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Bryan Caplan on the Awful State of Pop Economic History

Posted By Don Boudreaux On November 20, 2013 @ 8:13 am In History,Myths and Fallacies,Work | Comments Disabled

I was going to include this recent EconLog post by my colleague Bryan Caplan [1] in my next “Some Links” offering.  But Bryan’s post is so good that it deserves its own mention here at the Cafe.  Here’s a slice:

So what should history textbooks say about these matters?  This: Working conditions during the early Industrial Revolution were bad by modern standards, but a major improvement by the standards of the time.  Factory work looked good to people raised on backbreaking farm labor – and it looked great to the many immigrants who flocked to the rising centers of industry from all over the world.  This alliance of entrepreneurs, inventors, and workers peacefully kickstarted the modern world that we enjoy today.

And what of the “workers’ movement”?  A halfway decent textbook would emphasize that it wasn’t quantitatively important.  Few workers belonged, and they didn’t get much for their efforts.  Indeed, “workers’ movement” is a misnomer; labor unions didn’t speak for most workers, and were often dominated by leftist intellectuals.  A fully decent textbook would discuss the many possible negative side effects of labor market regulation and unionization [2] - so students realize that the critics of economic populism were neither knaves nor fools.

The Big Picture: Industrialization was the greatest event in human history.  Critics then and now were foolishly looking a gift horse in the mouth.  Until every student knows these truths by heart, history teachers have not done their job.

The list of egregiously mistaken yet most widely held beliefs about economic history is long.  And one of the worst offenders on this list is the notion that labor unions created the American middle class – the myth that workers’ ability to bargain for higher wages and fringe benefits is chiefly a consequence of their heroically organizing with similar workers to collectively demand from employers this higher pay.  (Remember, workers at Ford Motor Co. were not unionized until 1941, but twenty-seven years earlier Henry Ford more than doubled his workers’ pay [3].  And he did so not chiefly out of any “personal concern” for his workers; rather, he did so because, by lowering worker turnover and reducing worker absenteeism, this higher pay for workers would result in higher profits for Ford.)

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URLs in this post:

[1] this recent EconLog post by my colleague Bryan Caplan: http://econlog.econlib.org/archives/2013/11/return_to_high.html

[2] negative side effects of labor market regulation and unionization: http://econfaculty.gmu.edu/bcaplan/e321/lab2.htm

[3] twenty-seven years earlier Henry Ford more than doubled his workers’ pay: http://cafehayek.com/2013/11/ford-had-a-better-idea.html

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