===== PAGE 1 ===== IDEAS ON LIBERTY JULY 1964 Competition, Unions, and Antitrust . . . Sylvester Petro 3 You Can’t Strike Against the Market . . Harry L. Smith 32 Are We Enslaved by Machines? . . . . Mallory Cross 35 The Waron Poverty . . . . . . . Paull. Poirot 43 Free Trade: Domestic and Foreign . . . Dean Russell 47 The Land of Free Choice . . . . . . CharlesS. Roberts 55 Books: The State of the Unions . . . . . . John Chamberlain 61 A A THE FOUNDATION FLE FOR ECONOMIC EDUCATION, INC. Irvington-on-Hudson, New York 10533 ===== PAGE 2 ===== OUTSTANDING ADVANTAGES FOR COAST FEDERAL SAVERS FINANCIAL STRENGTH — Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with- drawal of savings immediately on request. HIGHER EARNINGS — Earnings for 1963 paid at 4.9% per year. SAVE-BY-MAIL — We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOST— OPEN YOUR SAVINGS ACCOUNT AT COAST MAIN OFFICE 9th & Hill, Los Angeles “A Businessman Looks at Communism Vs. Capitalism” For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California COAST FEDERAL SAVINGS | AND LOAN ASSOCIATION \ ===== PAGE 3 ===== »# When an outstanding authority on 1” Dean Russell lectured recently in labor policy as well as antitrust legis: Guatemala, dealing in part with the lation covers both topics in one arti- hopeful prospects for trade between cle, it runs long; but we thought you'd 05516 and nations of different levels want it in one piece rather than . of income ........................... p. 47 serialized .................................. p. 3 » That decision led to the next — to make this something of a special issue on labor policy; hence, the article by Harry Smith on why strikes can’t accomplish their purpose in the market place ........................... p. 32 » Charles Roberts finds that the current issues on Civil Rights are also an integral part of the problems of labor relations and policy ... p. 55 +» And John Chamberlain has found a trio of recent books on labor matters that seem worthy of review »* Mallory Cross explains the rela- tionship between the availability and use of tools and the level of living of a people — the automation prob- p. 61 lem in a new light ................... p. 35 yw Closely related, of course, is the ** Finally, we've appended a list of war on poverty here examined to suggested further readings on labor show why the political approach is policy and practice bound to fail ........................... p. 43 Inside back cover Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. ===== PAGE 4 ===== THE Teemai A MONTHLY JOURNAL OF IDEAS ON LIBERTY JULY 1964 Vol. 14, No. 7 LEONARD KE. READ President, Foundation for Economic Education Paul L. Poirot Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non- political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in- cluding THE FREEMAN, are met through volun- tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount — $5.00 to $10,000 — as the means of maintaining and extending the Foundation’s work. Copyright, 1964, The Foundation for Economic Education, Inc. Printed In U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each, Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit Is given. Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing. ===== PAGE 5 ===== | FEW THINGS seem more apparent than the existence of conflict be- tween much of the conduct of i American trade unions and the policies of the American antitrust | | laws. Yet it does not follow, even if one admits the apparent con- flict, that the antitrust laws ought necessarily to be extended to cover trade-union conduct as pervasively , as they govern the conduct of businessmen. INIONS 3 A variety of positions may be taken on the issue. Some may of- fer a confession and avoidance: yes, union conduct often conflicts with antitrust policy; but a su- perior imperative, premised on in- equality of bargaining power be- tween workers and their employ- | ers, dictates that worker organi- | | zations be permitted to engage in | SYLVESTER PETRO types of conduct which the anti- trust laws would proscribe, as a | | means of securing an otherwise | unattainable fair share of the | production to which workers con- | | tribute. Others, equally accepting | the fact of conflict, may insist | that the relevant imperative is ] ! the rule of law. These would con- | tend that if the antitrust laws are properly based on the public in- | terest, it is nonsensical, even from Dr. Petro is Professor of Law at New York University School of Law. He has written ! several books, including The Labor Policy of | the Free Society (1957) and Power Unlimited: | The Corruption of Union Leadership (1959), and is a noted lecturer and contributor to | magazines, 3 ===== PAGE 6 ===== 4 THE FREEMAN July the point of view of workers, since proposals in and out of Congress they compose so large a segment to apply the antitrust laws to se- of the public, to limit the applica- lected unions or to certain nar- tion of those laws; for the ensuing rowly defined types of trade-union harm must be to the very public action while explicitly releasing interest in which workers criti- other unions and other kinds of cally share. Still others, equally union action from antitrust liabil- committed to the rule of law, ity. The idea that unions should be might conclude that the antitrust reduced by law or administrative laws rather than the trade-union discretion to smaller units has conduct which those laws would also been circulating for a long proscribe, are contrary to the pub- time. Finally, some have even ar- lic interest; and accordingly pro- gued that fundamental antitrust pose repeal of the antitrust laws policy will be served better by rather than extension of those governing union conduct through laws to trade-union conduct. labor relations statutes such as Among those who would take a the Taft-Hartley Act than under relatively uncomplicated position the odd combination of very gen- on the issue, there might be some, eral and very specific statutes finally, who would consider it de- lumped together under the head- sirable to extend every conceiv- ing, “antitrust laws.” able kind of regulation, whether My purpose in this paper is called an antitrust law or not, to mainly to clarify thinking on the the conduct of businessmen, while merits of the foregoing positions. at the same time insisting that Pursuing this objective, I intend there is very little to gain and first to measure trade-union ac- very much to lose in regulating tion against antitrust policy, in any kind of trade-union conduct order to determine whether the at all; for persons of this type apparent conflict between them there can be no conflict between does in fact exist. I intend there- trade-union conduct and antitrust, after to evaluate antitrust policy or any other prescriptive legal itself. The third section of this policy. Their view, one surmises paper will offer a critique of the (for it is never made explicit), is more significant proposals that simply that businessmen can do are circulating today with respect no right and unions can do no to unions and antitrust policy, and wrong. draw attention to the basic ques- More complex positions have tion: Do we want a free competi- been developed. There have been tive enterprise system? ===== PAGE 7 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 5 f The antitrust method of promot- PART | ing a competitive economic order * * has called for governmental inter- Antitrust Policy vention into many phases of peace- ful and consensual economic activ- . ity. Such intervention occurred & Trade Union even under the original and the most general of the antitrust stat- | J Action utes, the Sherman Act of 1890;% and it has gone much further un- THE PROFESSED IDEAL of antitrust policy is a competitive economic der succeeding antitrust statutes, most notably the Clayton Act of order.! Promoting and maintain- ing such an economic order, it is 1914* and the Robinson-Patman Act of 1936.5 felt, will bring about the material conditions which everybody wants Owners of separate businesses were told under the original Sher- — prices as low as possible, quality as high as possible, allocation of man Act that they could not volun- tarily join together in programs resources in accordance with con- sumer wishes, in short, continuing which would in all probability lead to their charging uniform prices for their respective products.® economic progress. It will also remarks about the objectives of anti- s s trust policy more or less similar to contribute substantially to the those in the text. See, e.g., Northern achievement of one of the most Securities Co. v. U.S. 193 U.S. 197 highly prized noneconomic objec- (1904) (the opinion of Justice Holmes, . . . dissenting, challenges the idea that the tives of the free society, that is, Sherman Act was designed to establish opportunity for each individual to a charter of free competition, but this : : ERE _ is one of the opinions of the “great realize his potentialities to the ut dissenter” which people have tended to most degree, consistent with the ,yeriook). For other, more recent, com- public interest.” ments on the objectives of antitrust policy, see Associated Press v. U.S., 326 U.S. 1 (1945); U.S. v. Paramount Pic- tures, 334 U.S. 131 (1948); and Lorain are normally included among the anti- Jowrnol Co. v. U.S., 342 U.S. 143 (1951) trust laws, I am thinking in this article 3 Supra - A . S. . 1 While a number of other statutes mainly of the Sherman Act, 26 Stat. 4 Idem. 209 (1890); the Clayton Act, 38 Stat. 5 Idem. 730 (1914) as amended by 64 Stat. 1125 6 U.S. v. Joint-Traffic Assn., 171 U.S. (1950); and the Robinson-Patman Act, 505 (1898); Standard Sanitary Mfg. 49 Stat. 1526 (1936). Co. v. U.S, 226 U.S. 20 (1912); Ameri- 2 Almost any of the historic anti- can Column & Lumber Co. v. U.S., 257 trust decisions will be found to contain U.S. 377 (1921). ===== PAGE 8 ===== 6 THE FREEMAN July More recently, but still under the server may have some difficulty in original Sherman Act, business- understanding why some integra- men have been found guilty of un- tions are prohibited while others lawful price-fixing combinations are permitted,'® but there can be despite the absence of proof of no doubt that in the large number definitely concerted action, under which have been prohibited it has the theory of guilt sometimes re- not made any difference that they ferred to as ‘“‘conscious parallel- were voluntarily and even avidly ism.”” The Supreme Court of the sought by the parties involved. United States has gone so far as to Besides prohibiting such con- say in some cases that business- sensual, contractual arrangements, men violate the Sherman Act, re- the antitrust laws have provided gardless of the outcome of their the basis for prosecuting aggres- efforts, whenever they concertedly sive business activity — the kind “tamper with price structures.”® of conduct which, though nonvio- } . lent and nonfraudulent, is com- Other Business Practices Forbidden monly called “predatory.” Here, Antitrust prohibition of peace- too, the basic idea was originally ful, consensual activity has by no developed under the Sherman Act means been confined to the so- and then made more conscious called “price-fixing” cases. Both and specific in the Clayton Act of horizontal and vertical integration 1914 and the Robinson-Patman of business firms has been pro- Act of 1936. hibited under the Sherman and The classic example has always Clayton Acts, and it has not made been thought to be the old Stand- any difference in these cases that ard Oil case," where the defend- the owners of the businesses in- ant “trust” was accused and found volved might have been anxious to guilty of hounding competitors out effectuate the prohibited merger, of business, engaging in fierce consolidation, or other form of in- price wars, insisting upon favor- tegration.? The disinterested ob- able treatment from railroads, and "7 The leading case is probably Inter- so on. In more recent times, espe- stato Circuit, Inc. v. U.S. 306 U.S, 208 cially under the Clayton Act and (1939). the Robinson-Patman Act, busi- 8 U.S. v. Socony-Vacuum Oil Co., 310 1 U.S. 150 (1940) Seo especially the fa. Tess firms have found that even mous footnote number 69, ibid. at 224. 9 E.g., Northern Securitics Co. v. 10 Eg, US. v. U.S. Steel Corp. 251 U.S., 193 U.S. 197 (1904) (“horizontal” U.S. 417 (1920). integration); U.S. v. Reading Co., 2563 11 Standard Oil Co. of NJ. v. U.S, U.S. 26 (1920) (“vertical”), 221 U.S. 1 (1911). ===== PAGE 9 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 7 such mild conduct as exclusive of the defendant’s course of action purchasing arrangements! and — if it could have been carried out price discrimination (i. e., varia- with persistent success — would tion) among their customers!® have been additional advantage in may place them among the ranks the form of greater returns on in- of the lawbreakers. vestment over the less successful i competitors. But understanding Penalties of Success the decision is one thing, and ap- The antitrust mode of preserv- proving it as an intelligible imple- ing a competitive economic order mentation of a policy ostensibly in is perhaps most characteristically favor of free competition is an- illustrated by the decisions which other. For the moment, we merely at least seem to find illegality in cite the case as an example of the natural and even blameless con- antitrust laws as they are charac- duct — when it is the conduct of teristically applied. an outstandingly successful firm. Or consider the relatively recent Consider, for example, the Schine prosecution of the United Shoe case,’* where the Supreme Court Machinery Company.'® There, held it unlawful for the owner of with the subsequent per curiam a chain of movie theaters to insist approval of the Supreme Court,!¢ upon first-run exhibition rights Federal District Judge Wyzanski from film distributors in towns held that the defendant’s practice where there were competing thea- of leasing its machinery rather ters as a condition to leasing films than selling it outright violated from those distributors at all in the Sherman Act.!7 towns where there were no com- etin h rs. 15 U.S. v. United Shoe Machinery Co., p g theaters 110 F. Supp. 295 (D:C. Mass. 1953). One may understand how the 16 347 U.S. 521 (1954). Supreme Court arrived at the de- 17 Referring to the leases at one point cision: the defendant was pursu- .P his opinion, Judge Wyzanski said they “have not been predatory, immoral, ing its own interest vigorously; nor, on their face, discriminatory as be- although there was no evidence of tween different customers,” but still, he oe . . went on, “they have operated as bar- a malicious [intention to destroy iors to competition.” 110 F. Supp. 295, the competition, a logical outcome 297. What he meant was that they offered J — the customers a better deal than they 12 Standard Oil Co. of California v. could get elsewhere. For further dis- U.S. 337 U.S. 293 (1949). cussion of the leases by the judge, in- 1B Federal Trade Commission v. ALE. cluding the statement that the customers Staley Mfg. Co., 324 U.S. 746 (1945). seemed eminently satisfied with United’s 14 Schine Chain Theaters v. U.S., 334 leases and other services, see ibid. at U.S. 110 (1948). 340. ===== PAGE 10 ===== 8 THE FREEMAN July There was nothing immoral, in the same line of business.?? It nothing dishonorable, not even would not be accurate to say that anything which a scrupulously the right to compete is entirely decent person might be ashamed denied them. But it would be at of in United Shoe’s leases. Indeed, least equally inaccurate to say Judge Wyzanski warmly praised that the full range of competitive the defendant’s management for methods remains available to its “clean” record.!® Nevertheless, them. Many types of conduct the judge felt constrained to find which are neither violent, nor that the leasing practices — being fraudulent, nor in any other sense those of a firm which accounted malum in se are quite plainly for some 75 per cent of the pro- withdrawn from their use. It goes duction of shoe machinery in the without saying that any firm United States — were unlawful. which set out upon a course of Careful reading and rereading conduct deliberately designed to of the opinion leaves one with eliminate competitors, even the firm conviction that precisely though by peaceful and honest the same leasing practices would means, would be found guilty of be regarded as perfectly lawful if violating one or another, and quite adopted by any but a firm so possibly all, of the antitrust laws. “dominant” in its industry. In short, United Shoe’s success pre- cluded it from using exactly the The purpose of the large trade kind of arrangement with cus- unions of the United States, as tomers that other firms use with their leaders put it, is to bring the impunity.'? — Monopoly Aims of Unions 20 According to Judge Wyzanski, the Size Makes the Difference vice of the United leases lay in the . difficulties they created for less well- The burden of such cases as established competitors. For example, United Shoe and Schine seems to the judge said: “To combat United's . market control [i.e., great appeal to be that successful businesses, espe- its customers?], a competitor must be cially if they are relatively “large” prepared with knowledge of shoemak- businesses, may not strive for ing, engineering skill, capacity to in- eps . vent around patents, and financial re- competitive advantage against gources sufficient to bear the expense smaller and less successful firms of long developmental and experimental —_— processes. The competitor must be pre- 18 Ibid. at 345. pared for consumers’ resistance founded 19 See, for example, Judge Wyzanski's on their long-term, satisfactory rela- recognition that “the law allows many tions with United, and on the cost to enterprises to use such practices.” Ibid. them of surrendering United's leases.” at 346. Ibid. at 344. ===== PAGE 11 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 9 benefits of collective bargaining labor. The Keynesian-Marxian to all workers, or at least to as thesis that competitive labor many as they can. It is probably markets will necessarily return to more accurate, possibly less ques- workers less than their contribu- tion-begging, and certainly more tion to production—and thus lead realistic to say that the purpose to depressions —is the dominant of each of the national and inter- belief of trade union leaders. It is national unions is to secure a mo- also, incidentally, the rationale of nopoly of the working force in the National Labor Relations Act, the industries or fractions of in- as any reader may see for himself dustries in which they claim “jur- by consulting the statement of isdiction”’—the auto workers in the policy of that legislation. auto industry, the teamsters in Documenting the foregoing the trucking industry, the carpen- generalizations is a matter merely ters in the appropriate branch of of recounting what unions do in the construction industry, and so the two main branches of their on, activity: organizing employees Perforce, then, the objective of and collective bargaining. the large unions is to eliminate competition. There is no other Elimination of Competition meaning to the deliberate pursuit A pervasive preoccupation, to of a monopoly of any given type repeat, whether in organizing or of goods or services. in collective bargaining, is with The monopoly is sought, not as eliminating competition. The com- an end in itself, but because of the petition which unions seek to elim- results which it is expected to inate is the competition implicit bring about. Here, too, there is in alternative methods of doing no mystery. The labor monopoly the work over which the unions is sought as a means of gaining claim or seek jurisdiction. what economists call a monopoly I do not wish to be understood price—i.e., something more than as saying that unions are now the competitive or the ‘“free- guccessful, or that they will ever market” price for labor. be successful, in gaining their end. I intend no ethical, moral, or Discussion further on in this pa- legal evaluation here. I simply per will disclose the significance observe that which should be evi- of this disclaimer. At present it is dent to all. American trade unions necessary only to emphasize that are frankly disinclined to rest con- our concern is with the objectives tent with competitive prices for of and the means used by the large ===== PAGE 12 ===== 10 THE FREEMAN July unions, not with their ultimate inheres in ‘“‘the power to exclude prospects. coupled with the intent to ex- A material proportion of cur- clude.