authors unwittingly hint at the answer: “Although opposed to urban renewal, they [the PNAC] had agreed to co-sponsor with the Archdiocese of Detroit a housing project to be controlled jointly by the archdiocese and PNAC.” In other words, the area that had avoided rioting had also successfully resisted urban renewal, the federal government’s program of tearing down urban housing in which poor people lived and replacing it with fewer housing units aimed at a more-upscale market. Economist Martin Anderson, in his 1964 book, The Federal Bulldozer, had shown many of the problems with urban renewal. Even some of Anderson’s harshest critics at the time admitted that urban renewal could be called “Negro clearance.” Indeed, at the time, an even blunter term, also beginning with the letter “n,” was used.

But the Kerner Commission, even in the face of its own evidence, refused to admit that urban renewal was a contributing factor to the riots. Indeed, the Commission recommended more urban renewal. The Commission’s phrasing is interesting, though, because it admits so much about the sorry history of the program:

Urban renewal has been an extremely controversial program since its inception. We recognize that in many cities it has demolished more housing than it has erected, and that it has often caused dislocation among disadvantaged groups.

Nevertheless, we believe that a greatly expanded but reoriented urban renewal program is necessary to the health of our cities.

In short the commission’s antidote to poison was to increase the dose.

Franklin Roosevelt, a dedicated crony of private-sector unionism (PSU), believed that government-sector unionism (GSU) was “unthinkable and intolerable.” In 1955 George Meany, the first president of the modern AFL-CIO, opined that “It is impossible to bargain collectively with the government.” This sentiment against GSU was almost universally shared, but it could not withstand the realities of electoral politics.

The first government-sector union was created in New York City in 1958 at the behest of Mayor Robert Wagner—son of Senator Robert Wagner, the principal author of the 1935 National Labor Relations Act (NLRA), which imposed PSU. Mayor Wagner and union boss Jerry Wurf agreed that as many city workers as possible should be assembled into unions and forced to pay union dues. Wagner saw that a well-organized and well-funded union could be a formidable force in future elections by providing him with disciplined boots on the ground as well as other in-kind and pecuniary support. Wurf saw that he would get a special place at the table around which public policy is formed. Their scheme bore fruit in Wagner’s 1961 reelection effort. (In 1959 Wisconsin became the first state to authorize GSU.)

President Kennedy noticed the role government-sector unions played in Wagner’s 1961 victory, Fred Siegel of the Manhattan Institute writes. In January 1962, with an eye to his expected 1964 reelection campaign, Kennedy signed Executive Order 10988, which imposed GSU on many groups of federal workers. Thereafter GSU spread to as many as 30 states.

A Fourth Branch of Government

All federal and state statutes that authorize GSU are patterned on the NLRA. A key section of the NLRA imposes on employers a duty to bargain in good faith with unions. Thus a union can force an employer to bargain with it over all questions involving wages and other terms and conditions of employment. In practice the “good faith” part of the duty to bargain means that the employer must be willing to compromise during the bargaining process.

In ordinary contract law each party must consent to bargain with each of the other parties. All parties are free simply to walk away at any time, and any contract that emerges from forced bargaining is null and void. Not so with unions. Every collective bargaining (CB) contract emerges from forced bargaining, yet every CB contract is considered legal and is enforceable in the courts.

Elected government office holders are routinely lobbied by organized interests such as the Sierra Club and the Chamber of Commerce. But neither they nor any other ordinary lobbyist can force any elected or appointed government official to bargain with them, much less compromise with them. In contrast union officials have the power to force government officials to bargain and compromise with them on what burdens will be placed on taxpayers. In effect government-employee unions (GEUs) are a fourth branch of government with which the legislative and executive branches must bargain and compromise on matters of public policy.

Wages and other terms and conditions of government employment are matters of public policy. They are paid for by taxpayers. Taxes are supposed to be determined in the open by elected legislatures together with elected presidents and governors. Moreover, taxpayers are supposed to have access to and a voice in the legislative process.

In contrast the CB process is carried out behind closed doors. Taxpayers employ government workers but have no seat at the table. Government officials at the table do not represent the interests of taxpayers; they seek to expand the scope of their power and influence. To them bigger budgets are always desirable. GEUs seek better wages, benefits, and conditions of employment for government employees so they can justify raising dues. GEU bosses seek more perks and power for themselves. The two sides of the government-sector CB table are cronies. They both seek to pick the pockets of taxpayers.

