The Injustice of Handouts

The second negative that would result from a government auto bailout would be the injustice it brings to the American workers as a whole. A bailout would enable the Big Three to avoid dealing with the UAW issue, thus helping to preserve the UAW’s hold on the industry. Milton and Rose Friedman in Free to Choose stated that, “the gains that strong unions win for their members are primarily at the expense of other workers.”  Milton and Rose went on to write that:

On the average about 10 to 15 percent of the workers in this country had been able through unions or their equivalent, such as the American Medical Association, to raise their wages 10 to 15 percent above what they otherwise would have been, at the cost of reducing the wages earned by the other 85-90 percent by some 4 percent below what they otherwise would have been.

In an opinion piece, Bruce Raynor , President of United Here, cites union’s ability to raise wages as key to helping revive the economy. He states, “What the economy needs now is rising wages so the country can get on the path of wage-driven consumption growth.” But even this line of reasoning seems quickly debunked. In a UCLA research project focused on the Great Depression, one researcher states that:

High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns….As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.

So unions in many instances could hurt both the workers and the economy as a whole. Therefore, a bailout would constitute the use of taxpayer funds to rescue a system that discriminates economically against a majority of workers in favor of a unionized few.

While I believe that people should most definitely have the freedom to unionize, it would be unjust to use taxpayer funds to help institute discrimination against the majority of workers.


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