®® rent litigation of labor disputes, Every time a union sets up a as of the historic labor cases, picket line, its aim is to exclude grows out of attempts by unions competition. And the means of ac- to extend their organizations. Of complishing that end involve at course, a mere desire on the part least as severe pressure or duress of any group of men to extend as has earned for competitive their activity does not in and of business practices the description itself run afoul of antitrust policy “predatory.” —not even current policy, let alone Consider picketing in large the somewhat more lenient policy numbers. When hundreds or per- which has prevailed at times in haps thousands of men parade be- the past. fore a business establishment, But when an organization which their intention is to frighten peo- has achieved notable size mani- ple; and it is self-evident that all, fests an obvious intention to keep even the boldest of us, must feel on expanding, and when, more- qualms upon entering a place — over, its expansionism takes the whether as workers, customers, or form of aggressive conduct toward suppliers — when so many persons its competitors (whether those make it plain that they intensely competitors are isolated individ- wish that we would not do so. If uals or associations) — then a vio- the picketing is in such masses lation of the antitrust laws is held that penetration would actually to exist. This is the burden of the involve physical contact, the case development which has occurred is even clearer. If there has been from the old Standard Oil?! and some violence associated with the American Tobacco Company** picketing, the case is clearest of cases through the more recent all. American Tobacco”? Schine,** and Picketing in large numbers, es- United Shoe cases.” The crime of pecially with violence, is designed monopolizing, as it is often said, to exclude competition of various —_— 21 221 U.S. 1 (1911). 26 “Neither proof of exertion of the 22 7.8. v. American Tobacco Co., 221 power to exclude nor proof of actual U.S. 106 (1911), exclusion of existing or potential com- 23 American Tobacco Co. v. U.S., 328 petitors is essential to sustain a charge U.S. 781 (1946). of monopolization under the Sherman 24 334 U.S. 110 (1948). Act.” American Tobacco Co. v. United 23 Supra, note 16. States, 328 U.S. 781, 810 (1946). ===== PAGE 13 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 11 kinds, and in various ways. If as- tion and its benefits can be frus- sociated with a strike against the trated is through the peaceful and picketed employer, its purpose is consensual modes of conduct char- to shut off the employer's access acteristic of modern business. to competitive methods of keeping Picketing is not always in large the establishment in operation, or numbers, and it is not always as- of restoring it to operation. The sociated with strikes. Frequently, pickets seek to discourage non- picketing is done by one or a few striking employees from continu- persons, entirely peaceably parad- ing to work, or striker-replace- ing before an establishment with ments from taking jobs vacated signs identifying it as a ‘‘nonun- by the strikers, or customers and ion company” and requesting all suppliers from continuing their comers to note that fact. Such dealings with the employer. picketing has been defined, vari- ously, as “publicity” or ‘“organi- zational” or “recognition” picket- There has been some tendency ing. However defined, it normally to dismiss these violent or intimi- has one objective — to establish datory methods of excluding com- the picketing union as bargaining petition as “not the kind of thing representative for the employees that the antitrust laws were aimed of the picketed business. at.” That may be. But the problem It is equally accurate, and more here is not whether legislators in relevant to the purposes of this 1890 intended to govern violent paper, to describe such picketing union conduct (or indeed any un- as a means of extending the un- ion conduct at all) ; it is whether ion’s monopoly of the labor sup- unions today engage in conduct ply or as a means of removing the which violates current antitrust competition of nonunion employees policy. and employers. Indeed, one com- With the problem so defined, monly hears that a union has only one answer seems accurate: sought to “organize” a given em- Violent union conduct, when con- ployer mainly because some al- sidered from the point of view of ready “organized” employer has present antitrust conceptions, is complained of the competition. not only anticompetitive conduct It may be argued with much but in fact the most predatory force that such picketing, when monopolistic conduct visible in the genuinely peaceable, represents country today. One must not as- nothing more than the exercise of sume that the only way competi- a basic right — the right of free Violation of Antitrust Policy ===== PAGE 14 ===== 12 THE FREEMAN July men to advance their interests by mission are never required to honest and peaceful methods. But prove either that competition has when one remembers that busi- actually been destroyed or, much nessmen are constantly being held less, that prices are actually high- guilty of antitrust violations er than they would have been in though their conduct is honest, the absence of the conduct found peaceable, and consensual (as in unlawful. the price-fixing, price-discrimina- If in a dispute with one em- tion, and tying-clause cases), it ployer the union pickets or strikes will be seen that the argument, another, as a means of bringing however powerful, is of no rele- pressure to bear upon the first, it vance to our inquiry. is engaged in the type of conduct On the contrary, perhaps the most usually referred to as a “sec- most striking feature of current ondary boycott.” When one pur- antitrust policy is that it is essen- sues the facts of such cases with tially directed at honest, peaceful, some persistence, one is bound to and even consensual methods of see that the “secondary boycott” coping with competition. When a is nothing more than a somewhat union brings economic pressure to extended form of the same kind bear upon a nonunion business — of pressure which the so-called as all, even the most peaceable, “primary” picket line seeks to im- picketing is designed to do — it is pose, and usually for the same engaging in precisely the same ultimate objectives. The “secon- kind of conduct that leads to anti- dary boycott” differs from the pri- trust prosecutions in the case of mary picket line mainly geo- businessmen. Economic pressure graphically; the locus of applica- is used to reduce or to eliminate tion of the pressure is different; competition, with a view ulti- the end sought is the same: the mately to producing labor prices removal of competitive resistance. higher than those which would Unions frequently pursue their otherwise prevail. monopolistic or anticompetitive objectives by ‘contractual’ de- vices. Some unions insist that col- Again, it is necessary to remem- lective agreements provide for hir- ber that antitrust convictions do ing only by supervisors who are not turn upon the question wheth- themselves members of the con- er the objective has been demon- tracting union. If such unions strably gained; the Antitrust Di- have by-laws which require mem- vision and the Federal Trade Com- bers to prefer fellow-members Interest Rather than Accomplishment ===== PAGE 15 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 13 over nonmembers in hiring,?” the categories of conduct thus far de- insistence upon the contractual scribed.Indeed,if one were to push clause in question is a means of the logic of current antitrust poli- eliminating competition from non- cy all the way, collective bargain- union workers. Contracts requir- ing would itself have to be consid- ing union membership as a condi- ered unlawful as a combination in tion of employment (“closed shop” restraint of trade. It involves “col- or union shop) are obvious exam- lective” price-setting, not individ- ples of the same sort of thing. ual agreements establishing the Another common device is the price of labor. The same would be clause requiring employers to deal true of the simple, peaceable, pri- only with unionized suppliers or, mary strike for higher wages and in any event, with employers whom better working conditions. the union does not characterize as When Justice Douglas said in “unfair.” From the point of view Socony-Vacuum?8 that the Sher- of current antitrust policy, the use man Act prohibited all tampering of such clauses by a union which with price structures, he certainly occupies a “dominant” position was not thinking of combinations must be regarded as anticompeti- of workers. But consistent appli- tive. The analogy to the Schine cation of his doctrine would nev- and United Shoe cases is clear. ertheless bring collective bargain- And so too with clauses limiting ing and strikes within the ban of the subcontracting rights of em- the antitrust laws. For the object ployers; the union is using its is always to secure labor prices dominant position in order to fore- higher than those which would close markets, as the phrase goes. prevail in the “free and untram- meled” labor market. Few people are likely, however, The reader familiar with labor to take seriously the idea that col- relations will perceive that the lective bargaining violates anti- modes of conduct thus far re- trust policy when the union en- counted are not only common gages in bargaining only on behalf forms of union action but also of employees who voluntarily ask among the most common form of it to do so. The more cogent anal- union action. There are only a few ysis would seem to be that the union activities which do not fall, union in such a case (at any rate at least in principle, within the when it falls short of a full monop- To Cf. International Typographical oly of the entire working force) is Union v. NLRB, 365 U.S. 705 (1961). 28 Supra, note 8. Common Union Practice ===== PAGE 16 ===== 14 THE FREEMAN July the analogue of the single firm, lege which the National Labor which, too, is normally an aggre- Relations Act confers upon unions gate of human beings in some le- which are selected by a majority gal form or other. Thus, just as of employees in any appropriate the individual (nonmonopoly) firm bargaining unit as their repre- does not violate the antitrust laws sentative.?? For example, if in a in holding out for the prices it unit of 1,000 employees 301 vote wants, the individual union may in favor of union representation, not be regarded as violating those 300 vote against union represen- laws when it bargains or strikes tation, and the remaining 399 do for the labor prices it wants. not vote at all, the union becomes The conceptual, legal difficulty the exclusive bargaining repre- arises when the union asserts the sentative of all the employees. authority or power to bargain not The 300 who voted against union only for its members but also for representation and 399 who did employees who would rather bar- not vote at all may not under the gain for themselves. For then, in law deal directly with the em- the very act of collective bargain- ployer. In fact, the employer ing the union is eliminating com- would be guilty of an unfair labor petition in what may fairly be practice if he attempted to deal called a “predatory,” or at least an directly with the 699 employees aggressive, way. The people who who showed either no interest in prefer to bargain for themselves the union or active opposition. presumably wish to establish la- Here we have an example of one bor prices different in some way statutory scheme apparently in from those which the union seeks deliberate conflict with another. to impose; whether higher or One dramatic phase of contem- lower is of no significance; the porary unionism remains to be fact of difference is what makes measured against current anti- them competitors, and the union’s trust concepts. In holding the assertion of exclusive bargaining Aluminum Company of America authority a competition-suppres- in violation of the Sherman Act,30 sing (or “predatory”) activity. Judge Learned Hand placed con- siderable emphasis on the fact that Alcoa was practically the sole For the reader unfamiliar with producer of aluminum ingot in current labor legislation perhaps i NLRA, Section 9 (a), 49 Stat, 449, it is desirable to add that exclu- 80 U.S. v. Aluminum Co. of America, sive bargaining status is a privi- 148 F.2d 416 (2d Cir. 1945). Exclusive Bargaining Status ===== PAGE 17 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 15 the United States. It had never the rationale of the Aluminum before been thought that the mere case still holds good, it is difficult possession of the status of exclu- to avoid the conclusion that all col- sive producer of any good or serv- lective bargaining, at least on an ice automatically violated the industry-wide level, is contrary antitrust laws; some kind of ag- to antitrust policy when a union gressive exclusionary, ‘“monopo- enjoying a near-monopoly of the lizing” conduct had previously working force in the particular been required. industry is involved. The labor- But Hand pointed out that price which the United Steelwork- price-fixing was a per se violation ers of America agrees to, at what- of the antitrust laws, certainly ever level, is as much (or as little) when the price-fixing combination a monopoly price as the prices at was dominant in the “relevant which Alcoa agreed to sell its market.” And this being true, he products. For the Steelworkers’ felt constrained to conclude that control of the labor force in the Alcoa must necessarily have vio- industries in which it operates is lated antitrust policy and law as extensive as Alcoa’s was with every time it set a price, since it respect to the production of alu- by itself occupied the same kind minum ingot. This would be true of dominant market position as even if the Steelworkers never the price-fixing combinations engaged in mass picketing as a which had so frequently been means of securing its demands. found guilty of Sherman-Act vio- The fact that its strikes are at lations.31 times attended by mass picket- Whatever its legal, logical, or ing3? makes the case against it common-sense merits may be, if an a fortiori one. The same rea- "31 “Starting . .. with the authorita- soning applies, of course, to all tive premise that all contracts fixing other unions which share the fore- prices are unconditionally prohibited, ——— the only possible difference between and the only price at which it could them and a monopoly is that while a sell is a price which it itself fixed. monopoly necessarily involves an equal, Thereafter the power and its exercise or even greater, power to fix prices, its must needs coalesce, Indeed it would mere existence might be thought not be absurd to condemn such contracts to constitute an exercise of that power. unconditionally, and not to extend the That distinction is nevertheless purely condemnation to monopolies; for the formal; it would be valid only so long contracts are only steps toward that as the monopoly remained wholly inert; entire control which monopoly confers: it would disappear as soon as the mo- they are really partial monopolies.” 148 nopoly began to operate; for, when it F.2d 416, 427.8, did — that is, as soon as it began to 32 Cf. Youngstown Sheet & Tube Co., sell at all — it must sell at some price 130 NLRB 1295 (1961), ===== PAGE 18 ===== 16 THE FREEMAN July going characteristics. And they ing union wages. But this is a are many. classic monopoly argument, being no more or no less true or accept- able when made by a union than By way of summary and re- when made by any other aggre- capitulation, a number of signif- gate of persons banded together icant points seem evident. The for their economic advancement. avowed objective of trade unions Moreover, unions pursue their is to secure for their members monopolistic objective to a con- higher labor prices in one form siderable extent by physically and or another than they could achieve economically aggressive means: without unionization. When thus mass picketing, stranger picket- stated, the objective does not in- ing, secondary boycotts, compul- fringe upon antitrust policy any sory-unionism agreements, and more than the profit-maximiza- the other methods of foreclosing tion goal of an individual firm competition which have been here- does. If unions did nothing more tofore described. than peacefully, honestly, and Finally, having reached monop- otherwise lawfully represent in oly- or near-monopoly-control of collective bargaining those em- the labor supply in a number of ployees who asked them to do so, labor markets, they are in the there could be no conflict with an- same position as all other monop- titrust policy (assuming condi- olists; when conditions are other- tions in which the rationale of the wise propitious, they are able, Alcoa case did not control). The that is, to exact monopoly prices same is true in respect of the sim- for the services they control.33 ple, direct, and peaceful strike for The foregoing pages do little higher wages. more than briefly summarize the But unions seek their maximi- monopolistic objectives and the zation by monopolistic means. They anticompetitive methods which expressly set as their goal the en- characterize contemporary trade rollment of all workers in what unionism. But I take the summary, they refer to as their jurisdiction. skimpy as it is, to be sufficient to Their argument is that in the ab- 733 For an analysis of the conditions sence of such complete unioniza- necessary to the emergence of monopoly ized employers will make it im- Learned Hand's understanding of the possible for the unionized employ- Problem (supra, note 31), sce Mises, ] . ) Human Action. 