Concentrated Benefits and Diffused Costs

Other things equal, no one likes having to pay higher taxes. But when everyone pays higher taxes the extra tax receipts are disproportionately spent in ways that benefit government-sector workers. Their wages go up, or other terms of employment are improved, or the budgets of their agencies expand so their prominence and power increase—perhaps all of the above. Private-sector employees pay the higher tax and get little or nothing back, but since the costs are widely dispersed, the per-person burden is not high enough to spark taxpayer resistance. (The revolt against GEUs in Wisconsin and elsewhere suggests that in some venues the per-person cost is getting high enough to create significant resistance.)

GEUs support their friendly politicians out of dues taken from the workers they represent. All taxpayers pay the wages of government employees, and some of those wages end up as union dues that become campaign donations to big-government politicians. In short all taxpayers, even those who favor smaller government, are forced into making campaign donations to big-government politicians. Meanwhile, the politicians, bureaucrats, and GEUs happily dance around their closed iron triangle, taxpayers be damned.

Keeping It All Going

In February 2009, using the Great Recession as cover, President Obama signed the American Recovery and Reinvestment Act (ARRA). It was a benighted Keynesian scheme based on the popular superstition that a recession can be cured by increasing government spending and handing out temporary lump-sum tax cuts. ARRA increased government spending by $499 billion and cut $288 billion in taxes. What was the result? Research done by Timothy Conley (University of Western Ontario) and Bill Dupor (Ohio State University) reveals that ARRA “created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private-sector jobs” (“The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled”). In short most of the money went to bail out several states so they could avoid laying off GEU dues payers.

Another crony antic of the Obama administration was to impose a GEU on 40,000 TSA officers (TSOs), who thus become union dues payers. The TSA was created after the 9/11 attacks. At its inception most politicians, at least publicly, said that the job of officers was to react rapidly and flexibly to unpredictable security threats. Even politicians know that union-impaired workplaces don’t work like that. Unionization was banned until February 2011, when John Pistole, the Obama-appointed administrator, lifted the ban. Congress tried to intervene, but the effort was defeated in the Senate. The American Federation of Government Employees and the National Treasury Employees Union fought over which would get monopoly bargaining privileges over the officers. The Federation won. Now that they are union-protected, the officers will likely morph from grossly abusive to crudely invasive.

The Act contains two important provisions. Section 1 outlaws contracts and conspiracies in restraint of trade. Section 2 prohibits monopolization and attempts to monopolize.

Most people have a knee-jerk response to monopoly and collusive agreements and condemn such behavior out of hand. Before making a broad condemnation, we might consider the behavior more generally. The Bible’s book of Exodus gives us the Ten Commandments. The first two, and presumably most important, are: “Thou shalt have no other gods before me,” and “Thou shalt not make unto thee any graven image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth. Thou shalt not bow down thyself to them, nor serve them: for I the LORD thy God am a jealous God.” These two commandments establish God as a monopoly and to reinforce the monopoly, there shall be no God-substitutes. I do not think that many would condemn Christianity on the basis of its monotheism.

Another area of monopoly and collusion is marriage. The marriage license is in fact a collusive monopoly contract between two persons that closes—or at least is supposed to close—further competition.

The monopolistic and collusive characteristics of religion and marriage emerge naturally and benefit society. Therefore, we are faced with the question of what kinds of monopoly and collusion we would wish to restrain. I would venture to suggest that government-coerced and -encouraged monopoly and collusion should be restrained. Moreover, if the Department of Justice were really serious about Sherman antitrust provisions, it would focus on Washington as the main source of collusion in restraint of trade.

One of the most egregious examples of conspiracy and monopoly in the restraint of competition are Private Express Statutes. These are a set of civil and criminal federal laws that outlaw the delivery of first-class mail by all entities other than the U.S. Postal Service. As such they represent government coercion that bans peaceable, voluntary exchange in the delivery of first-class mail. Aside from the well-documented inefficiencies of the Postal Service, the postal monopoly should be condemned on that basis.

The U.S. Department of Agriculture (USDA) establishes fruit and vegetable marketing orders and milk marketing orders with the stated purpose of balancing the products’ availability with an adequate return to producers and the needs of consumers. Federal marketing orders are locally administered by committees of producers. Initiated by industry and enforced by the USDA, they bind an entire industry in a geographical area.

For example, there’s the Navel Orange Administration, in which growers get together and establish citrus production quotas in California and Arizona. Any citrus grower exceeding his market quota by bringing too much to market and threatening to lower prices faces fines and imprisonment. This collusion applies to nearly all commercially produced fruits and vegetables. The effect of market quotas is to generate prices that are higher than they would be without the government-backed collusion.

Mandated maximum quantities and/or minimum prices are surefire indicators of seller collusion in restraint of trade. An example of the latter is minimum wage law. The effect of a minimum wage is discriminating against low-skilled workers. What employer would find it profitable to pay the mandated wage of $7.25 to a worker capable of producing only $4 or $5 an hour?

