Free markets & free kicks

Been following the discussion fallout from Rod Long’s essay on Cato Unbound.  Spotted some blog responses I found rather curious, figure I’d provide my two cents…

Tyler Cowen, referring to remarks by Matt Yglesias (which amounted to “watch me completely ignore Dr Long’s point!”, IMO):

In my view at the margin it would be better to have both less corporate privilege and less labor union privilege.  Maybe we have no good theory (much less a strategy) for how to get there, but surely some marginal improvements are possible and who knows maybe more. […] Sometimes the left-wing tactics, especially supporting labor unions, are exactly what lead to greater corporatism.  Look at the forthcoming GM bailout.

The unspoken assumption here is that corporate privilege vs organized labor privilege is analogous to chicken vs egg.  Which one came first?  We don’t know!

…well, actually we do.  Since dinosaurs, which laid eggs, were walking the earth before chickens, the egg had to be first.  Likewise, since historically speaking the concept of labor organization not being replied to with violence is fairly recent, corporate privilege had to be be first.  People that the law doesn’t say can’t be assaulted yet are powerless by definition, so needless to say they were also privilegeless.

As for the union responsibility for encouraged corporatism, this is itself a symptom of previous interference.  The previous spontaneous nature of labor organizing has been regulated out of existence, shaping the modern form to be inherently political.  Of course groups like the UAW seek to extract resources via government force, because within the narrow parameters of “acceptable” activism that’s their only option.  If someone takes up tactic X after you’ve declared tactic Y to be void, and you don’t like X, then to gripe about X instead of taking back the ban on Y prompts more questions than it answers.

I’d like for there to be less privilege too — no privilege, to be exact.  But while statism itself is the key problem, going after statism from labor first strikes me like cops showing up to the scene of an attempted armed robbery & arresting the guy that fired in self-defense instead of the idiot robber.

-Bryan Caplan reads this from Roderick:

if there is “nothing special or different about government privileges for corporations,” they ask, why have I chosen to “single them out” (especially since I have not chosen to challenge the legitimacy of the corporate form itself)? My answer is that the primary and disproportionate beneficiaries of government privilege tend to be corporations, particularly large corporations.

…and decides, somehow, to argue that corporate privilege is outweighed by — get this — 1st world labor privilege due to immigration restriction:

I’m afraid Rod overlooks much more important beneficiaries of government privilege than corporations: Lower-skilled workers in the First World.  Lower-skilled workers in places like the U.S. earn several times as much as equally-qualified people in the Third World.  The reason is clearly immigration restrictions – with modern transportation and credit markets, there’s no way that price differentials of that size could long persist.  In fact, as a recent paper by Clemens, Montenegro, and Pritchett points out, the “price wedge” between the First World and the poorest Third World countries is the largest that has ever been measured.  When you recall that labor earns about 70% of GDP, it should be clear that we’re talking about a massive distortion in a massive market.

Now of course I’m the first person to point out that immigration hurts lower-skilled Americans less than most people think.  But there are literally billions of lower-skilled workers who would love to move to the First World.  That is more than enough to sharply reduce the wages of lower-skilled workers lucky enough to be born in a more-developed country.

To an extent, he does have a point: obviously the lower-end workforce in the West, if dropped into the 3rd world, would be considered wealthy.  Sure that ignores the difference in cost of living, how the benefit of infrastructure in the developed world is distributed, and just how much of our dealings with poorer nations is intended to rig the rules of globalization against them, but in terms of pure numbers the claim is correct.   I don’t question the remark, I question his reason for attaching such importance to it.

Suppose that all of the immigration restrictions were dropped, immediately.  The sudden increase in competition in the labor market would, on paper, drop wages.  But this is within the assumption of all other structure remaining exactly as it is, which would be impossible under a real-world scenario where such liberalization could take place.  You mean to tell me that mass migration to the West would simply happen absent any efforts by the nations left to address why their people decided their countries suck?  Besides, I’d suspect that the parameters of those trade deals might have something to do with it…

It has to be asked: it only makes sense to consider the constant balancing involved with global trade, but why is there so little thought about the condition of the 3rd world coming UP vs the 1st coming DOWN?  You chew on that, I’mma chew on something else today.


About b-psycho

Left-libertarian blogger & occasional musician.
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