1st ed. (New Haven: ers to stay in business while pay- vale, 1949), p. 354 et seq. The Conflict Summarized ===== PAGE 19 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 17 PART I establish that the apparent con- flict between trade-union activi- ties and antitrust policy does in fo and Free Competition As indicated at the beginning of this paper, I am aware that es- & A tit t P li tablishing the existence of conflict | | Fis 0 ICY does not automatically resolve the problem of what to do about it. However, it does help some. For example, I cannot imagine how IT 1s a remarkable fact that the anyone who is in favor of free only determined opposition to an- competitive markets can take the titrust policy which exists today position, after becoming aware of 18 coming from proponents of that how unions are hampering such school of thought which is proba- markets, that nothing at all needs Ply best identified as larssez to be done about the conflict. On faire Communists, socialists, the other hand, such a person must new dealers, new frontiersmen, be quite sure that antitrust policy and all other proponents of gov- is the defender of free markets e€rnment ownership or extensive which it is advertised to be, be- governmental control of the means fore insisting even upon its reten- ©f production are to a greater or tion, let alone its extension to less degree in favor of the anti- trade-union activity. trust policies which have been de- It is at least logically possible veloping over more extensively in that antitrust policy, despite its this country since 1890. claims, is as inimical to free mar- What makes this fact remark- kets as much of trade-union ac- able is that free competition is as tivity is. If this logical possibility central to laissez-faire thinking should turn out to be a fact, it 28 1t is said to be to antitrust poli- would follow that applying the an- ¢Y. For a laissez-fair ist, the con- titrust laws to trade-union con- cept of free competition, or its so- duct could not promote free mar- cial embodiment, the free enter- kets — and that, indeed, it might prise system, is in fact the basic even hamper them still more. Thus Principle of social organization. it seems indispensable to examine 34 See, for example, the comprehen- the contention that antitrust poli- sive and tightly reasoned approach in cy is necessary to free competi- Rothbard, Man, Economy, and State : (New York: D. Van Nostrand, 1962), tion. 11, 560-660. ===== PAGE 20 ===== 18 THE FREEMAN July Thecredentialsof laissez-fairists and choice government and law as friends of free competitive en- leave to the economically active terprise are in somewhat better members of any political commau- order than those of the socialists, nity. One suspects that this is the new dealers, and other proponents way in which many persons today, of more powerful government who especially interventionists, think find so much to praise in recent of free enterprise and free compe- antitrust trends. Purely on the tition. But the trouble is that basis of this fact one might be in- when they are so defined our key clined to challenge the contention terms become useless, as well as that antitrust is indispensable to actually not what the average in- the free competitive enterprise telligent person is likely to think system. For it does seem strange of when they are used. Russia to- that antitrust, allegedly indispen- day would be a free-enterprise na- sable to free enterprise, should find tion, under the definition. friends among people who are at So defined, to be brief about it, least very cool to free enterprise free competition and free enter- and at most its deadliest enemies. prise would exist always and for- However, establishing guilt by ever, while men are men. For it is association is always less satisfac- simply inconceivable that govern- tory than rational demonstration ment could ever completely elimi- of the truth of a charge. The lais- nate choice from either economic sez-fairist charge is that antitrust or social life. While men are men, is the enemy of free competitive they will be left choices of action, enterprise;?* the antitruster in- they will have to choose among al- sists that it is an indispensable ternatives, and they will choose, friend. There is only one way to no matter how powerful or how resolve the issue rationally: the interventionist their government key concepts, free competition and may be.3¢ free enterprise, on the one hand, As a useful semantic entity, im- and antitrust policy, on the other, mune to erosion by subjective and must be defined, and their rela- arbitrary manipulations of mean- tionships to each other explicated. ing, the freely competitive enter- prise system denotes a society in which each of its members has Free competition and free en- his property and contract rights terprise may be defined as what- "2 Of Bertr 1d de Jouvenel. The Pur ever area of freedom of action Theory ‘of Politics (Now Haven: Yale, 33 Ibid. 1963), pp. 47, 69-95, A Useless Definition of Freedom ===== PAGE 21 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 19 intact. This is not only a workable matter of status rather than one semantic entity; it is also the his- of consent. As Sir Henry Maine torical meaning of the expression put it in the nineteenth century, — the meaning attached to it both ‘the movement in the progressive by historical development and the societies has hitherto been a move- general understanding of that his- ment from status to contract.”3? torical development. The free com- Out of the feudal tenures, the petitive enterprise system is dis- concept of the fee-simple absolute tinguished semantically and his- grew; and out of the intricate web torically from mercantilism, on of legal and customary status re- the one hand, and socialism, on lationships the concept of freedom the other, by the fact that it rec- of contract grew. The right of pri- ognizes full property rights in its vate property gave each person members and envisions govern- control of himself, of that which ment as a limited-purpose tool de- he produced, and of that which he signed mainly to protect property came by in any other lawful man- rights and to enforce contracts. ner, whether by finding, by gift, or by inheritance. The right of Property and Contract Rights freedom of contract, actually a This is not the place to trace in corollary of the right of control detail the tortured events which implicit in the right of property, led Western society from feudal- gave each man the freedom to dis- ism through mercantilism to the pose by consensual arrangement free competitive enterprise and of all the subjects of his proper- limited government system. Every ty right. Serfdom, slavery, and student of law knows that in early all the other burdens and restric- feudal days there was virtually no tions which limited men’s freedom such thing as a concept of private of action were sloughed off as time property, only a system of limited went on, till in the middle of the tenures adding up in principle and eighteenth century it was possible largely in fact to an essentially for men to reason clearly and sys- tenant and landlord relationship, tematically about the system of with the king as landlord and all political economy that was grow- others as tenants. Every student ing up about them. And this sys- of law knows too that in the be- tematic reasoning was set forth in ginning, the concept of freedom the works of David Hume and of contract was equally unknown, Adam Smith, the decisions of the with custom and law making in- 37 Ancient Law. Pollock ed., 1930. p. terpersonal relationships largely a 182. ===== PAGE 22 ===== 20 THE FREEMAN July great English judges, such as ulation in place of frce competi- Mansfield, and the dramatic eight- tion. eenth century political develop- These are the considerations ments here and in France. which Bowen, L.J. had in mind when he held in the Mogul case Constellation of Freedoms Inherent that even the most aggressive kind in the Right of Private Property of competition could not be consid- What made ours a free competi- ered tortious as long as it was tive enterprise system was the honest and peaceable. He said: constellation of freedoms found to be inherent in the right of pri- Until the present argument at vate property: freedom to go into the bar it may be doubted whether any business at will; to form as- shipowners or merchants were ever sociations; to produce at will; to deemed to be bound by law to con- exchange at will, upon terms mu- orm to some imaginary “normal” tually satisfactory to the parties prandard of freights BA or to the exchange. As the House of at Law Courts had a right to say : ] to them in respect of their competi- Lords pointed out in the Mogul tive tariffs, “Thus far shalt thou go case’™— in my opinion the most en- 414 no further.” To attempt to limit lightening analysis of competition English competition in this way to be found in any authoritative would probably be as hopeless an legal source — the exclusive job of endeavour as the experiment of King the common law is to see that com- Canute. But on ordinary principles petitors do not assault each other, of law no such fetter on freedom of cheat, or rob. When the law goes trade can in my opinion be war- beyond that point, when it seeks ranted. A man is bound not to use to impose standards of “fairness” his property so as to infringe upon in addition to the basic standards another’s right. Sic utere tuo ut of honesty and peacefulness, by ulienum non laedas. 1 engaged in implacable necessity it introduces actions which may involve danger I . . to others, he ought, speaking gener- purely subjective standards which . know no limitations other than ally, to take reasonable care to avoid those which the prejudices and endangering them. But there is sure- : . . ly no doctrine of law which compels predilections of the judges and him to use his property in a way legislators may suggest. More m- that judges and juries may consider portant than that, the result ig a | "11. coo Chasemore v. Rich- substitution of governmental reg- ards, 7 H.L.C. 349. If there is no WwW Mogul Steamship Co., Ltd. v. Mc- such fetter upon the use of property Gregor, (Jow & Co., (1889) A.C. 25 known to the English law, why ===== PAGE 23 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 21 should there be any such a fetter antiboycott decisions tell people upon trade?. .. they cannot withhold their patron- The substance of my view is this, age as they wish. The decisions that competition, however severe ,oqinst tying clauses drastically and egotistical, if unattended by cir- limit contractual rights. The deci- cumstances of dishonesty, intimida- . . . . . . . . vr sions against price discrimination tion, molestation, or such illegalities . tell both sellers and buyers what as I have above referred to, gives ; . rise to no cause of action at common kind of price contracts they are to law.39 make. To repeat: in none of these in- If T am correct in saying that stances do the courts find the de- free competition is a useful and fendants guilty of fraud or vio- meaningful expression only when lence; in each, their property and defined as a condition which exists contract rights are drastically when men have their property and limited. contract rights intact, it neces- . sarily follows that antitrust policy Consequences of Restrictions is inexorably in conflict with it, And what are the empirical con- and this is as true empirically as sequences of these comprehensive it is logically. restrictions upon property and For, as already shown in some contract rights? Well, one imme- detail, antitrust policy is essen- diately perceptible consequence is tially characterized by more or less that — if antitrust prosecutions arbitrary and unpredictable re- are effective — the shape and strictions upon the property and structure of American industry contract rights of antitrust de- are different from what they would fendants. The one thing almost be if the parties had been allowed never seen is an antitrust prosecu- to do as they wished with their tion against businessmen for vio- businesses, subject, of course, to lent or fraudulent conduct. Every ultimate approval by the consum- successful antitrust prosecution in ers on the free market. The point one way or another attacks and may be made vividly by calling limits a peaceful and honest exer- the reader’s attention to the fact cise of a property or contract that such firms as General Motors, right. The antimerger decisions Chrysler, U.S. Steel, and General prevent people from disposing of Electric would probably not be in their properties as they wish. The existence today if current anti- 39 Court of Appeal (1889) L.R. 23 trust policies had been applied Q.B.D. 598. consistently in the past 75 years. ===== PAGE 24 ===== 22 THE FREEMAN July Anyone who doubts this need only the direction of lower prices by read the U.S. Supreme Court’s de- one of his competitors. Again, cision in the Brown Shoe case,® liability may be escaped if the and his doubts will be removed. seller can prove to the satisfaction Our “big business” is eagily the of the Federal Trade Commission most characteristic, creative, and that the actual cost of selling to unique of all American institu- one buyer was less than the cost tions. I can think of no more com- of selling to another.44 pelling way of establishing the These are not easy defenses to anomalous character of our anti- make. But that is not the point. trust policies than to bring atten- The point is that pricing is one tion to the fact that strict and con- of the most sensitive and most sistent pursuit of those policies profoundly significant aspects of would have aborted this most pro- property and contract rights—and ductive of all American institu- of free competition. To compel a tions. seller in general to charge all buy- Another equally perceptible con- ers the same price is drastically to sequence— again if antitrust pros- restrict free competition. ecutions mean anything — is a What is true empirically of the drastic modification of business antimerger and the antiprice-dis- practices. Consider the price-dis- crimination phases of antitrust crimination cases. They hold policy is true also of all other that sellers must charge all their phases of that policy. These sharp buyers the same prices for goods invasions of property and contract of like grade and quality.#* A sell- rights necessarily confine and lim- er may escape liability for an in- it the condition which exists only stance of price discrimination when property and contract rights among his buyers, if he can prove are intact — free competition. that he responded to a move in -_ Price-Fixing Agreements 40 Brown Shoe Co. v, U.S. 370 U.S. . . . 294 (1962). Special attention must be paid 41 For a scathing critique of the Fed- to price-fixing agreements, for eral Trade Commission’s apparent de- . bd termination to make the Robinson-Pat- they seem an interesting anomaly. man Act even more anticompetitive than On the one hand, they are un- Congress did, see Handler, “Recent doubted] xercises of contract: Antitrust Developments,” 112 U. Pa. L. y exercises ¢ ct; Rev. 159, 183 et seq. (1963). 43 . . 42 Cf. Corn Products Refining Co. v. U.S aor Croan 2H Co. v. F.T.C., 340 F.T.C., 824 U.S. 726 (1945); F.T.C. v. er vei A. E. Staley Mfg. Co. 324 U.S. T46 44 Robinson-Patman Act, Sce. 2 (a), (1945). 49 Stat, 156206 (1936). ===== PAGE 25 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 23 but on the other, it is difficult to we are to have competition. On see how they can be considered to the contrary, the notorious fragil- be forms of competition. The ity of price-fixing combinations is anomaly disappears upon resort directly attributable to the contin- to further analysis of the nature ued possession and exercise of of a free society. Such analysis property and contract rights by must necessarily conclude that members of price-fixing combina- there is nothing in the concept of tions. freedom which commands all peo- These combinations break down ple to compete with each other. as swiftly and as consistently as One acts the free man, in short, they do precisely because the par- as well when he declines to com- ticipants remain in control of pete as when he chooses to com- their business —and responsible pete. Moreover, everyone can for its losses. When a business- think from his own experience of man sees that his goods are not examples of voluntary withdraw- moving at the prices established als from competition which were by such a combination, he does in no way censorable. the natural thing: he lowers his The common law dealt with price. Perhaps he does this fur- price-fixing agreements in a pe- tively; but he still does it. The culiar way; it simply refused to American experience with the so- enforce them. It might perhaps called ‘“Fair-Trade” laws makes have gone so far as to hold such the point as vividly as possible. combinations fraudulent, at least These laws are an attempt to es- in collusive-bidding cases where tablish price-fixing by force of the parties deliberately convey the law. But so unwilling are business- impression that they are in com- men to stick with price-fixing of petition. It is too bad that this any kind, whether by government idea was never developed; but at or private contract, that they have any rate, the common law was made the job of enforcing ‘“Fair- quite correct in finding that price- Trade” laws extremely difficult. fixing combinations were in no other way violations of property or contract rights. The fact that price-fixing com- Once again the appropriate con- binations, while exercises of con- clusion seems to be that the com- tract rights, are not competitive mon law was its usual fair and does not mean that property and common-sense self when it con- contract rights must be limited if fined itself merely to refusing to The Common Law Refused To Enforce Price-Fixing Pacts ===== PAGE 26 ===== 24 THE FREEMAN July enforce price-fixing agreements, farmers, air lines, shipping com- On the one hand, it could not panies, and so on. hold such agreements unlawful, The situation is not improved since they were valid exercises of when one considers the contradic- property rights. On the other tory conduct of the federal gov- hand, their relationship to compe- ernment in the premises. While tition was at best imperceptible sending some people to jail for and at worst destructive. Denied agreeing on prices, it considers legal enforcement, they would nationwide price-fixing agree- probably soon break down as a ments laudable if exacted by trade consequence of the ineradicable unions; it visits penalties on tendency of all businessmen to re- farmers for departing from the spond to changing demand and prodigious price-fixing scheme supply conditions (for bankruptcy known as our agricultural policy; is the alternative). Hence, while it forces uniform prices on air denying enforcement to price-fix- lines and other participants in the ing contracts might not have been transport industry; and finally, as the most elegant and logical solu- we have seen, it forbids individual tion, it was a fair and practical businesses to vary their prices way out of the dilemma. downward at will. And it still seems so to me — I am sure that human ingenu- far more practical, and just, than ity is capable of rationalizing each to send men to jail because they of these contradictory programs. have peacefully agreed among The one thing that no amount of themselves as to what they should rationalization can do, however, charge for their