The minimum wage can be used as a tool of collusion. For some activities low-skilled workers are a substitute for higher-skilled workers. Imagine that 100 yards of fencing could be produced per day either by employing three low-skilled workers at $13 each or one high-skilled worker at $38. A profit-motivated employer would hire the high-skilled worker because it’s cheaper. If the high-skilled worker demanded $50 a day, the employer would replace him with the three low-skilled workers. But suppose the high-skilled worker could lobby Congress to enact a $20-a-day minimum wage in the fencing industry. Now using the three low-skilled workers would cost $60. Thus the probability of the high-skilled worker getting $50 would be greater because he has been able to use government to price his competition out of the market.

The Davis-Bacon Act is a 1931 federal law that mandates that “prevailing wages” be paid on all federally financed or assisted construction projects. As such it is a union-supported super-minimum wage law. Its stated intention—as seen in the 1931 congressional testimony supporting the Act—was to price black workers out of the market. Representative Clayton Allgood of Alabama said, “Reference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country. This bill has merit, and with the extensive building program now being entered into, it is very important that we enact this measure.”

Representative John J. Cochran of Missouri voiced similar sentiments, saying he had “received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.” AFL President William Green made clear the unions’ interests: “Colored labor is being sought to demoralize wage rates [in Tennessee].”

The Davis-Bacon Act remains on the books today. The political rhetoric in support of the Act has changed but its effects have not. It remains an ongoing collusion against lower-skilled, non-union construction workers.

Just about every cabinet-level federal agency enforces some kind of collusive restraint on competition. Without government support, collusion has a tendency to break down primarily because what is in the best interests of an individual colluding member is not necessarily in the best interests of other members. For example, it pays a member to cheat on the agreement by, say, shading his price a bit to get more business. The members who abide by the agreement will find themselves losing business, and before long they will start cheating. The cheating becomes infectious, and the collusion breaks down. But if a federal law fixes the terms of the collusion, then to violate the terms is not simply a violation of a gentlemen’s agreement; it’s also a violation of the law, with the possibility of fines and imprisonment. In other words, effective collusion needs some kind of enforcement technique. Most often it is the threat of sanctions for noncompliance.

The bottom-line reality is that collusive monopolistic restraints on competition are deemed illegal and hence prosecutable only if the seller does not first secure Washington’s permission to rip off his fellow man.

But is the sector too small? In an article titled “Yes, American Manufacturing Really Is in Trouble” (Huffington Post, February 11), free-trade critic Ian Fletcher says it is.

To judge whether a sector of the economy is too small, we need criteria. Fletcher writes: “Unfortunately, the only rational standard for how much America should produce is how much Americans wish to consume. Because the only way to consume is either to produce what you wish to consume, or produce something else you can exchange for it” (italics in original).

But if that were the only way, Fletcher should be content—yet he’s not. Why not? Because, as he well recognizes, it’s not the only way, and that’s why he wrote his article. He notes two ways that we consume what we get from foreigners besides selling them goods and services: 1) by selling them assets (these assets are produced, but that’s not what he means) or 2) by borrowing. He objects to both.

He writes: “And this is where American manufacturing is clearly falling short, because America is running a huge trade deficit in manufactured goods, and we don’t produce enough of anything else (raw materials, services) to cover the gap. So instead we borrow and sell off existing assets to pay for imports.”

Fletcher’s ideal is becoming clear: The “right” amount of manufacturing is achieved when the amount the United States spends on other countries’ manufactured goods (and I think he means to include raw materials and services) just equals the amount foreigners spend on our manufactured goods, services, and raw materials. In short, Fletcher’s ideal is a zero trade balance.

He’s almost right that if we have a trade deficit, which we do, we will have to borrow from foreigners or sell assets. Why almost? Because Fletcher leaves out two other possibilities. First is that foreigners will want to invest directly in the United States. Second is that they will want to hang on to some dollars: The U.S. dollar is still the closest thing there is to a world currency.

It’s true that the increases in foreign direct investment in the United States and in dollars held are substantially smaller now than the sale of assets and the increase in borrowing. So let’s grant that most of the trade deficit will be paid for with borrowing and asset sales. What’s wrong with that? In a later article, “The Biggest Bubble of All Has Yet to Pop” (Huffington Post, February 17), Fletcher explains: Americans will own fewer assets. That does seem like a problem, doesn’t it? Let’s dig further.

