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… is from page 535 of the great Armen Alchian [2]‘s insightful November 1957 lecture, delivered at the University of Chicago, “The Economics of Power,” as this lecture is reprinted in The Collected Works of Armen A. Alchian (2006), Volume 1 [3]:
In some instances this power to create this kind of monopoly [for labor-union members] is used to raise the wages of the union members to the full monopoly height. In other instances the employed must share part of their gains with the unemployed members of the union, but not with those workers who are unable to work because union membership is denied them. Part of the unemployment is disguised by non-union members being forced to work at wages, in other areas, even lower than the competitive wage would have been….
DBx: Over the long run, the only way artificially to raise the wages of some workers is artificially to lower – often to zero – the wages of other workers. And as in so many regions of economic reality, the economically unskilled eye focuses on the gains, which are typically captured by a relatively small number of people, and is blind to the losses artificially caused by whatever processes create the gains.
Intellectually amusing, if in practice sad, is the spectacle of “Progressives” who, with one breath, accuse Wal-Mart and other employers of low-skilled workers of running up taxpayers’ welfare-state bill and, with the next breath, bemoan the demise of labor unions and of collective bargaining. In fact, Wal-Mart and other employers of low-skilled workers – by the very act of employing these workers – reduce the amount of money that taxpayers are compelled to spend on welfare programs not tied to work requirements, while labor unions that succeed in artificially raising wages likely increase – by causing some workers to be unemployed and others to work at wages below those that they would earn absent the use of labor-union power – the amount of money so spent by taxpayers.