property. There is to demonstrate that they are i8 in my opinion no way to justify consistent with the principle that this kind of savage treatment of every member of a free and de- some people for doing the very cently run society is entitled to kind of thing that all of us — in- the same kind of rights. cluding lawyers — do at one time or another. For everybody does engage in what amounts to price- We have yet to develop the most fixing agreements at one time or illuminating of all the insights another — working men when they to be derived from consideration participate in union activity, pro- of price-fixing agreements. As fessional men when they set their already suggested, price-fixing fees in accordance with prevailing agreements, even those enforced views among themselves, retailers, by government, are under constant A Tendency To Break Down ===== PAGE 27 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 25 pressure, constantly in danger of tors who are always attracted breaking down. The reason for this when they see prices out of line is to be found in the law of in- with existing supply and demand cessant change. Supply and de- conditions. mand conditions are always Another basic feature is that changing. Hence, no matter how everyone has a right to charge sheltered the market may be in whatever he wishes for that which which a price-fixing combination is his; therefore, the members of operates, the fixed prices are a price-fixing combination cannot nearly always out of date —and prevent the competition from always on the verge of being out charging prices lower than they of date. A price-fixing combina- feel are proper. Finally, the com- tion sheltered from competition mon law refuses to enforce price- by government power can hold out fixing agreements; and, therefore, relatively long. The government the members of the combination can keep price-cutting competitors cannot avail themselves of the from entering the field at all; or it power of government to keep in- can throw into jail those members ternal insurgents from breaking of the combination who depart ranks. from the fixed prices; or it can through the subsidy process make The Basic Flaw in Antitrust up the losses of the combination Thus, practically everything members who are compelled by works against nongovernmental law to sit quietly by while the un- price-fixing while little or nothing regulated competition takes the works in its favor. The restless customers who refuse to pay the law of incessant change, the de- erroneous prices. sire for profit on the part of in- But none of these methods of vestors who are constantly seek- keeping down or discouraging ing promising investment oppor- competition is available to a tunities, the notorious preference strictly private, nongovernmental of businessmen for selling goods price-fixing combination in a free rather than watching them gath- competitive enterprise system. ering dust on the shelves — all One of the basic features of sucha these are constantly battering system is that everyone has a legal against any structure of prices right to seek his fortune in any established only by a legally un- field of activity; therefore, the enforceable private agreement. members of a price-fixing combi- The light which these consider- nation cannot keep out competi- ations shed upon the nature of ===== PAGE 28 ===== 26 THE FREEMAN July the competitive process in a free the highest degree to seek to im- enterprise system illuminates the pose this purely imaginary con- basic flaw in antitrust policy and struct on living men in a living philosophy. That basic flaw is its society. The model was never con- quite erroneous conception of ceived for such a purpose. The what a competitive economy is, most persistent efforts on the part and of how it operates. Reading of legislators, judges, and bureau- many of the opinions of the Su- crats can never squeeze a society preme Court and of the Federal of living people into such a con- Trade Commission, and perusing struct. And even if they could, the antitrust laws themselves, the results, however pleasing to brings to one’s mind the average them, would never be tolerable to text for the beginning . college the manhandled subjects of the course in economics, with its so- experiment. called “perfect competition” mod- I do not intend to use up energy el, the purely imaginary construct and space in tracing out the many which Professor Mises refers to ways in which the model departs as the model of the “evenly ro- from reality. The reader will find tating economy.”*3 Everyone re- that job magnificently done in members the fiction: sharply (and Professor Mises’ great work, Hu- therefore hopelessly unrealisti- man Action. It will suffice for pres- cally) defined industries charac- ent purposes to point out that an- terized by businesses so numer- titrust policy built around con- ous, so small, and so homogeneous ceptions derived from the ‘“per- that none can affect the price fect competition” model must structure; instantaneous and au- necessarily be inimical to both the tomatic adjustment by all firms basic principles of the free soci- to all supply and demand changes; ety, private property and free identical products and product contract, and to their most char- mixes — and so on. acteristic product, the free com- petitive enterprise system. The Model Is Purely Imaginary I do not wish to deride this The Law Does More Harm than Good model. I am willing to accept the The analysis of the causes of assurance of economists that it breakdowns in price-fixing com- serves some useful purposes —in binations goes a long way toward the classroom or in the econo- explaining the conflict; the model mist’s study. But it is vicious in peglects the three factors which 45 Mises, op. cit., p. 245 et seq. played so critical a role in that ===== PAGE 29 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 27 analysis: incessant change, the profit-seeking impulses of inves- PART ll tors, and the preference of busi- | * & nessmen for selling goods. The Nons whole of contemporary antitrust . policy suffers from the same Antitrust short-sighted failure to perceive the multitude of structural and functional checks which a com- petitive economy opposes to those SUBJECTING UNIONS to the anti- who would abuse it. Putting the trust laws is probably not a prac- Antitrust Division to work to tical proposition, and, even if it keep a free competitive enterprise were, the result would be, not a economy free and competitive is freer and more competitive econ- not only silly but harmful. The omy, but an economy more and normal profit-seeking drive built more regimented by government. into vigorous men insures com- It is probably not practical for petition. Antitrust policy is serv- geveral reasons. First and fore- ing only to distort, frustrate, and most, it seems to me highly un- ultimately inhibit competition. realistic to believe that it is po- I should like to conclude this litically feasible to apply the anti- section by suggesting that anti- trust laws as comprehensively to trust policy based on the perfect unions as they are applied to busi- competition model makes about nessmen. The reader must bear as much sense as a law decreeing in mind here that practically all that all men must at their matur- union conduct beyond voluntary ity be five feet eight inches tall. bargaining on a one-company ba- Such a law would relate to reality sis and similar (peaceful) strikes, much as ‘perfect competition” runs counter to current antitrust antitrust policy relates to real policy. Picketing, boycotts, the competition. We are never going restrictive contractual devices we to force society into the “perfect- have described, and multi-plant competition” mold, serious injus- or industry-wide bargaining by tice and great social cost are the the larger unions are all in con- product of the attempt, and the flict with current antitrust atti- results of ultimate success, if that tudes. I simply do not believe that were possible, would be horrible this country is politically capable in all ways, esthetically, morally, of either enacting or enforcing juridically, and economically. an antitrust policy which would ===== PAGE 30 ===== 28 THE FREEMAN July condemn all those types of union A Treatment but Not a Cure conduct. No one is in a position to pre- There is a further complica- dict the eventual outcome of the tion, intimately associated with event. There might even be a good this political difficulty. As a tech- result. Subjecting unions to the nical matter, merely subjecting antitrust laws would of necessity unions to the antitrust laws mean providing direct access to would not reach the aspects of the federal courts in many of the union action which represent the labor cases which now must go, worst threat to genuinely free at least in the first instance, to competition. Those aspects are in the National Labor Relations fact to a considerable extent the Board. The federal courts are, in product of legislation, The capac- my opinion, so much more com- ity to destroy competition which petent and so much more disin- unions so frequently demonstrate terested than the National Labor traces in large part directly to Relations Board that we should be the special privileges granted likely to get a more coherent and them in federal and state labor consistent structure of legal doc- relations legislation: the strict trine applicable to union conduct limitations on peaceful anti-union than we have now. action by employers, the exclu- While such a result is to be de- sive bargaining authority of ma- gired, however, it would still not jority unions, and the advantages remove the inherent conflict be- derived from having labor rela- tween our labor relations and our tions laws administered by agen- antitrust policies. Unions would cies which believe their duty to still be encouraged under labor lie in encouraging the spread of relations policies to build up mo- monopolistic collective bargain- nopolistic power, only to be dis- ing. couraged under the antitrust In short, antitrust policy and laws from using it. In all proba- labor relations policy are in di- bility, the fundamental monopo- rect conflict. Subjecting unions to listic privileges would remain (ex- antitrust laws while leaving them clusive bargaining status, compul- with the special privileges inher- sory unionism agreements, peace- ent in labor legislation would be ful picketing, and so forth), and like slamming on the brakes while the main result would be contin- the foot is still pressing all the ued conflict in our fundamental way down on the accelerator.We’d policies. go into quite a skid. Furthermore, subjecting unions ===== PAGE 31 ===== 1964 COMPETITION, UNIONS, AND ANTITRUST 29 to the antitrust laws would not in labor relations. Consider, for cope with the most egregious and example, the proposal to limit the most harmful of the anticompet- size of bargaining units. There itive union activities, namely, vio- is admittedly no objective prin- lence and intimidation. I am ciple available to tell us just how aware of the almost universal large or widespread any bargain- tendency to regard violence in ing unit should be. labor disputes as unusual, or as Proponents of the idea admit a “thing of the past.” But the that they must rely upon the dis- fact is, unfortunately, that vio- cretion of government agencies lence and intimidatory techniques to determine in particular cases are at least as widespread today whether bargaining should be on in labor disputes as they have a one-local-union basis, or an ever been. I have files document- area-wide basis, or an industry- ing this statement quite as ex- wide basis. Confronted directly, tensive as my files on any other this would appear merely another aspect of labor relations. method of depositing additional arbitrary power over the economy in bureaucratic hands. I find it If intimidatory practices and impossible to reconcile this pro- the special privileges accorded posal with a genuine free-com- by labor relations legislation are petition policy, and still less with the main means by which unions the basic property and contract destroy competition, as I believe, rights underlying such a policy. then it follows that applying the The same conclusion is inevit- antitrust laws to unions, even if able with respect to the proposal politically feasible, would do no that the antitrust laws be applied real good. It would not work in to certain individual unions, no- the practical sense that it would "46 Thus, Professor Edward H. Cham- not remove the fundamental harm berlin, an advocate of a policy of re- . . els structuring labor unions, acknowledges which unions do to a competitive that ‘‘the application of this principle economic order. might involve diluting the strength of result — substantial increase in ated, by merging them with larger the discretionary (i.e., arbitrary) units. In other cases, it might involve . the breaking up of large units into power of the government over the smaller ones.” Chamberlin, “Labor economy. This would follow from Union Power and the Public Interest,” either comprehensive or limited in Bradley (ed.), The Public Stake in Union Power (Charlottesville: Univer- application of antitrust principles sity of Virginia Press, 1959), pp. 3, 20. More Power to Government ===== PAGE 32 ===== 30 THE FREEMAN July tably the Teamsters.i” The Team- exercises of fundamental property sters are neither structurally nor and contract rights, peaceful operationally distinct from other strikes and boycotts must be re- unions. They are just more so, garded as competitive devices in most ways; they do everything rather than as destroyers of com- more effectively than most other petition. unions (including, if gossip in the trade is accurate, adhering to their contractual commit- The foregoing reasoning pre- ments). There is irony in the supposes, however, that the spe- thought that the most successful cial privileges granted unions by of all unions should be burdened, current labor relations statutes as are the most successful busi- are withdrawn. In more detail, nesses, with special antitrust du- this means repeal of the monopo- ties. But irony ought not to be listic exclusive bargaining privi- allowed to rule one's judgment. lege and of all restrictions upon Giving free reign to animosity peaceful and honest anti-union and vengeance is not likely to activities by employers which do promote free competition or to not apply with precise equality establish a just, sensible, and co- to pro-union activities by unions. herent legal system. Concretely, if a union may take If we wish to gain the ben- peaceful action to secure an efits of free competition in labor agreement requiring union mem- relations, we must first and fore- bership as a condition of employ- most devote as much of our en- ment, the employer should be al- ergies and our resources as nec- lowed to take similar action in an essary to the elimination of the attempt to establish nonunion violent and intimidatory methods membership as a condition of em- which are fundamental to the an- ployment. Again, if a union may ticompetitive practices of trade strike or picket peacefully to es- unions. The peaceful and honest tablish collective bargaining or methods which unions use in or- to gain concessions from the em- der to advance their interests may ployer, then the employer should be bothersome, but they are not be allowed to lock out employees ultimately dangerous. Indeed, as as a means of resisting collective 47 See, for example, Senator John L. bargaining or to gain concessions McClellan’s bill to apply the antitrust from employees and their repre- laws to unions in the transportation . industry. S. 2573, 87th Cong. 1st Sess. sentatives. In short, I do not see (1961). how it is possible to have free Withdraw the Privileges ===== PAGE 33 ===== 196 COMPETITION, UNIONS, AND ANTITRUST 31 competition unless the competing there will be violence if those parties are equally free to act likely to use it get the idea that within a broad and equal rule of nothing will be done about it. We law in pursuit of their own in- have as much violence in labor terests. disputes as we have today because I have heard it said that such prevailing ideology blinds itself a rule-of-law regime is not only to union violence or seeks anx- naive but also a sure way to ex- iously to justify it and thus di- cite violent reactions from trade- minishes the zeal of the author- unionists.*® As to the charge of ities in the enforcement of law.4? naiveté, I would suggest that it It seems self-evident to me that is irrelevant: no one really knows we have the resources to keep what can be ultimately attained; violence in labor disputes within the best that men can do is use acceptable limits — if we seriously their reason in pursuit of the wish to do so. At the outside there means most likely to gain the ends are no more than 17,000,000 they wish. If we wish to promote trade-union members in this coun- free competitive enterprise, we try. I have no way of knowing must establish and preserve prop- just how many of these are vio- erty and contract rights, and we lence-prone; but they are people must do so equally among all men. like other people and therefore, Naiveté does not enter into that I judge, not particularly violence- analysis. The only relevant ques- prone. On the other side, as a tions are whether the end is really nation we have vast human and desired and the means appro- material resources. It is a shame priate. that they are directed as little as As to the threat of a violent they are in the service of law and reaction, I suggest that there is order. already a great deal of violence The question which this paper in labor disputes and that there raises is whether we are enough is really no proof that violence in favor of free competitive enter- will increase if trade unionists prise to do what is necessary in learn that the decent citizens of order to establish the rule of law the community are determined to and order without which free com- require equal obedience to the petitive enterprise cannot exist. law by all persons. Naturally, @® 48 See the comments of Professor 49 Cf. Petro, Power Unlimited: The Bertram F. Willcox in Industrial and Corruption of Union Leadership, (New Labor Relations Review, XI, 272, 273 York: Ronald, 1959), pp. 95, 99-101, (1958). 203-20. ===== PAGE 34 ===== HARRY L. SMITH YOU CAN'T STRIKE AGAINST EMPLOYERS do not determine wages. Most of them would like to. Many of them think they do. But they can’t. Why ? Because the mar- ket steps in and holds them rigidly in its grasp. The market is an abstract con- cept, just as is the center of grav- ity, moment of inertia, or meta- centric height. Abstract thought originates in the minds of genius and is the only key to the secrets of the universe. It is the primary difference between man and ani- mal. Mankind has usually reacted to the innovation of abstract thought with incredulity and ani- mosity. Copernicus, Galileo, New- ton, and Bacon all suffered ridicule and outright persecution for their ideas. Luckily mankind has now been sufficiently conditioned by rapid scientific advancement to accept on faith such things as Einstein’s collapsible time and Mr. Smith is n businessman in Argentina. 