If the capital stock is growing quickly enough, even if foreigners own more of it, Americans might own more too. It’s true that private investment has declined, something likely due to President Obama and Congress making investors unsure about health care and other regulations in the future. Between 2008 and 2009 the value of the U.S. capital stock fell by about 2 percent. By the end of 2009 foreigners owned about $21.1 trillion of the $48.5 trillion U.S. capital stock–over 40 percent. Sounds scary, right? But it overlooks that Americans own $18.4 trillion of the rest of the world’s capital stock. So the U.S. “net international investment position” was negative $2.7 trillion, or less than 6 percent of the U.S. capital stock. Interestingly, even though “our” ownership of “their” capital is less than theirs of ours, in 2009 “we” made $121 billion more on them than they made on us. That suggests the U.S. government’s data underestimate the value of U.S. investments abroad or overestimate the value of foreign investments here, or both.

Bonds and the Trade Deficit

One of the main U.S. assets that foreigners invest in is Treasury bonds. If the federal government reduced its budget deficit, now running at more than $1 trillion annually, there would be fewer bonds for foreigners to buy. That wouldn’t necessarily cause our trade deficit to fall because if foreigners see private U.S. assets—corporate bonds, for example—as good substitutes for U.S. government bonds, they might simply shift to buying more. Still, private assets are unlikely to be a perfect substitute for government debt, and so reducing the budget deficit would probably reduce the trade deficit somewhat.

It’s also true that if we Americans increased the percentage of our income that we save, we would buy some of those bonds and buy fewer foreign goods and services, again reducing the trade deficit.

Fletcher recognizes these facts. In his February 17 article he writes: “It is indeed true that if we take our low savings rate as a given and ask whether we would be better off with foreign-financed investment or no investment at all, then foreign-financed investment is better.”

But Fletcher doesn’t want to take this low rate of saving as given. He wants a higher rate. Fine. There are two ways to accomplish this. The first is to reduce the budget deficits of the U.S. federal, state, and local governments. In 2009 they totaled a whopping $1.272 trillion, which exceeded net private saving (personal and corporate) of $945 billion. The result: a negative saving rate for the economy as a whole. Have the government spend less, and the net saving rate would probably increase. It’s still not clear, though, that we would manufacture more.

The second way to increase saving and thus reduce the role of foreign investment is for us individually to spend less and save more. Fletcher seems to like this idea, asserting that “domestically-financed investment is obviously better because then Americans, rather than foreigners, will own the investments and receive the returns they generate.” But how can he know whether it’s better for you to buy an iPhone or to put more money in your IRA? He doesn’t. Neither do I. I’m more humble than Fletcher: I want you to be able to choose. Do I trust your choice? Not necessarily. But I think you have the right to make even bad choices.

So what is my criterion for the “right” size of the manufacturing sector? Simple. The right amount of manufacturing is the amount that would be achieved if the government did nothing to distort people’s choices. Let’s focus on getting rid of government distortions and not attack the symptoms, if they are indeed symptoms, of those distortions.

In January the Bureau of Labor Statistics released union data that are almost all bad news for union bosses. In 2010 only 6.9 percent of people employed in the private sector were union members. In 2009 the figure was 7.2 percent. Unions now have a smaller market share of private-sector workers than they did prior to the enactment of the NLRA. Cronies to the rescue.

One union crony, Secretary of Labor Hilda Solis, is trying her best to revive private-sector unions. Her Strategic Plan FY 2011–16 promises “good jobs for everyone.” She defines “good jobs” in nine bullet points that echo union organizing propaganda. Later in the document she openly declares that “union jobs are, by and large, good jobs.” While there may be a few good union-free jobs, most union jobs are by definition good. So at least through 2016 the Department of Labor (DOL) will act as the Department for the Propagation of Unions. The principal means for achieving this fevered vision are spelled out in an accompanying document that describes a “new approach” to deploying DOL’s six “labor protection agencies” (most importantly OSHA, the Office of Labor-Management Standards, the Wage and Hour Division, and the Office of Federal Contract Compliance Programs) to harass union-free employers. With scarce resources, Solis says, DOL can only closely monitor enterprises that are “most likely” to fall short of DOL standards. Since union jobs are defined as “good jobs,” one naturally infers that many union-free enterprises will be hit hard by “labor protection” enforcers determined to increase the cost of remaining union-free.

In my March column, I discussed another union crony, Craig Becker, who holds a recess appointment to the National Labor Relations Board (NLRB). Becker holds openly pro-union, anti-worker, and anti-management sentiments. He has even written that no worker should be able to refuse to be represented by a union. Two days after the State of the Union address, wherein President Obama urged us all to seize our “Sputnik moment,” he resubmitted Becker’s name to the Senate for confirmation to a full five-year term on the NLRB. He may have a point. Like Sputnik, Becker is a relic of the socialist past. I doubt the Senate will confirm the nomination, but Obama can simply keep Becker on the Board by another recess appointment at the end of this year. As I wrote, Becker and his two sympathizers (Wilma Liebman and Mark Pearce) on the five-member NLRB are determined to impose card-check certification of unions through creative interpretation of the labor law.

