Lesson 1: Of Picket Lines And Lost Generations

Firstly I would like to introduce myself, I am the economist's apprentice and I started this blog for a very specific purpose, to spread economic truth in these times of economic insanity. It is my intent to discuss not simply current events, but the day's news in the context of the eternal economic principles which have guided humanity since the very first barter transactions all those thousands of years ago. Today our nation faces a crisis which threatens not only her most prominent citizens, but a crisis which looms over those who have the least, and yet so much, to lose. To save America, this nation which has brought freedom and success to countless millions, we must hold to the philosophy which made us great; capitalism built our nation once and it will renew it now. However, these precious principles have to be understood and then passed on or true recovery may not manifest for many years. The loss of these principles is in fact why we now find ourselves in need of a recovery, therefore, for the first lesson, I feel it is appropriate to discuss how exactly our philosophy of greatness has been forgotten.

Unions, for many, bring to mind security and togetherness, a particular form of Americanism from which there must be no deviation lest there be a terrible gnashing of teeth. For many, the sight of a picket line encircling a place of business or occupying the street outside of city hall is an inspiring spectacle. Ah yes, those many fine citizens might say, let the will of the common man be done! Let the man to whom these hardworking, decent people are enslaved be punished for his ill-treatment of them! Most of these individuals would most likely never pause their mental objections to the employer long enough to realize that without that same employer the opportunity for the picketers to become employees would never have existed. That much is true, but it is a superficial observation. What is more compelling is the difference between the idealistic onlooker, silently cheering for his supposed brethren down on the line, and the economist. The onlooker most certainly sees a victim, but only one, which is the group of striking workers. However, the economist sees three. The workers are victims, the strike imposed by the union denies them the opportunity to produce and, as wages are defined by productivity, they necessarily lose. Even if the union "wins" and concessions are made such as a nominally higher wage, the union still might lose if the employer refuses to higher any more union workers. As the union population ages and retires, a company very well may simply choose to contract with non-union workers as a substitute for the higher cost workers. Ultimately, union numbers dwindle, leaving them rather more vulnerable and far poorer than even before. The employer is certainly a victim, without his employees his income drops as surely as theirs does. And finally, and least obviously, the patron suffers. But how is that so? He does no work for the company, he does manage, he does not produce, so how is it that he suffers?

Imagine three teenagers are interested in starting a yard service. None are experienced and are therefore risky to hire, but, for the right wage they are able to find reasonable business. On average let us say that they are paid $10 per hour for their services for a total of $30 per hour. It is a wage that is freely offered and freely accepted, no coercion ever occurred. However, because the young entrepreneurs are so cheaply priced, it soon becomes apparent to consumers that it is in their interest to hire them as opposed to workers from the local yard work union. Losing business never makes anyone happy, least of all union bosses. Less business means less workers and that means less dues. And so, armed with the power to vote, a mass of union workers descends on the town hall of Anytown USA and demands that a law be enacted to require union membership for all new yard workers. Afraid of the union's power to persuade potential voters, the sitting politicians of Anytown quickly draft a law proclaiming that all yard workers must join the union and can, therefore, only charge union prices, say $20 per hour. Now, should a family wish to hire a lawn service, they must make a choice. Either hire three inexperienced teenagers at the cost of $20 per hour for a total of $60 per hour, or higher a single more experienced worker who can work alone for $59. Under conditions such as these, not only are three teenagers denied the opportunity to gain valuable work experience and income, but the town's consumers of lawn services are terribly hurt; they might have paid $30, now they must pay at least $59. That is nearly a 100% increase in their yard budget, under the rule of a free market, the same family might have gotten their yard mowed and then gone to the movies, but because of interventionism through unionization, the average family's budgetary discretion has been severely curtailed.

The value of a union is refuted easily enough through understanding economic theory. In fact, it must be emphasized that the crucial factor in refuting a union's value is in understanding economic theory. And it is this point, this fundamental point, which has brought our economy to the brink of collapse. Knowledge of economics is kryptonite to unions, every union boss whether he admits it or not understands that, if the underlying properties and effects of unionization were widely known, his very "industry" would be at stake. And, normally, the bitterness of the unions toward economic science would have little net effect on the propagation of knowledge as long as freedom of speech remained intact, however, if those whose job it is to propagate knowledge are themselves unionized a fundamental conflict of interest arises. Telling a union member to teach a room full of students about why unions are inefficient would be like an oil rig worker advocating for solar panels, and yet this is the situation that exists. Teacher's unions have brought much hardship upon America's education system, making it effectively impossible to fire sub-standard teachers and weighing down our school administrations with layer upon layer of cumbersome and expensive bureaucracy. Stated frankly, teacher unions represent teachers, not students. And so, to save their own positions, teachers in our nation's public schools have taken to either misrepresenting or completely ignoring the science of economics. In fact, upon researching the absence of economics from our nation's classrooms, I found that reports from our own Department of Education do not even list economics as a possible major for students on a 2009 report concerning the SAT (http://nces.ed.gov/programs/digest/d09/tables/dt09_145.asp).

The ramifications of this policy are astounding, students leave high school with only the knowledge necessary to perhaps balance their own personal check book. Students living in the age of liberal mob rule are being released to the world without the slightest idea as to, not only how, but why a business thrives or fails. There exists amongst students no appreciation for the precious liberty afforded them through the principles of capitalism, for these unfortunate individuals, economics, politics, liberty, and success are unrelated or even not worthy of their attention. But nothing is more necessary; economics is defined in many different ways in many different texts, I define it as the the science of wealth creation, as the philosophy of well-being. Our nation is at stake, either we teach and disseminate the same economic ideals which built America into what it is or we will fall.

And so I end the first lesson as I plan to end every lesson; America needs the help of every thinking man, woman, and child. I personally appeal to all those concerned to educate themselves, their families, and friends about this science which I have come to love and appreciate. Without this knowledge, without a deep passion for enlightened liberty, the teacher's unions, the IRS, the EPA, President Obama, the countless list of "czars", and so many more will continue to picket line our nation and our children; unionization of our nation's teachers is why we are here, it is because the only thing that those educators have taught their students is apathy. They have not taught the truth, they have failed in their appointed tasks. While they have stood year upon year at the picket line, how many generations have we lost?


Lesson 2 preview: The problems in the education system are apparent, but what are the solutions?