32 3 { cob ) ! { [I ; REE ¢ curvable space. Engineers know that they are bound by the laws of nature. While physical science now seems to be safe from the preju- dices of mankind, new fields of abstract thought are causing man to react as badly as did his medi- eval ancestors. The field of eco- nomics has become the new intel- lectual battleground, and the concept of market value versus labor value is the abstract con- cept which has literally divided the world. The true and real value of any economic good is determined by the amount of labor required to give it utility, said Karl Marx. This concept struck an immediate chord of response among workers, who saw themselves as the only creators of wealth, and formed the basis for a flimsy pretext to con- fiscate private property in the name of the workers who had “cre- ated” it. Communists have sought ===== PAGE 35 ===== 1964 YOU CAN'T STRIKE AGAINST THE MARKET 33 desperately, but vainly, for a price offered. It would be impossi- mathematical formula which would ble to come even close to this elu- relate value and labor. sive value were it not for the opposing forces of self-interest. The laborer can enhance the The vast majority of worldly market value of his services wealth is produced by a proper through experience, education, and combination of cost factors. The dexterity. The businessman can market determines the value of affect the market value of his prod- any finished product. It also de- uct through improvement of qual- termines the value of each element ity and service. This leads to the of cost entering into its produc- illusion that they can control the tion. The entrepreneur must accept market, either singly or collec- the “going price” of labor as de- tively. When working deep within termined by the market. Entrepre- the economy, both employee and neurial ability enters the picture employer often lose the perspec- by properly combining cost fac- tive of the over-all market econ- tors. In this manner, the business- omy which finally establishes all man can use his ingenuity and values. This myopia has proven skill to determine total cost. The ideal for the introduction of Marx- difference between this total cost ist concepts into Western civiliza- and the market price of his prod- tion. uct constitutes his profit. By disregarding the concept of Supply and Demands Versus the Boss the market, communists and so- Today the free market economy cialists presume that values can is regarded as an impractical the- be determined by law. Conse- ory having no place in modern, quently, they insist that it is bet- complex, practical, economics. ter for “disinterested” politicians There is no use in telling the mod- to determine values than for ‘“self- ern laborer that it is not his em- interested” businessmen. ployer but an abstract market Self-interest is the basis for all which determines his wages. The economic stability and is the bal- answer is as obvious to him as was ance wheel of the market. In the the flatness of the earth to the specific task of searching for the medieval man. He knows that the market value of an hour of labor, boss determines his wages and employer and employee face each that strikes should be directed at other on the see-saw of self-inter- him. After all, it is impossible to est, each free to take or leave the bargain collectively with a market! Combination of Cost Factors ===== PAGE 36 ===== 34 THE FREEMAN July Even the businessman is none would be an attempt to determine too sure. Doesn't he have a wage the value of each human economic committee and a pricing policy? interchange for purposes of indi- When it comes right down to it, vidual or group control. The mar- were it not for unions and legisla- ket value of any economic trans- tion, all wage and pricing deci- action is so complex that only the sions would be his. What he fails close study and self-interest of the to realize is that he does not deter- parties involved can hope to ap- mine wages and prices but is proximate it. Only by sweeping searching for that shifting and away the internal and external nebulous true market value. barriers which prevent the har- monizing of free interchange can No government would attempt we hope to find humanity's eco- to determine, much less control, nomic center of gravity — the free the center of gravity of all rigid market. And only by realizing that objects, and is content to accept you can’t strike against the mar- the earth’s center as the focal ket can we achieve peaceful indus- point of all. Even more ridiculous trial relations. @® | tosas oN] copeay | Dividing the Pie WHEREVER the pie is divided by the free market, one thing seems sure: Marx’s surplus value theory will be vetoed. For persons will continue, as they have over the past few centuries in our relatively free United States, to recognize a bargain when they see one. That bargain is tools. Of our total output, perhaps as much as 95 per cent is because of the use of tools. And this is at a cost of only about 15 per cent of total output, as pay to those who have saved to create these tools. That, and not Marx’s concept, is the miracle that creates a surplus of value. F. A. HARPER, Why Wages Rise ===== PAGE 37 ===== Are We ENSLAVED MACHINES? “7, f MALLORY CROSS ARE MEN “enslaved by machines”? an idea; it is a thing. And a thing It is important to get at the truth has no stick to beat us with if we or falsity of this idea, because it ignore it, nor can a thing have any leads to legislation that affects all effect on our conscience. of us. People who are concerned If a man voluntarily uses a about men’s slavery to machines machine to help him create new nearly always see it as a social things from raw materials, he is question which can be solved by not enslaved by his helper. The putting the right laws into effect. machine has neither will, nor pow- The essence of slavery lies in er that is independent of that serving or performing work un- which man has constructed it to willingly for another. The ‘“oth- produce or use. It is serving the er” may be a person or idea. man, perhaps replacing a slave, If it is a person, we have a contest but certainly not enslaving its of wills. If it is an influence or owner. idea, the contest will lie within the If the owner is bound by natural individual and the bondage is nec- laws to do certain things in order essarily voluntary to some degree. to keep his machine in working As Dr. Ludwig von Mises has so order (oil it, for example), he still clearly set forth in Human Action, is not a slave to his machine. we always do what we want to do, First, it is a voluntary act; sec- in the sense of choosing the most ond, it is not the machine that de- desirable — or least undesirable — mands the care, but his own desire alternative of those available to us. to keep it in use. Can a man, then, be “enslaved Suppose a man invents a ma- by a machine”? No, he cannot: a chine that cuts and assembles machine is neither a person nor shoes faster than he could do the Miss Cross is a free-lance writer, residing in job by hand. By putting out a France. larger quantity, he is able to re- 35 ===== PAGE 38 ===== 36 THE FREEMAN July duce the price per pair and under- cessity of earning a living. But sell his old friend who is still mak- even if true, they are not forms of ing shoes by hand. The latter “slavery” that can be successfully gradually loses business until he dealt with by govermment action. is forced to close shop and seek This may be made clear by dis- work elsewhere. And the man with cussing the other cobbler, Mr. the machine now has to work six- Craft. What has happened to him? teen hours a day managing his His will or desire was to go on rapidly expanding business. making shoes by hand. He enjoyed Has either of these men been en- his work and was proud of his slaved by the new machine? Many craft. It was against his will that persons would answer that both of business fell off, finally forcing them have, so, let’s take a close him to close his shop and look else- look. where for work. Mr. Smart invented a tool to help him. It works for him, and he is glad to be relieved of such According to one point of view, drudgery as cutting out shoe soles what happened to Mr. Craft is an by hand. He is willing to go on injustice that has a social cause, managing his growing business, and therefore requires a social even work more hours, because of remedy. It was the economic power the higher financial rewards (prof- gained by Mr. Smart when he in- its). With these, he can arrange vented his machine that forced for future vacations; his children Mr. Craft to do something against can have a better education; his his will or desire. “No one,” ac- wife can have greater comforts cording to such a view, “has a at home. right to use economic power to He may complain about the long harm others. Mr. Craft has a right hours, but if the business is really to go on being a cobbler if he a success, he could sell it or hire a wants to. He has been driven to manager. Or he could even go back involuntary servitude by a ma- to making shoes by hand. From chine.” Social Coercion? his actions, we must assume that But does anyone have a right to he is not working involuntarily for use social power (the law) to a machine; it is serving him. harm others? That is the inevit- A philosopher may say that Mr. able result of forcing consumers Smart is a “slave” to the idea of to support a cobbler just because getting rich, or of improving his he wants to be one. Must we then condition; or a “slave” to the ne- support the woman who makes ===== PAGE 39 ===== 1964 ARE WE ENSLAVED BY MACHINES? 37 unsalable pictures from thousands wuntary means: gifts, inheritance, of bits of postage stamps glued on private charity; 2) by involun- a board to represent birds or tary means: theft, or by using flowers — just because that’s all she government as the instrument to wants to do? Or a man who makes collect and redistribute the funds. horseshoes where there are no Note that in any case the burden horses — just because he likes to does not disappear but is only work with iron? shifted from one back to another. It is true that Mr. Craft was Mr. Craft could become the ben- constrained to make a choice when eficiary of unemployment compen- business fell off. But he was forced sation, which necessarily calls to act by the necessity of earning forth the involuntary service a living —a matural necessity, (slavery) of others for his bene- neither socially imposed, nor im- fit through forcible collection of posed by the will of Mr. Smart. taxes. The cobbler was forced to choose But perhaps there is another by the failure of customers to seek way for government to help Mr. him out and pay his prices. Craft in the name of society with- Further, Mr. Craft was not at out imposing this injustice on any time under bondage to either everyone. Mr. Craft's business Mr. Smart or his machine. Even might survive if Mr. Smart didn’t if he later got a job in Mr. Smart’s reduce prices. Couldn’t the gov- shoe factory, the machine would ernment help through price con- still be helping him earn a living trol? — serving him, not he serving it. To set a minimum price means Therefore, Mr. Craft was neither that those who buy shoes are enslaved by Mr. Smart nor “en- forced, against their wills, and slaved by a machine.” against natural conditions, to pay more for shoes than is necessary. Only the arbitrary intervention of This is not the end of the prob- the government causes this injus- lem, however. Granting that we tice. And it is an injustice, though are in sympathy with Mr. Craft, it costs each of us only a few and would like to do something for pennies per shoe, because we him, what can be done? otherwise could have that money Nature has imposed the neces- to spend on something else. It is sity of earning a living. Society an injustice to all sellers who will can relieve a member of this bur- not be able to sell their goods be- den in only two ways: 1) by wol- cause this money that would have What Can Be Done? ===== PAGE 40 ===== 38 THE FREEMAN July been available to help them earn with rotting grain, for ships in their livelihood was diverted by mothballs, for goods and services government intervention for the poured into foreign countries that special benefit of the cobbler. later insult us and drive us out, Men, not natural necessity, have for rockets to the moon. We are created this method of spreading enslaved by people who benefit injustice or slavery to a whole from postal subsidies. Every work- society. ing taxpayer is a slave to every I am sorry that anyone has to farmer who gets a subsidy for work to eat; sorry that not every- not growing grain. one can work at the craft or art “Oh, it doesn’t matter when it's he prefers; sorry that anyone is such a little bit. I'm not aware of weak, or ill, or not very intelligent. being poorer than I might be,” is But I am not sorry that some are a stock response to these facts. able to live on gifts from others; But think about it. In the nor that some are strong and United States, all governments healthy and intelligent to the combined spend nearly a third of point of genius. Not at all! Why the national income. If you earned try to destroy that which 1s good, $300 last month, then government out of sympathy for that which — for somebody’s alleged benefit — is undesirable? took nearly $100. It won't show up in your paycheck that way. But, besides what is withheld, every- thing you buy has taxes hidden in We seldom recognize the extent the price. Would you contribute to which we are indeed “enslaved” that much voluntarily? Or have by subsidy or intervention. When you other uses for that $100? government keeps interest rates Whatever barriers to trade the lower than the free market rate, government imposes in the name numerous investments are made of society, with the sincere inten- in machines and for other things tion of promoting justice, will not that are economically unsound. only fail in that purpose but will Raw materials are used to pro- impose further injustice on many. duce things that people are not All become slaves of the few in the willing to pay for — unless they sense of involuntary servitude, of are given a subsidy in turn. performing work for another We are truly enslaved to the ex- against one’s will, of being under tent that we have involuntarily bondage to the will of another per- paid for storage bins bursting son or persons. Examples of Enslavement by Subsidy or Intervention ===== PAGE 41 ===== 1964 ARE WE ENSLAVED BY MACHINES? 39 Abolishing Machines — bison left, and it’s so dry the little A Retreat to the Cave ones can’t chew it.” But sometake an entirely differ- “Hush, till you see what I've ent approach to the problem. They brought.” would restrict the use of machines “lI suppose you found an old for other reasons. They find them dead one that’s too tough to eat.” noisy, dirty, ugly, poisoning the She follows him outside, where air, spoiling the landscape—a children of all sizes are already general burden and a curse. Those surrounding the haunch, ready to people think it would be ideal to help cut it into strips when it is go back to the days when each skinned. She darts over, shoving homestead was self-sufficient, bak- them aside, to poke and sniff the ing homemade bread, growing its meat. own corn, smoking its own bacon, “This long stick killed it,” he spinning its own cotton, making said. “See,” he showed the chil- its own entertainment at home. dren, “I put the little spear on the Despite certain virtues in the vine and —watch!” The little spear pioneers’ struggle to better their goes sailing to the edge of the conditions, would many today be clearing to stick quivering in the willing to live in a world without earth, far beyond where his throw- mechanical aids? To be rid of un- ing-stick could reach. pleasant by-products of civiliza- Yes, the invention of the bow tion, they would have to give up to fling his short spear farther, the advantages as well, both ma- harder, faster, more accurately terial and spiritual. Carried to its than his throwing-stick gave late logical conclusion, abolishing ma- Paleolithic man a precious gift: chines would take us back to the more time. More time to store up caves, without even a bow or a reserves of food; more time to firestick. spend teaching his children vital Imagine the man who has just skills; more time to draw, think, invented an effective bow, coming wonder. home with a haunch of the first Was he then “enslaved” by the deer ever taken by bow and arrow. bow? He certainly became depen- His mate greets him from the dent on it. And it eventually put cave. out of business those skilled at “Back so soon?’ she growls. making and using throwing-sticks. “You haven’t had time to go to Though men for a time continued the pit and back. Lazy good-for- to hunt in groups, a man alone nothing! There's hardly a strip of could now travel farther afield, ex- ===== PAGE 42 ===== 40 THE FREEMAN July plore more of his environment, de- produced, or meat more than once velop his individual talents more a week — or once a month in bad easily, become more civilized, less times. savage. As the Industrial Revolution got When I told a friend, an engi- under way, women and children neer, the title of this piece, he was worked in factories and mines be- puzzled that such a question could cause otherwise the family could seriously arise. not have survived on what one “But machines are a boon,” he man could then earn or produce. said. “They’re impersonal, just Gravestones in old cemeteries and mechanical aids to help do a job or other records reveal that mothers make things faster than we could often bore 16 or 20 babies, only to do otherwise. They're a boon to have most of them die within two man.” or three years. Perhaps only three He is right. And thanks to sav- or four would reach adulthood. ings invested in capital goods of But a century later, there were all kinds, we not only can make families with ten or twelve or even things faster, but we can provide Sixteen living children, well on things which otherwise would not their way to maturity. Many of exist. First in importance is food these worked in factories or in cot- and clothing. This means more hu- tage industries on rented machin- man beings can come into life, and ery. But they were keeping alive. survive, within a given period of ~~ This is not to imply that there time. were no injustices: there were serious ones. But they were not A Bare Subsistence caused by machines. At the dawn of the Industrial Little by little those roaring Revolution in the eighteenth cen- steam engines, the stocking frames tury, well over 90 per cent of the and spinning jennies, the turret population were engaged in agri- lathes and milling machines, began culture. Those were times of want to enable a man to produce enough and misery for the vast majority surplus to raise his wages. Men of the English population. They could eventually support their labored from dawn far past sun- family despite laws diminishing set, at the mercy of the weather, child labor and restricting women and paid a large part of their pro- to lighter work. duce to landlords and as taxes. Many well-meaning people have Many were too poor to afford to felt that industrial workers for eat the chickens they kept, the eggs over a century were enslaved by ===== PAGE 43 ===== 1964 ARE WE ENSLAVED BY MACHINES? 