They are creative on other questions as well. For example, in the Roundy’s Supermarket case the Board is struggling to find something in the NLRA that will justify allowing union organizers to trespass on private property with the specific intent of herding unwilling workers into the ranks of union dues payers. The unions are arguing that because Roundy’s allows the Girl Scouts to sell cookies and the Salvation Army to collect contributions on its property, it must also allow union organizers to sell their snake oil on its property. That argument makes Becker tingle all over.

Prosecutions and Waivers

Yet another union crony is Lafe Solomon, the NLRB’s acting general counsel. (He is “acting” because Obama couldn’t get his appointment confirmed by the Senate.) The general counsel is independent of the NLRB. His job is to investigate and prosecute alleged unfair labor practices and to supervise the NLRB’s field offices in their processing of cases. Last November voters in four states—Arizona, South Carolina, South Dakota, and Utah—adopted amendments to their respective state constitutions to make card-check union certification illegal. Solomon immediately sued all four states, asserting that the NLRA preempts state voters. Another example of Solomon’s hyperactivity on behalf of union bosses is his General Counsel Memorandum 11-04, issued in January. He directed all field offices to put default language in all settlement agreements between unions and employers which stipulates that if the employer is alleged to have violated any part of the agreement, he is to be considered guilty of all the allegations brought against him in the initial complaint that led to the settlement agreement.

Health and Human Services Secretary Kathleen Sebelius is yet another union crony. Obamacare gives her power to determine the rules and regulations that are and will be imposed in the health care and health insurance markets. Her decision-making process includes the interests of unions. For example, Sebelius has the power to grant waivers to the burdens of Obamacare to favored supplicants. Forty percent of the approximately 1,000 waivers she has granted have been given directly to unions, and many more have been given to enterprises on which unions depend for dues revenue.

Of course, Obama is the unions’ most important crony. The “structured bankruptcies” imposed by Obama on General Motors and Chrysler in the spring of 2009 were little more than egregious bailouts of the United Auto Workers Union (UAW), which put taxpayers on the hook for $60 billion. The stockholders and bondholders of those two companies were sacrificed to keep the UAW viable. GM and Chrysler had to be kept going because the majority of UAW dues payers worked there. The government seized 60 percent ownership of GM and bestowed another 17.5 percent ownership on the union. With its principal crony in charge, the UAW knows GM will be run to maximize the flow of union dues. Thanks to Obama the UAW now owns 55 percent of Chrysler. Chrysler no longer employs workers to make cars; it makes cars to employ dues-paying workers. Another example of Obama as a union crony is the $53 billion he wants to spend on high-speed rail. Because of project labor agreements and the Davis-Bacon Act, most of the people employed in this silly, wasteful, and destructive endeavor will be union dues payers.

In 2010, 36.7 percent of government workers were union members. A year earlier the figure was 37.4 percent. While government employees are only 17 percent of all employed people, government employee union members now are 52 percent of all union members. Crony unionism works in the government sector as well as the private sector. That will be the subject of my next column.

There is very little either complicated or interesting about poverty. Poverty has been man’s condition throughout his history. The causes of poverty are quite simple and straightforward. Generally, individual people or entire nations are poor for one or more of the following reasons: (1) they cannot produce many things highly valued by others; (2) they can produce things valued by others but they are prevented from doing so; or (3) they volunteer to be poor.

The true mystery is why there is any affluence at all. That is, how did a tiny proportion of man’s population (mostly in the West) for only a tiny part of man’s history (mainly in the nineteenth, twentieth, and twenty-first centuries) manage to escape the fate of their fellow men?

Sometimes, in reference to the United States, people point to its rich endowment of natural resources. This explanation is unsatisfactory. Were abundant natural resources the cause of affluence, Africa and South America would stand out as the richest continents, instead of being home to some of the world’s most miserably poor people. By contrast, that explanation would suggest that resource-poor countries like Japan, Hong Kong, and Great Britain should be poor instead of ranking among the world’s richest places.

Another unsatisfactory explanation of poverty is colonialism. This argument suggests that third-world poverty is a legacy of having been colonized, exploited, and robbed of its riches by the mother country. But it turns out that countries like the United States, Canada, Australia, and New Zealand were colonies; yet they are among the world’s richest countries. Hong Kong was a colony of Great Britain until 1997, when China regained sovereignty, but it managed to become the second richest political jurisdiction in the Far East. On the other hand, Ethiopia, Liberia, Tibet, and Nepal were never colonies, or were so for only a few years, and they rank among the world’s poorest and most backward countries.