41 machines. They also complained Half the employed persons in about the long hours (not so long the United States are now en- as on the farm), lack of air, light, gaged in service industries. The sanitary facilities (none on the tremendous significance of that farm), insufficient time off for fact has escaped the columnists meals or rest, lack of safety pre- and headline-writers. Half the cautions. working population is now doing But a great many employers — with the help of machines — were neither careless nor unjust, what used to be done by wife and nor even unsympathetic. There was children and servants, who went little they could do about many of on working 14 hours a day at the undesirable things until later. home long after such hours were Not until savings and tools, mak- outlawed in factories. Many of ing possible greater output per these modern services were left man and inventions of new tools, undone before. Machines give men had run through numerous cycles and women leisure to form Art could men afford to reduce work- Leagues, study for Ph.D.’s, and ing hours and attempt other re- take their children to Europe, in- forms. stead of baking and sewing, chop- Today, economists see the pro- ping wood, and plowing their grammed, self-correcting, com- acres. pletely automatic assembly lines — not as monsters designed to cre- ate unemployment — but as won- What do time and machines and derful means to release men and slavery have to do with each women from the boredom and other? To begin with, a slaves drudgery of endlessly repeated op- time is not his own. And it is ma- erations. There is a tremendous chines that free man from bond- advance in safety, too. The tech- age to time. There is a miracle nician who observes a process, per- here, if we could only appreciate it. haps through closed-circuit televi- A famous visitor from the sion, will not lose a hand in the USSR a few years ago was puzzled gears, or burn out his lungs by at the sight of America’s richest breathing chemically dirty air. farming lands. “Where are all the And the ever-dwindling number of workers?” he asked. unskilled workers live far better Most of the workers — and the and have more purchasing power horses as well — were reflected in than their grandfathers had, be- the horsepower that ran tractors, cause automation has cut costs. combines, and harvesting ma- Gaining Time ===== PAGE 44 ===== 42 THE FREEMAN July chines. In his country it takes one We all have a more abundant of every two workers to produce life to the extent that we are freed food for the rest, and not much of from bondage to time. Machines it at that. In the USA only one help us do this; so it is vital for out of ten work to produce more future progress, whether at ma- than enough food. What an in- terial or spiritual levels, to under- credible amount of time to do stand how we bring these helps other things we are given by farm into being. The people of under- machinery alone! developed countries would like to That visitor from the USSR was make the magic operate there too. Mr. Khrushchev, who perhaps has come to see the vital link between The principle is simple: men capital goods and time, between who have hope of bettering their time-saving and progress. East condition bring this progress into Europe magazine of November being. When men feel secure in 1963 quotes him to the effect that their honestly gained property, trading with the West can provide they save money or goods or ma- the USSR with “quicker fulfill- terials that are then combined to ment of its program for the con- form new capital goods — things struction of new chemical enter- which never existed before. prises without wasting time on These daily miracles of trans- creation of plans and mastering formation come about when men of the production of new types of have hope of a greater profit in equipment.” (Italics added.) the future than they would obtain “Time is omnipresent in human by spending in the present. With- action as a means that must be out this hope, the miracle doesn’t economized,” Murray Rothbard happen. And the wider the area tells us in Man, Economy and of freedom to produce new goods State (p. 11). Capital goods are by voluntary cooperation, the more those on which man has expended time-creating miracles occur. his labor and his time. Raw ma- Given personal freedom, hope, terials can be turned into capital free exchange in the market place goods, that is, made more useful (without threats or subsidies), to man, in less time by the use of and security of life and property, machines. That means there is men will not then be enslaved by more for everyone sooner, even for other men. Nor will men be “en- those who have mo capital, sav- slaved by machines.” Instead, they ings, tools, or raw materials them- will see that machines are indeed selves! “a boon to man.” ® ===== PAGE 45 ===== THE WAR = - DATE /] Wb AHI ERIE PAuL L. PolroT ONCE UPON A TIME the people of were violations of principle, hu- the United States waged a war on man nature being what it is, but poverty, the success of which has the principles themselves were seen no equal. sound. They didn’t call it war on Unlike their modern counter- poverty. They said they were try- parts in the United States, and un- ing “to promote the general wel- like their eighteenth century con- fare,” and the device they used temporaries in France, the early was a new Constitution for a gov- political leaders of the United ernment of strictly limited powers. States did not try to promote the The government was to protect general welfare through deficit life and private property, thus financing and continuous infla- providing the political framework tion. They had suffered through within which all individuals would the wild paper money inflation of be free to produce and trade to the Revolutionary War period and their hearts’ content. If anyone concluded that the whole scheme wanted to be richer or poorer than was “not worth a Continental.” others, that was his choice and his They took the position that the problem; and how well he suc- best way to help a debtor was to ceeded depended on how well he let him pay what he owed, thus pleased his customers. The laws establishing his credit rating were designed, as best those men against which he might want to knew how, to render justice im- borrow again some other time. partially, neither harassing nor They even went so far as to let granting special privilege to the bankers and borrowers and lenders rich or the poor, or any class, or compete in the money markets, and any individual. Of course, there suffer the consequences of their 43 ===== PAGE 46 ===== 44 THE FREEMAN July own folly if financial panic ensued. a police force of limited power for If a man acted so as to become a limited purpose; and most of a failure, he was permitted to fail. life was to be found and lived in If he couldn’t make good at farm- peaceful and creative ways outside ing, there was no federal farm the scope of governmental control. support program to discourage his trying to be useful in some other way. If he lost one job, he was free It would be a gross distortion to seek another, with no powerful of the fact to presume that poverty labor unions to bid him nay, and was eliminated from the United no unemployment compensation or States in an absolute sense under state or federal relief programs to the comparatively free-market and encourage him to remain idle. limited-government practices of There wasn’t even a minimum the nineteenth century, or to as- wage law to tell him at what point sert that there were not govern- he must stop working entirely mental interferences in the pri- rather than take a lower wage; no vate sphere. Throughout the programs inviting or compelling period, there were many individ- him to retire at age 60 or 65. And uals and families in the nation if he chose to enter business at with earnings and savings well be- his own risk and responsibility, low a level they themselves might there was no federal Small Busi- have considered necessary for a ness Administration (with 3,400 decent standard of living. All that employees) to help him remain a one may conclude, without fear of small businessman. reasonable contradiction, is that Perhaps most important of all Americans prospered under those was a reluctance on the part of conditions to a greater extent than many of the early statesmen of had the people of any other society America to seek political office at any time. If they knew that and political power. They knew among them lived “a lower third,” of other ways to find happiness it was not cause for panic. Com- and achieve success. George Wash- petitive private enterprise kept ington wanted to return to farm- open the market paths through ing at Mount Vernon; Jefferson which anyone could, and most longed to be back at Monticello. everyone did, find ways to help Neither the governors nor the gov- himself by serving others. And the erned looked to the government as basic economic theory behind this the source and provider of all miracle of progress was: those good things. The government was who produce more will have more. Situation Vastly Improved ===== PAGE 47 ===== 1964 THE WAR ON POVERTY 45 One of the characteristics of The problem of production has not human nature is an insatiable de- been solved. There is no endless sire for more — materially, intel- free supply of the goods and serv- lectually, spiritually. The more a ices consumers want. Unless there person understands, the more in- is some incentive to save and in- quisitive he tends to be. The more vest in creative business enter- he sees, the more he wants. The prises, all the spending in the more he has, the more acquisitive world will not promote further he becomes. Now, the fact that productive effort. In short order, individuals are forever wanting all available goods and services more and tend to act so as to ful- will have been consumed if noth- fill their most urgent wants ing is done to replenish their sup- largely accounts for the miracle ply. It is not spending or consum- of the free market, the fabulous ing, but productive effort only, outpouring of goods and services that begets production! through competitive private enter- An individual surely must real- prise and voluntary exchange. ize that he cannot spend himself rich, if all he does is spend. Nor can two individuals spend each A superficial view of this hu- other rich if all they do is trade man tendency to be dissatisfied led back and forth what they already Karl Marx and many others to re- have on hand. Nor can any number ject the market economy with its of individuals long subsist if all emphasis on production. A more they do is trade among themselves satisfactory formula, they have what remains of a nonreplenished, presumed, is that “those who want initial supply of goods and more should have more.” The services. problem of production has been Monetary transactions tend to solved, the modern Marxists con- obscure some of these most ele- tend, and their “multiplier” for- mentary facts of life. In an indus- mula stresses the speed of spend- trialized market economy money ing; if each spends his income and enters into mest trades, serving savings fast enough, everyone will as a medium of exchange, a con- have more to spend. venient measure of exchange rates This consumer doctrine or pur- or prices which guide buyers and chasing power theory of pros- sellers in their further activities perity has tremendous appeal to as consumers and as producers. human beings who always want Among these market prices are more. But it presumes too much. wage rates for services rendered, The Marxist View ===== PAGE 48 ===== 46 THE FREEMAN July and interest rates for savings of all taxpayers, the result will be loaned and invested. an increase in the number of those being subsidized — more poor tax- The Market Phenomenon payers. If the power of the gov- In a freely functioning market ernment is invoked to favor economy, prices, wages, and in- debtors at the expense of credi- terest rates guide and encourage tors, more persons will try to bor- production for the purpose of row but fewer will be willing to satisfying consumer wants; and lend. If savings are to be system- this occurs so automatically that atically plundered through infla- many consumers spend their dol- tion, the thrifty will learn to be lars without even thinking of the spendthrifts, too. creative efforts that had to be The poor always will be able to called forth in some manner before obtain in the open competition of those dollars would be worth any- the market more of the life-sus- thing. Failing to understand the taining and life-enriching goods market, political planners assume and services they want than can that the whole process of produc- be had through political warfare tion and exchange might be stimu- against successful private enter- lated to function even better if prise. The market leaves the plan- only the government will create ning and managing to those who additional money and put it into continuously prove their ability, the hands of consumers. These whereas political class warfare planners fail to see that money’s tends to redistribute resources only purpose, as a medium of ex- among those most likely to waste change, tends to be defeated by them. such arbitrary tampering with the When government becomes the supply. This inflationary tamper- guarantor of “freedom from ing distorts prices and wages and want,” this means that the poorest interest rates on which economic managers within the society have calculations are based. It encour- been put in charge of human ages consumption and spending affairs; for they always do and but it discourages saving and lend- always will outnumber those of ing, weakening the incentive and superior talent. What is now ad- capacity to produce. vertised as a war on poverty is This is why the current political really a confiscation of the fruits war on poverty is doomed to fail. of production; and the conse- If the government continues to quence has to be disastrous for subsidize the poor at the expense everyone, especially for the poor. ® ===== PAGE 49 ===== DEAN RUSSELL THE MOST persuasive argument competition from the more ad- I ever heard for protective tariffs vanced industrial nations, most of was offered by an Egyptian stu- them would soon lose their jobs dent. He pointed out correctly to the high-paid men with the that the low production of the machines. Egyptian workers is due primar- Actually, my Egyptian friend’s ily to their primitive tools. He in- argument for protection against formed me that (contrary to gen- so-called expensive foreign labor eral belief) the low production is not any more valid than are the standards in Egypt actually re- arguments by my own country- sult in high labor costs when men for protection against so- measured on a realistic per unit called cheap foreign labor. In produced basis. He then argued reality, the trade itself necessar- that the workers in the under- ily causes real wages to rise in developed nations just couldn’t all nations that participate. In possibly compete against indus- order to understand this better, trial workers with their efficient let us start with a statement that machines and the resulting high is not subject to argument: No production and low labor cost per person in Egypt or Guatemala unit. And he concluded that if the or the United States will volun- government didn’t protect the low- tarily trade with a person in paid Egyptian workers against another country (or even next Dr. Russell is a member of the staff of the door) unless he puts a higher rector oi ne FEE. Sehoct of Polsical Bon. Voue on what he gets than on omy. This article is one in a series of lectures what he gives up. And thus both delivered at the Centro de Estudios Economico . . Sociales in Guatemala City, April 6-10, 1964. parties to any trade (domestic 47 ===== PAGE 50 ===== 48 THE FREEMAN July or foreign) necessarily benefit guage and belonging to the same (or at least expect to benefit) church), he encounters problems from the trade. that are often insurmountable. Actually, there is no exclusively All of these problems are, with- economic or theoretical justifica- out exception, created by govern- tion for discussing domestic and ment and are thus completely ar- foreign trade separately; they tificial and unnecessary. are identical in all respects — ex- Canada offers an example of cept for the purely arbitrary and how vast distances, different wage artificial interventions of govern- scales, different languages, dif- ment. For example, in the United ferent religions, and different States, a manufacturer in south- racial and cultural backgrounds ern California has no particular present no real trade problems difficulties in trading with a com- at all. But let a Canadian try to pany in northern Maine, some buy an automobile from Detroit, 4,000 miles away. But when the just across the border! same manufacturer tries to trade Even different moneys (lira, with a company in Tijuana, Mex- peso, dollar, or whatever) pre- ico — perhaps 4 miles away —he sent no real problem to any trader encounters all sorts of frustrating — if the various moneys can be and noneconomic prohibitions and freely bought and sold. But when compulsions that have been de- this is forbidden, problems do vised by the two governments. appear; again, however, they are The problems of transportation artificial problems and are due and distance (as such) are not entirely to governmental rules something peculiar to interna- and regulations. tional trade. Nor do differences of language and religion consti- tute special problems in trading Any argument for free trade across national boundaries. and the division of labor within For example, a Catholic man- a nation is automatically and nec- ufacturer who speaks only Italian essarily an argument for free in Lugano, Switzerland, has no trade and the division of labor problem at all in trading with a internationally. If a person ad- Protestant retailer who speaks vocates free trade domestically, only German in Zurich. But when he cannot logically advocate pro- he attempts to trade with his tective tariffs and other similar Italian cousin just across the bor- measures that prevent goods and der (both speaking the same lan- services from moving freely At Home and Abroad ===== PAGE 51 ===== 1964 FREE TRADE: DOMESTIC AND FOREIGN 49 across national boundaries. It is States that actually depend on simply not true that a nation and foreign trade. a people are made more prosper- For example, the advocates of ous by compelling themselves to protective tariffs in my own coun- pay two and three times as much try dramatize the story of the as they need to pay for the goods jobs and industries that are de- and services they want. It just stroyed or threatened by the $16 does not make sense to improve billion of yearly imports into the the means of moving goods from United States. But they just ig- one nation to another, and then nore the far larger number of to cancel out the savings in trans- jobs and industries that are in- portation costs by passing laws volved in our $20 billion of ex- to hamper the resulting trade. I ports —automotive and electrical am convinced that such contra- equipment, steel mill products, dictions arise more from lack of machine tools, coal and cotton, understanding than from evil in- petroleum products, and many tentions. others. In a manner of speaking, For example, the idea of cre- prohibitive tariffs could destroy ating and protecting domestic in- 20 United States jobs and com- dustries and jobs by restricting panies for every 16 saved or cre- foreign imports is still generally ated. And worse still, the com- found at the bottom of most argu- panies most likely to be injured ments for protective tariffs. This by restrictive trade policies are objective is at least understand- our most efficient ones that tend able. And it 7s unquestionably to pay the highest wages. The true that if it were not for gov- advocates of protective tariffs ernment protection against for- completely ignore the obvious fact eign competition, many persons that foreigners cannot continue in Guatemala and the United to buy from us unless they are States would lose their jobs. Fur- permitted to sell to us. ther, a considerable number of companies in both nations would be forced out of business and In reality, the absence of tariffs would suffer heavy losses of capi- and similar trade restrictions tal. But the persons who are among the 50 states in my coun- quick to point out these economic try goes a long way to explain realities seem unaware of the why our level of living is so high. multitude of jobs and industries This absence of internal trade in Guatemala and the United restrictions permits and encour- A Huge Market ===== PAGE 52 ===== 50 THE FREEMAN July ages competition, natural special- of the nations alone. The compar- ization and division of labor, sur- ison concerns the ‘substitution vival of the most efficient man- ratio” or “alternate opportunity agers and companies, and espe- cost” of producing domestically cially the free movement of labor one of the two products instead and capital from one industry of the other. Then exactly the and one section of the nation to same comparison is made domes- other industries and sections. The tically within the other nation. final result of all this is better Whenever the physical cost or jobs at higher pay for all employ- substitution ratio for the two ees, lower prices for all consum- products in one country differs ers, and perhaps even higher from the same cost or substitu- profits for those owners and man- tion ratio for the same two prod- agers of capital who are capable ucts in the other country, a “com- of operating in a free and com- parative advantage situation” ex- petitive economy. ists. Each nation can then profit Just as free trade among the by concentrating on producing states of the United States has one of the products at home and brought this result, just so would trading a part of it abroad for free trade among the nations of the other. the world bring similar results to all of them. To help us under- stand why this is so and how it Now I am well aware that the would work, let us refer briefly above explanation of Ricardo’s to the concept of trade according comparative advantage principle to the principle of “comparative of trade is too condensed and advantage” as developed by David complicated for general lecture Ricardo. purposes. So I will merely refer This comparative advantage you to any textbook on interna- idea is often confused with an tional trade for the full develop- absolute advantage, such as coffee ment of it. I will here confine my- produced in Guatemala but not self to applying the same idea in in the United States. But accord- more familiar situations and in ing to the Ricardian example, two less technical terms. But even so, nations must produce the same the reality behind my examples two (or more) products before and conclusions are still Ricar- this principle applies. And still dian. following Ricardo, the comparison Here is my first example of is always first made within one Ricardo and his comparative ad- Delivering the Paper ===== PAGE 53 ===== 1964 FREE TRADE: DOMESTIC AND FOREIGN 51 vantage idea in modern dress: As storm. Thus, I will here maintain I write these words, I can see my that I can do both of these jobs “newspaper delivery boy” plod- better than he can; I have an ding slowly toward my door. He absolute advantage over him in is late as usual. And perhaps the delivering lectures and in deliver- reason I am watching him is to ing newspapers. Even so (and to see if he will again step on anoth- get at Ricardo’s point), he has a er one of my prized flowers comparative advantage over me planted along the sidewalk. Now in delivering newspapers. And if you will look upon him and me based on what the market will pay as representing two nations —and me to deliver newspapers and to let lecturing and delivering news- make lectures, I have a compara- papers represent the two prod- tive advantage over him in the ucts produced in both countries speech-making business. Here is — I can illustrate quite simply the how it works. essential idea behind Ricardo’s law of comparative advantage. Positively and beyond any shad- Let's say the market pays my ow of a doubt, I can deliver news- paper boy 50 cents an hour to papers more efficiently than my deliver papers. My guess is that paper boy can. Since I can deliver he would earn almost nothing as more of them in a given period of a speech-maker, but let’s be gen- time, I can earn more money than erous and allow 5 cents an hour. he can. And since I would be much To follow Ricardo, his substitu- neater and much more pleasant tion ratio is 50 to 5 or 10 to 1. while doing the job, doubtless the That is, in the same amount of traditional “tips” would be larger time, he can earn 10 times as much for me than they are for him. In delivering newspapers as he can short, the market would pay me earn by making speeches. more to do that delivery job than I am confident that the market it now pays him. will pay me better for both jobs. I'll also hazard the guess that Let's say I could earn $1 per hour I can make better speeches than delivering newspapers, and $20 my paper boy can. I know, how- an hour as a lecturer. Thus, for ever, that he can make speeches; every hour that I spend deliver- in fact, he made a couple of them ing newspapers for $1, the alter- to me when I recently suggested nate opportunity cost to me is the that he should not leave my paper $20 I could earn as a lecturer and on the open porch during a rain teacher. Thus, it clearly pays me The Scope of the Handicap ===== PAGE 54 ===== 52 THE FREEMAN July to devote my full working time and wage rates in the two nations to lecturing, teaching, and writ- will tend to be based on reality ing instead of delivering papers. instead of wishful thinking. And Even though I can do a better when trade is based on reality, job than my “competitor” in de- comparative advantages are not livering newspapers, he still has hard to find. Select two jobs or a comparative advantage over me; two products that exist in both or, technically, his comparative nations. Now examine the wage disadvantage is less in delivering rates and prices paid in one of papers than in delivering lectures. the nations for the jobs or prod- The fact that I have an absolute ucts. Now compare the wages and advantage in both categories is of prices for the same jobs and prod- no consequence. As the Ricardian ucts in the other nation. principle illustrates, I will con- Unless the comparative substi- tinue to pay my so-so paper boy tution ratios are identical (highly to deliver my newspaper because unlikely), trade will occur be- (comparatively) my advantage tween the two nations. Each na- over him is far greater in lectur- tion will concentrate on the pro- ing than in delivering papers. duction of the item in which it has the greatest comparative ad- It still Pays To Trade vantage (or the least comparative And so it is with trade between disadvantage). Both nations will nations. As Ricardo pointed out, profit from this trade, even when one nation can be more efficient one of them has an absolute ad- in every category than another vantage in producing both prod- nation —and yet because of a com- pets. parative advantage, it is still profitable for the more efficient Abundant Supply of Labor nation to trade with the less ef- Comparative advantages can be ficient nation. But how does one found in general categories as discover these comparative ad- well as in specific products and vantages among the various na- services. For example, I am con- tions in today’s world? fident that, compared to the Well, first, it is necessary that United States, the cost of capital you and I and everyone else can is higher than the cost of labor freely buy and sell and exchange here in Guatemala. If so, the the moneys of the two nations be- United States enjoys a compara- ing compared. For when free ex- tive advantage over Guatemala in change is permitted, then prices capital costs, and Guatemala en- ===== PAGE 55 ===== 1964 FREE TRADE: DOMESTIC AND FOREIGN 53 Joys a comparative advantage son he actually hires to wash over the United States in labor them. But obviously, everyone costs. profits by his decision to devote Given this situation, one would his full time to the job (surgery) logically expect “labor intensive” at which he enjoys the greatest products to go from Guatemala comparative advantage, as meas- to the United States, and “capital ured by the price the market will intensive” products to flow from pay him for performing the two the United States to Guatemala. tasks. And I am confident that such As another familiar example would be the case, if our two gov- of how Ricardo’s comparative ad- ernments would abolish the trade vantage idea works in everyday restrictions that each has placed life, take the insurance salesman against the other. If this were who pays a man $1.50 an hour done, both nations would neces- to work for him in his yard dur- sarily profit thereby. ing the day. Let’s assume that the Again, this comparative advan- caliber of the work done by the tage principle works the same be- yardman is not as good as the tween persons within a nation as owner himself could do — or, at it does between nations. For ex- any rate, thinks he could do. So ample, the famous showman, Billy why doesn’t he do the work him- Rose, was also a champion typist. self and save $1.50 an hour? The But he operated on the principle answer is that he would not nec- of comparative advantage when essarily save $1.50 an hour but he hired a typist and devoted his might actually lose $3.50 an hour own time to producing shows and by working in his own yard. That writing newspaper columns. The development is due to the fact fact that he could type faster and that his average hourly earnings better than his secretary is be- as an insurance salesman are $5. side the point. Both he and she He has a comparative advantage enjoyed a higher level of living selling insurance instead of rak- because of that division of labor, ing leaves. The pricing mecha- just as the level of living in any nism of the free market shows and all nations rises when trade this beyond any shadow of a is permitted to operate according doubt. to this principle. And so it is with trade among Likewise, a surgeon may know nations. Every nation enjoys a how to wash his surgical instru- comparative advantage in some ments better than does the per- product or service, even though ===== PAGE 56 ===== 54 THE FREEMAN July it may be due only to some in- to see what and where he can buy stitutional or historical reason. most advantageously. Nor do any That nation (and the people in of them need to hear this lecture general in that nation) would en- in order to know where in the joy a higher level of living if it world the most profitable demand specialized in those goods and exists for Guatemalan products services in which it enjoys such and services. While the producers an advantage. and buyers in Guatemala and the United States may not be able to Let the Market Decide explain the Ricardian theory on How can we citizens of Guate- which they operate, they will still mala and the United States dis- quickly indicate to us which prod- cover which are the products and ucts and services enjoy a com- services in which each enjoys a parative advantage in which na- comparative advantage? Easy! tion. You and I need only follow Just remove all artificial restric- the free market price signals in tions against trade, including our buying and selling monetary exchange. Then observe We are foolish indeed to con- what the importers and exporters tinue to impose tariffs and other in Guatemala do. I doubt that restrictions against trade between many of them can explain to you our nations; the only result of Ricardo’s comparative advantage such misguided and uneconomic principle, but every one of them governmental interventions is will search the world’s markets that we pay more and get less. @ IWEAS @ CIBIBIY Consumer Sovereignty IF AN EMPLOYEE asks for a raise because his wife has borne him a new baby and the employer refuses on the ground that the infant does not contribute to the factory’s effort, the employer acts as the mandatary of the consumers. These consumers are not prepared to pay more for any commodity merely because the worker has a large family. LUDWIG VON MISES, Human Action ===== PAGE 57 ===== THE LAND OF FREE CHOICE CHARLES S. ROBERTS THE LAND OF THE FREE gained its race, color, religion, or place of glorious and enviable reputation national origin. through the principles of individ- It is termed a law against dis- ual liberty and freedom of choice crimination; but it is patently a that were stated in the Declara- law against freedom of choice be- tion of Independence and guar- cause choice and discrimination anteed by the Constitution and its are inseparably one and the same amendments. thing, each being one side of the Until March 12, 1945, when the same coin. One cannot arrive at New York State legislature en- a choice without discriminating. acted the first so-called antidis- For example, when a shopper buys crimination law, no one in this a package of AB coffee, she has country seriously questioned the thereby discriminated against XY right of every citizen in it to and all of the other brands on the make his own choices freely and ghelf. independently regarding his own Every act of selecting is at the business or property, so long as same time a process of discrim- the choice did not infringe on the inating. When an employer se- rights of others. lects an applicant for a job, Under the provisions of the he has necessarily discriminated New York State antidiscrimina- against all the other applicants, tion law an employer is denied the whatever their race or other clas- right to choose his employees sification may be. For instance, freely. It states that an employer if there are five white men apply- may not discriminate against an ing for the same job, when the applicant for a job because of employer makes his selection he i has unavoidably discriminated New Fo an investment counselor in against the other four. Those who 55 ===== PAGE 58 ===== 56 THE FREEMAN July are left out have no recourse, and give a job to a Negro, Cuban, or there is nothing more the employ- Puerto Rican, he has been forced er can do about it, whatever his to sidetrack a white man or some- wishes may be. one else of his own free choice. However, under the practical Such a result of the practical workings of the antidiscrimina- workings of this law brings us to tion laws, an employer may not the inescapable conclusion that it make a free selection if one or should be labeled an antichoice more of the applicants are of a law instead of an antidiscrimina- race or religion other than his tion law. own. An employer may discrim- When in March, 1945, the first inate against members of his own antidiscrimination law was signed race or religion with impunity, by Governor Dewey of New York, and he often is compelled to do there were employed by the vari- 80; but if he fails to employ mem- ous parishes, schools, hospitals, bers of other races and minority nursing homes, and administra- groups, he runs the risk of being tive departments of the Catholic summoned before a commission Archdiocese of New York approx- and penalized. imately 14,000 people, not includ- ing the clergy. All but a small fraction of 1 per cent of these people were Catholic, and why Even a superficial analysis of not? If there had been ten times this legislation will show that the as manyemployees, the various de- only end it can accomplish is to partments, which were paying transfer a job from one person their wages, would have possessed to another, from one of the em- the right to make the groups un- ployer’s choice to one who is not animously Catholic, just as it is the his choice. These minority-group inherent right of every private members have therefore been employer to maintain any kind of moved up into a preferred posi- unanimity he chooses. tion over the majority-group ap- It is not only the right but the plicant. It is a one-way operation duty of an employer to set up and with all of the transferring being maintain an harmonious organiza- made to the minority groups, tion. A part of the basis on which never away from them. an employee is selected is his In each case in which an em- ability to fit into an organization. ployer has been forced by a so- And who should be the judge? The called antidiscrimination law to employer. It Can Only Transfer a Job from One Person to Another ===== PAGE 59 ===== 1964 THE LAND OF FREE CHOICE 57 Bowing to Pressure free to fill the jobs for which he The antidiscrimination or anti- is paying the wages and salaries choice laws were enacted in the with the workers he feels will various states without the vote or serve him best, and he must select consent of the citizens. The law- them on merit if his organization makers gave in to the campaigns is to prosper and grow, or even of pressure groups. This brazen survive. injustice is threaded with an These laws against free choice irony that seems to have gone al- in employment not only fail to most unnoticed by the public, as create jobs, but inevitably they well as by most of its victims. cause unemployment. Quite natu- Political employers openly dis- rally, employers are reluctant to criminate on a wholesale scale by take on employees when they can- giving out almost all of the avail- not freely choose them. Instead, able government jobs to members they make out with fewer em- of their own political party. ployees. For instance, it is estimated There are at present several that Presidents Kennedy and million unemployed white men and Johnson gave to Democrats more women in the United States. An than 99 per cent of the appoint- unknown but sizable number of ments which they made to key them are unemployed because po- posts in the federal government, tential employers were forbidden thereby discriminating against to assign jobs to them. There the color of the political badge were applications for those jobs the Republicans were wearing. from members of the minority Who would deny the presidents a groups, and in order not to “dis- free hand in choosing their aides? criminate” against them, the em- No one, perhaps, except those ployers were forced to discrimi- who would deny a private em- nate instead against applicants of ployer a free hand in selecting their own choosing and send them his helpers. off to join the growing ranks of In the scheme of government the unemployed. affairs, the government official, Thus, a law, which its