Despite the many justified criticisms of colonialism and, I might add, multinationals, both served as a means of transferring Western technology and institutions, bringing backward peoples into greater contact with a more-developed Western world. A tragic fact is that many African countries have suffered significant decline since independence. In many of those countries the average citizen can boast that he ate more regularly and enjoyed greater human-rights protections under colonial rule. The colonial powers never perpetrated the unspeakable human rights abuses, including genocide, that we have seen in post-independence Burundi, Uganda, Zimbabwe, Sudan, Central African Empire, Somalia, and elsewhere.

Any economist who suggests he has a complete answer to the causes of affluence should be viewed with suspicion. We do not know fully what makes some societies richer than others. However, we can make guesses based on correlations. Start out by ranking countries according to their economic systems. Conceptually we could arrange them from more capitalistic (having a larger free-market sector) to more communistic (with extensive State intervention and planning). Then consult Amnesty International’s ranking of countries according to human-rights abuses. Then get World Bank income statistics and rank countries from highest to lowest per capita income.

Compiling the three lists, one would observe a very strong, though imperfect, correlation: Those countries with greater economic liberty tend also to have stronger protections of human rights. And their people are wealthier. That finding is not a coincidence, so let us speculate on the relationship.

Rights and Prosperity

One way to gauge human-rights protection is to ask to what extent the State protects voluntary exchange and private property. These signify the rights to acquire, keep, and dispose of property in any fashion so long as one does not violate the rights of others. The difference between private property rights and collectively held rights is not simply philosophical. Private property produces systemically different incentives and results from collective property.

Since collectivists often trivialize private property rights, they are worth elaborating. When property rights are held privately the costs and benefits of decisions are concentrated in the individual decision maker; with collectively held property rights they are dispersed across society. For example, private property forces homeowners to take into account the effect of their current decisions on the future value of their homes, because that value depends, among other things, on how long the property will provide housing services. Thus privately owned property holds one’s personal wealth hostage to doing the socially responsible thing—economizing scarce resources.

Contrast these incentives to those of collective ownership. When the government owns the house, the individual has less incentive to take care of it simply because he does not capture the full benefit of his efforts. It is dispersed across society instead. The costs of neglecting the house are similarly spread. You do not have to be a rocket scientist to predict that under these circumstances, less care will be taken.

Nor is nominal collective ownership the only force that weakens social responsibility. When government taxes property, it changes the ownership characteristics. If government were to impose a 75 percent tax on a person selling his house, it would reduce his incentive to use the house wisely.

This argument applies to all activities, including work and investment. Whatever lowers the return from or raises the cost of an investment reduces incentives to make that investment in the first place. This applies to investment in human as well as physical capital—that is, those activities that raise the productive capacity of individuals.

To a significant degree the wealth of nations is embodied in their people. The starkest example of this is the experience of the Germans and Japanese after World War II. During the war, Allied bombing missions destroyed nearly the entire physical stock of each country. What was not destroyed was the human capital of the people: their skills and education. In two or three decades, both countries reemerged as formidable economic forces. The Marshall Plan and other U.S. subsidies to Europe and Japan cannot begin to explain their recovery.

Proper identification of the causes of poverty is critical. If it is seen, as is too often the case, as a result of exploitation, the policy recommendation that naturally emerges is income redistribution—that is, government confiscation of some people’s “ill-gotten” gains and “restoration” to their “rightful” owners. This is the politics of envy: bigger and bigger welfare programs domestically and bigger and bigger foreign-aid programs internationally.

If poverty is correctly seen as a result of the unwise government intervention and lack of productive capacity, more effective policy recommendations emerge.

But when some of those same libertarians and many conservatives think about war, their critical thinking skills seem to go out the window. On the principle side, they rarely argue that the U.S. government doesn’t have the right to force U.S. taxpayers to support oppressive dictators in foreign countries such as Kuwait. Why? Because they seem to think the fact that an even more vicious dictator, Saddam Hussein, attacked Kuwait makes coerced funds from U.S. taxpayers morally obligatory. And on the practical side, they tend to drop their skepticism about the consequences of government action. Yet, even aside from any argument based on principle, if libertarians and conservatives were to be as skeptical of our own government abroad as they are of it at home, they would likely favor keeping the United States out of foreign wars. Indeed, as I shall show, there are two reasons we should be even more skeptical of our government’s actions overseas.