pro- unfortunately, has been given the ponents claim bars discrimina- right to fill the jobs in his depart- tion, creates discrimination in ment with the faithful of his every case it enters. It forces the political party, almost without re- shifting of jobs among applicants, gard to merit. Without question, and in so doing stirs up dissatis- the private employer should be faction and intensifies prejudice. ===== PAGE 60 ===== 58 THE FREEMAN July Clearly, such a law cannot create make it, whatever his reasons; employment. and because he is the owner of the job in the first place, no commis- sion has any moral or ethical right Among the provisions of these to demand that he justify his antichoice laws, the one which choice. The responsibility for the most flagrantly violates our tradi- success of an organization rests tion of freedom and fair play is on the shoulders of management; that which holds the defendant consequently management must employer guilty until he proves retain the full authority that goes himself innocent. When an em- with that responsibility. ployer fails to employ a minority- Every casting director in the group member in a particular theater emphasizes that he needs case, or consistently fails to em- to audition a number of applicants ploy members of that group, even for every part in a play in order though in his judgment these ap- to select the one he feels is right plicants do not qualify for the for the part. Every employer is jobs that are open, the commis- a casting director. Only he is sion against discrimination may qualified to decide which applicant find him guilty and force him to is right for any place he may have give jobs to the complaining ap- open. Only one person is needed to plicants with back pay. fill the job. It will be filled either More than that, section 297 of by one of the employer’s choice or the New York statute states that by one who is moved into it by an “the commission shall not be antichoice or FEPC law. In The bound by the strict rules of evi- American Way of Life, which dence prevailing in the courts of should it be? law or equity.” Thus we are all The trend of this antichoice equal before the law unless we are legislation could be extended by employers. However, regardless of only a few degrees to apply to the its individual provisions, the in- individual's choice of his doctor, tent of the whole law flagrantly his lawyer, or his architect. A violates our cherished tradition of member of one of these profes- freedom of choice. sions retained by the individual If there are two or more appli- is no less his employee, during cants for a job, the employer is the time he is serving, than any the only one who is qualified to other employee. make the selection, and he is the It should be crystal clear to only one who has the right to anyone who will analyze this sub- Presumed Guilty ===== PAGE 61 ===== 1964 THE LAND OF FREE CHOICE 59 ject that there is no such thing There are a number of meas- as forbidding discrimination by ures the government could take law. The so-called FEPC laws can or abandon that would stimulate only forbid freedom of choice. business’ activity and consequently It has been advocated by some create jobs. They are being ex- writers and politicians that the pounded constantly by outstand- employers of this country give a ing businessmen and economists, certain percentage or certain mum- but one certain way that jobs can- ber of their available jobs to Ne- not be created is by turning away groes and other ethnic groups. one group of people to make way Overlooked is the fact that this for other groups. This maneuver idea could be carried out only by reduces efficiency and creates fric- disemploying the same percentage tion, and it does not bring one or same number of white men single net addition to the nation’s and women. total employment. Job Opportunities : Civil Rights On a visit to any of the large Political, religious, and civic department stores in New York leaders have recently attempted City today one will see Puerto to include private jobs in their Rican and Negro women installed demands for civil rights for mi- as sales women in almost every nority groups. By no stretch of department and in clerical posi- the definition of the word civil tions in the offices. The same num- could it be made to mean a per- ber of white women who would emptory right to a private job. have occupied those posts are now Both white people and Negroes . displaced persons. In effect, they may vote in the same elections, were kept out of those jobs be- use the same transportation and cause of the color of their skin, other public facilities, and go to or the lack of it. the same schools and churches. If an accurate census could be Such use and attendance by one taken of the number of the mi- group does not preclude the use nority-group members who are and attendance by the other now holding jobs that were not group; but a white man and a given to them voluntarily, itwould Negro cannot hold the same job show the number of white men at the same time. More than that, and women who are now unem- no one has a civil right to a pri- ployed because of the antichoice wate job. or FEPC laws. New York City’s religious lead- ===== PAGE 62 ===== 60 THE FREEMAN July ers recently were urged to join truistic end through coercion.” in boycotts and use other means Some people who have not ex- of coercion to force “equal em- amined these conditions closely ployment opportunities” for Ne- have asked, “If we do not have groes and Latin Americans. They laws against discrimination in were petitioned specifically to employment, where will those peo- bring their collective pressure on ple of the minorities find jobs?” the management of the The Amer- Before this question can be an- icana Hotel, where their confer- swered, another must be asked, ence on religion and race was be- “If we have laws that force the ing held, to start drawing up a transfer of jobs to the minority timetable for the opening up of groups, where will the displaced supervisory positions for Negroes persons find jobs?” and Latin Americans. And perhaps the final question The management of The Amer- should be: “If there is a law icana might well have replied to against discrimination, would that these leaders, “If we give the law also serve to punish white em- jobs to the people of your choos- ployees who work exclusively for ing, we shall be compelled to dis- white employers, or Negro employ- charge or reject the same number ees willing to work only for white of people of our own choosing. employers, or Chinese employees Commendable as your motives in an all-Chinese restaurant or may be, you cannot gain an al- laundry?” ® EX SR ONE Ni 6]H ayy | Brotherhood IN A MATERIALISTIC SOCIETY which denies the existence and authority of God, the appeal for human brotherhood is a curious contradiction in terms. The battle cry of the French Revolution for “liberty, equality, and fraternity” was thus shrewd but none the less deliberate demagoguery on the part of its socialist leaders. The slogan was calculated merely to capitalize upon the misery of the poor and set them apart as “a class” against the hated “Aristocracy.” In the ensuing terror of the class warfare which these revo- lutionary leaders generated, “Liberty, Equality, and Frater- nity’ were conspicuous by their complete absence. CLARENCE MANION, The Key to Peace ===== PAGE 63 ===== A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The State of the UNIONS IF YOU ASK a modern “liberal” to if the laws which exempt labor define the duty of Congress, he from the provisions of the Sher- will in all probability tell you man Antitrust Act were to be that it is to pass a certain quota amended or canceled. Mr. Franks, of new legislation each session as a former union organizer, puts demanded by the President in his his hopes in the restoration of annual State of the Union mes- voluntary unionism, which would sage. But the burden of three new enable union members to ride books on labor — Union Monop- herd on their leaders instead of olies and Antitrust Restraints by vice versa. As for Alex Rubner, Patrick M. Boarman (Labor Pol- he thinks that the way to freedom icy Association, $5), What's lies in giving people total com- Wrong With Our Labor Unions? mand of their own money aside by Maurice R. Franks (Bobbs- from the small portion they are Merrill, $5), and Fringe Benefits: willing to grant the state to carry The Golden Chains by Alex Rub- on ordinary military, police, and ner (Putnam, 25s.) —is that we limited residual welfare duties. have had far too much legislation All three of the authors have over the past three decades, par- little patience with the modern ticularly in regard to labor union “liberal” consensus that labor is protection. still an underdog. The most de- The three authors have pro- liberately shocking is Mr. Rub- fessedly different ends in view, ner, who thinks that workers are but they agree among themselves perfectly able to take care of in calling for a restoration of themselves without being wrapped simplicity to the tangled field of in any cotton batting. Paying a labor relations. Professor Boar- man a “fringe benefit” is just as man thinks the “union monopoly” insulting to his dignity as was problem would tend to disappear the old-time practice of paying 61 ===== PAGE 64 ===== 62 THE FREEMAN July him with a draft on the company modern personnel thinking, partly store. In the old days, says Mr. from a desire to avoid the ex- Rubner, we had the “truck sys- penses of labor turnover, and tem” and the “company town’; partly from our complex tax laws, today the worker has permitted which encourage both manage- “fringes” to assume “such dimen- ment and labor to find ways of sions that they are now between rewarding people without letting one-quarter and one-half of the the tax collector skim the cream money wage.” To pay a man in a of anything “extra.” Then, too, “fringe benefit,” so Mr. Rubner there had to be some way of cir- insists, presumes that he has less cumventing the intention of war- than human capacity to add and time wage freezes if production substract and make judgments. incentives were to be retained, so Mr. Rubner recalls that the the fringe benefit had a hardy “model town of Pullman,” near growth in the 1939-45 period in Chicago, was scathingly de- both Europe and America. To Mr. scribed by a pro-labor critic of Rubner’s way of thinking, none the eighteen nineties as “a gilded of these reasons for paying in cage that imprisoned the manhood fringes instead of cash is a good of its citizens.” But the motives reason. It would be better to of Mr. Pullman, who wanted to change the tax laws, making the ensure that “no brothels and income tax less steeply progres- drinking dens” would be close to sive. With their “manhood re- the abodes of his employees, did stored,” workers would be forced not differ from the motives of to do some thinking for them- that modern Texas personnel di- selves about old-age insurance, rector who argues that payment joining voluntary hospitalization in fringe benefits is good because plans, and planning their own his workers, “principally Latin vacations. American and Negro,” don't know how to budget properly. “The Economically and Morally Sound company,” so this personnel di- The abolition of the fancy mod- rector is quoted as saying, “can ern ‘truck system,” says Mr. do more for them by giving them Rubner, would have good econom- better benefits than through high- ic effects as well as good moral er wages.” effects. Private insurance com- The movement toward paying panies are likely to invest their men in fringe benefits derives money more productively than partly from the paternalism of pension fund guardians; men and ===== PAGE 65 ===== 1964 THE STATE OF THE UNIONS 63 materials that are now tied up Franks, that leader tips his hand in the administration of fringes as a totalitarian who considers would be released for other uses; that he has a right to force his and people would be less apt to own conception of welfare on think themselves sick on Monday everybody else. He has also lost morning just because the weekend track of the reality of democratic has been arduous and thus de- civil society, in which a man is serving of extension through sick- free to belong to any one of a num- leave. Moreover, if men were to be ber of political parties which, in paid once again in money, the turn, get representation in a par- more scrupulous employees would liament. Labor unions, it hardly not be forced to carry the less needs to be said, don’t have par- scrupulous by paying for their liaments. A union is simply an insurance. As F. A. Harper once agency designed to carry out bar- said, one man’s fringe benefit is gaining functions for those who another man's fringe detriment, feel they have need of an agent. depending on who is in position It can also be a social club. If a to collect it. man doesn’t want a social club or Maurice Franks agrees with an agent, it hardly makes him a Mr. Rubner that it is an insult to free loader or a free rider. man’s dignity to compel him to In a brilliant passage Mr. do things which he is perfectly Franks defends voluntarism by able to decide upon for himself. singling out associations that He objects to the type of thinking wouldn't dream of trying to trans- that, likening dues to taxes, stres- form their dues into compulsory ses the analogy between citizen- taxes. “A physician,” he says, “is ship in a union and citizenship in not compelled to belong to a medi- a state. If such an analogy holds, cal association in order to practice the union would have the right medicine... . A lawyer does not to establish police and court func- have to belong to a bar associa- tions as well as its right to collect tion in order to handle cases, and taxes. Well, how do you like to no citizen — however much he think of Jimmy Hoffa as judge might profit from it — must of and cop? necessity consult an attorney or engage paid counsel beyond the point of personal desire or pref- Every time a union leader re- erence. No man is compelled to fers to a nonunion man as a free own a single share of stock . . . rider or free loader, says Mr. no manufacturer is forced to be- Free Coercion’’ ===== PAGE 66 ===== 64 THE FREEMAN July long to any association or con- proach to the theme of union mo- tribute to the support of any nopoly. And he is less deliberately chamber of commerce. No church shocking than Mr. Rubner. But in has the power to coerce any be- his careful economist’s language liever into joining its congrega- he is no less devastating. His mes- tion or paying pew rent into its sage is that the big “countervail- coffers. No United Fund . . . is ing” union, by virtue of its legally equipped with powers to com- entrenched position, is able to mandeer a single contribution, no push wages above the market in matter how many ‘free riders’ its own segment of the economy. may profit from public undertak- The result is unemployment and ings of the various organizations stagnation elsewhere. Incidental- supported by its drive ....” ly, Professor Boarman thinks Yet union leaders wish the legal that unions have quite legitimate power to “man-herd” all workers functions, one of which is to into their organizations! The ‘cause subcompetitive wages to worst of it is, they have this pow- be raised to competitive levels.” er in thirty-odd “sovereign’ states But the union must not be en- of the union. dowed with legal exemption from Professor Boarman is less emo- the antitrust laws lest it lose its tive than Mr. Franks in his ap- own competitive excuse for being. | IDEAS ®N LIBERTY | The Propriety of Property To EVERY INDIVIDUAL in nature is given an individual property by nature, not to be invaded or usurped by any: for every one as he is himselfe, so he hath a selfe propriety, else he could not be himselfe. . . . Mine and thine cannot be, except this be: No man hath power over my rights and liberties and I over no man’s; I may be but an individual, enjoy myselfe and my selfe propriety. RICHARD OVERTON From An Arrow Against All Tyrants and Tyranny Shot from the Prison of Newgate (1646) ===== PAGE 67 ===== SUGGESTED READINGS ON IRER DA ANT AND BRAG {ls (Available from The Foundation for Economic Education, Irvington, New York 10533) ASHTON, T. S. The Treatment of Capitalism by Historians 35¢ BRONNER, GEORGE I'm Fed Up with Union Bossism 15¢ BROWN, W. J. Imprisoned Ideas 2¢ BROZEN, YALE Competition from Cheap Foreign Labor 5¢ COOLEY, OSCAR The Freedom To Move 15¢ CURTISS, W. M. *A worker should be pald according to his productivity. 2¢ FREIER, L. H. High Cost of Unionism 10¢ GOMPERS, SAMUEL Legislated Security Is Bondage 2¢ Voluntary Basis of Trade Unionism 2¢ GREAVES, PERCY, JR. Jobs for All 2¢ GUARANTY SURVEY Labor's True Magna Carta 2¢ HARPER, F. A. Why Wages Rise (124 pp.) paper $1.50, cloth $2.50 HAZLITT, HENRY Economics in One Lesson (143 pp.) 50¢ *Wars bring jobs and prosperity. 2¢ HOILES, R. C. *Competition is fine, but not at the expense of human beings. 2¢ HOLMES, R. W. *Individual workers are too weak to bargain with corporations. 2¢ HUTT, W. H. The Theory of Collective Bargaining (150 pp.) $3.00 MAHER, EDWARD The Hot Fight Over the Right To Work 15¢ MARX, KARL The Communist Idea, | 2¢ MISES, LUDWIG VON Facts About the Industrial Revolution 10¢ Wages, Unemployment and Inflation 10¢ PETRO, SYLVESTER The Labor Policy of the Free Society (339 pp.) $5.00 Power Unlimited: The Corruption of Union Leadership (323 pp.) $5.00 POIROT, P. L. Bargaining (excerpts) 5¢ *Employees often lack reserves and are subject to exploitation by capitalist employers. 2¢ *Human rights are more important than property rights. 2¢ *Labor is not a commodity. 2¢ *Man is born for cooperation, not for competition. 2¢ *One man’s gain is another's loss. 2¢ *We must break up economic power. 2¢ *Without legislation, we'd still have child labor and sweatshop conditions. 2¢ READ, L. E. *Big business and big labor require big government. 2¢ *The right to strike is conceded, but . 2¢ Two Ways To Stop Strikes 10¢ ROTHBARD, M. N. Human Rights Are Property Rights 2¢ RUSSELL, DEAN *Purchasing power creates jobs. 2¢ *We can have both guaranteed jobs and freedom of choice. 2¢ SENNHOLZ, HANS F. *Labor unions are too powerful today, but were useful in the past. 2¢ SMITH, ED. P. A Declaration of Independence 5¢ WOLMAN, LEO Industry-Wide Bargaining (63 pp.) 50¢ *Clichés of Socialism — suggested answers. ===== PAGE 68 ===== o [| 9 9 = 3 a S3g88§gE223cgm S¥s 5882 So 5 5 = = 2 - FS ® 0 = 8 Gv --- 23 0] S82 gR3E7T 28 gs a2 Sow a2 3 ESSERE 82a FL . =} wn ™ vw 2 £R 25° 8 ° - OC on uv g 2 > go gq s ~~ F a. 3 2 Scea = — < 3g = =. © 22 wag => E - «8 9 3 3 8 5 52,2 ! ig .2z2c55_3%;°¢8 ” —- ® = 5 = °o = o Ego8.3°38c82z:. o S82 S828 ,7>3 = SS = S oo 2% mj 3 1 h sages 288g = © oF >ag 28% = ! = © =r 3 © TB o 3 i ¥ 3 EE 8 eo 3 8 ws ea ; 420% 8 883 Ts ~ | Fo) = YY n= 53° = § > da SS 8 als oo & 2 5 § © =F 4+ 5 3S ow 2 = bh] pa ho} 0 Vv 8 oe 2 2 < EB TT 83 4 = a 3 = 5 3 8 8 To a = 29 8 oo 4 S§Z8.8 = Pe Bo8d88.,385828 N - = — | ~ -— =e F739 ’ I [=] “Eos = 3 2 S25 e > | z Egf83 8dss3F° - £ [3-] ET 2.2% $ 238988 = = =~ OO 5 zs 8 5 3 21 m © © 9 = 2a = 5 m El ® = 8a E o = a ) - ag == - =r NS —- © o Ce 73 [CT ] gs 8 _3gcog8 hn) T “2 oo 8 ZF 8 9 ~) 5 pi Ss sg=2 2 TL n - . bx] — =F, ou & Tf2c5z.3885¢:85 ) 3 S885 8Fs8883°1 14 ® 3 TK 2 o th [ARES m 2