One of the strongest practical arguments against government intervention in the domestic economy comes from Ludwig von Mises: One intervention, by causing unintended consequences, leads to further intervention. At each point in the chain the government could back down and deregulate. But governments tend not to do that. Take an example I wrote about in this publication (“Unintended Consequences in Energy Policy,” March 2009, www.tinyurl.com/adv6gm). Richard Nixon’s price controls on gasoline caused a shortage that then led to fuel-economy standards for cars.

The same kind of reasoning applies to foreign policy. In 1963 the Central Intelligence Agency helped a young Iraqi ally who, along with other plotters, overthrew Gen. Abdel-Karim Kassem. His name: Saddam Hussein. Five years later, the CIA backed another coup that made Hussein deputy to the new military ruler. Then, in 1979, Hussein took his turn as dictator.

In 1980 Hussein proceeded to wage a long and costly war on Iran. Interestingly, the Reagan administration supported this invasion with billions of dollars in export credits and with satellite intelligence. Consider how this one intervention led to another.

Why did the U.S. government support Saddam Hussein in his war on Iran? The Iranian government had become an enemy of the U.S. government a year earlier, when Ayatollah Khomeini took over and some Iranians held Americans in the U.S. embassy hostage. Why did so many Iranians dislike the U.S. government? One reason was that in 1953 the CIA had helped depose the democratically elected premier, Mohammad Mossadegh, and reinstalled the shah of Iran. The shah created a secret terrorist police force, SAVAK, that tortured its own citizens and imprisoned political opponents. The CIA helped train SAVAK. The shah also undertook a highly inflationary monetary policy that caused the value of the Iranian currency to plummet. Inflation and torture: funny how that upsets people.

No Laughing Matter

Interestingly, when James Woolsey, former director of central intelligence in the Clinton administration, spoke at the Naval Postgraduate School in August 2003, he addressed the 1953 uprising in response to my question. During his speech Woolsey had stated that the war with militant Islam had begun in November 1979, when some Iranians took over the U.S. embassy. I asked him whether he didn’t think it might have begun in 1953, when the CIA helped depose Mossadegh. Laughing, Woolsey quoted Winston Churchill’s claim that Americans, after doing many wrong things, would always end up doing the right thing. In other words, Woolsey seemed to admit CIA complicity, but dismissed the idea that this mattered because the U.S. government, at some point (he didn’t specify when), had gotten it right.

But Woolsey’s answer evaded the issue: The consequences of the U.S. government’s intervention in 1953 have been horrendous and cannot be laughingly dismissed.

Or take the unintended consequences of U.S. government intervention in Afghanistan. Although the U.S. government now fiercely opposes the radical Muslims who until 2001 ran the Afghan government, it helped put them in that position in the first place. Zbigniew Brzezinski, national security adviser to President Jimmy Carter, bragged in an interview in Le Nouvel Observateur that in 1979 he had persuaded Carter to destabilize Afghanistan’s pro-Soviet government so that the Soviets would invade. In December 1979 Brzezinski got his wish: The Soviets invaded Afghanistan. The CIA proceeded to finance Afghan Muslim jihadis through Pakistan.

Just as the economy is a complex nexus of rights and exchanges with each participant having, as Adam Smith put it, his own “principle of motion,” so it is with whole countries. U.S. government officials—and there are many—who think they can plan another country to make it better clearly don’t recognize these principles of motion. They have what F. A. Hayek called, in his criticism of government intervention in the economy, a “fatal conceit.” And, as we’ve seen with the above-mentioned wars, the conceit is literally fatal.

There are two reasons to think that the consequences of government intervention abroad will be worse than the consequences of government intervention at home. First, the major victims of this foreign intervention will typically be foreigners. Foreigners don’t vote in U.S. elections. Therefore, U.S. politicians will never have to worry about the negative votes of foreigners and will therefore be more destructive than otherwise. Second, when people see the negative consequences of intervention, they, all else equal, tend to turn against it. That’s why people tend to oppose taxes more than regulation: Virtually everyone can observe the wealth lost to taxes. But because most of the obvious consequences of foreign intervention occur abroad, they are less visible to Americans. How many Americans are aware that the CIA helped overthrow a democratically elected prime minister?

War is a government program. Libertarians and conservatives should bring the same skepticism to war that they bring to other government programs.

The 112th Congress is not likely to enact the sort of changes to American union law preferred by the bosses of the Service Employees International Union (SEIU), but Obama is very likely to try to do so through administrative and executive fiat. As Shelby Steele says, Obama’s “policymaking has been grandiose, thoughtless and bullying.” Two non-union examples (mine not Steele’s): Obama, when faced by Senate opposition to his grandiose cap-and-tax war against carbon, deliberately went around Congress to his thoughtlessly green appointees in the EPA to attack carbon through administrative fiat. Again, when faced by two court decisions that told him he could not shut down offshore oil drilling in the Gulf of Mexico, he deliberately went around the court decisions to his EPA and his Interior Department effectively to prevent drilling by holding up the permitting process.

The five-member National Labor Relations Board (NLRB) is appointed by the president, with concurrence of the Senate, to five-year terms. At this writing there are only four members. Three of them—Wilma Liebman, Brian Hayes, and Mark Pearce—are serving Senate-approved terms. Liebman, the chairman of the Board, is a former union lawyer with a long record of serving the interests of unions. Her term expires August 27. Obama may reappoint her, but the new Senate may not go along. While in private practice Hayes represented management interests in labor disputes. His term expires in 2015. In private practice Pearce represented union interests in labor disputes. His term also expires in 2015.

Becker Versus Workers

The other member, Craig Becker, was never approved by the Senate. He is on the Board because in 2010 Obama used his recess appointment power to get around Senate confirmation. He may have to do the same to keep Liebman on the Board when her term expires. Becker is unique in his pro-union, anti-worker sympathies. As I will show below, he is an Obama kind of guy. While a package deal between Obama and sufficient Senate Republicans involving Liebman and a Republican appointee to fill the fifth seat may be put together, there is no way Becker can avoid a Senate filibuster against his appointment to a regular term.

Right now there are three reliably pro-union votes on the NLRB. They can do what they want in each case that comes before them. The imminent danger to worker freedom is best understood by examining the views of the most articulate and forceful of the three—Becker. When he was appointed, Becker was associate general counsel to the SEIU. Earlier, as a professor of law, he published many articles in scholarly journals in which he promulgated his pro-union vision.

He doesn’t think any worker should be allowed to be union-free. In his own words, “Just as U.S. citizens cannot opt against having a congressman, workers should not be able to choose against having a union as their monopoly-bargaining agent.” Apart from the obvious rejoinder that unions are not governments, Becker, like Obama, doesn’t believe in the consent of the governed. They are Mountaintop people—that is, elitists.

In a 1993 article in the University of Minnesota Law Review, Becker argued that existing union law can and should be interpreted to strip employers of any “legally cognizable interest” in the process by which their employees unionize. When faced with aggression, employers should be forced not to resist. Just after Obama’s inauguration, Becker composed executive orders that the President then imposed on workers and employers. For example, if a union-impaired federal contractor supplying services to the federal government loses a contract to a union-free firm, the latter must extend preferential hiring offers to the unionized workers of the former and recognize and bargain with the unions representing those workers.

Reversing Course

Last August 27, Becker, Liebman, and Pearce voted to reconsider two earlier NLRB cases that displeased union bosses. Existing law allows, but does not compel, an employer to turn his employees over to monopoly-bargaining unions on the basis of card check. In Dana Corp. (2007), the NLRB said that such workers had 45 days to request an election to void a card-check recognition. MV Transportation (2002) addressed the following: Suppose firm A is unionized and has to go out of business because it cannot effectively compete. Union-free Firm B buys A’s assets and hires workers, a majority of whom are former, unionized employees of A. Does Firm B have to recognize those workers’ union as a monopoly-bargaining agent for all of B’s employees? In 2002 the NLRB said that workers themselves should decide the question by an election.

In both cases the NLRB decided that a secret-ballot election, not administrative fiat, should determine the fate of workers. Now a majority of the Board wants to “reconsider” whether the two cases were correctly decided. It appears that Liebman and Pearce want to join Becker and Obama on the Mountaintop. When this NLRB reopens these two cases it is likely to reverse both, and those reversals will be the first steps on the road to compulsory private-sector card check without Congress. I have no doubt that Becker and the others will try to take the whole trip.

As voters across the country gave us the new Congress, voters in Arizona (Prop. 113), South Carolina (Amendment 2), South Dakota (Amendment K), and Utah (Amendment A) adopted amendments to their respective state constitutions that prohibit compulsory card check whether imposed by Congress or from the Mountaintop. States control the rules of unionism as they pertain to their state and local government employees, so these newly adopted amendments will protect those employees from card check. However, the National Labor Relations Act (NLRA) sets the rules for private-sector workers, and my guess is that federal courts will decide federal law preempts state law on card check.

In sum, David wins the bet, but workers are still exposed to the tyranny of the Mountaintop. The short-run consolation for workers who want to become and remain union-free is that a future NLRB can reverse what the existing Board does. The better, long-run, solution is the permanent repeal of the NLRA in favor of genuinely voluntary unionism.