THERE are three recent events that all share a common thread that runs through them. The recent reelection of Barack Hussein Obama, the failure and pending liquidation of Hostess and the toothless union threat on Wal-Mart.
WHILE all three have union involvement, the common thread is not that they all have undertones of organized labor, it is the idea that there are entities in the American economy that do not deserve to retain the payments for their assumption of risk, something that normal people recognize as profits (in these cases, these are the taxpayer, one failing business and one that is successful). There is a supposition in each of these situations that there is some entity that exists that is more efficient at making the decisions on what value these situations represent and therefore is somehow more “fair”.
IN the case of Obama, his position is clear. For Obama and his ilk, the fact that the “rich” have money is evidence enough that they don’t pay their “fair share” of taxes and instead of representing the results of bringing hard work, innovation, expertise an value to a market willing to enter into a voluntary exchange of things that they have for the value that the “rich” offer, they actually represent a parasitic plague on the “common man” and therefore persecution of this class is both morally defensible and economically desirable.
IN the case of Hostess, we have seen an intractable union place demands on a business with complete and total ambivalence to a company selling a product, one that has probably the best brand identity in its market, into a saturated market highly dependent on discretionary spending. No matter what some think, Twinkies are not a necessity. Of course, there is an argument to be made that the original sin belonged to the management teams that tried to resurrect the flagging business but it is also hard to ignore the lush union contracts that were negotiated during better days that played a big role by doing two things – first by raising the total labor cost of the business and increasing total costs thereby giving less of a cash cushion for the business to use during challenging economies and secondly, believing that the unions were due to a perpetual increase in salaries regardless of the condition of the business – businesses are like airplanes – when they are crashing it doesn’t really matter who is responsible for the dive, just what pulls the plane out of it because if it reaches ground, all passengers are equally as dead.
AS for Wal-Mart, the contention is that they don’t pay their employees enough, a “living wage”, even though people still go to Wal-Mart of their own free will in droves to get a job and those same people look to Wal-Mart for low priced, yet quality goods. The union argument is that they “make enough money” to pay their employees more. In short, even though the employees bear none of the risks of running a global supply chain, maintaining thousands of stores and distribution centers and the market has not role in setting the level of pay at which largely unskilled workers make a decision to exchange their efforts for pay.
THE common thread? One of the pillars of Marxism, the labor theory of value. This is a proposition that the value of any good or service is only determined by the amount of labor required to generate it.
IN this theory, risk, capital and management skill plays no part in the creation of value and society should only assign value by the amount of direct labor input to a good and since the value is solely based on labor content, any and all gains are the property of collective to be shared with all the laborers. There is no decision to be made by the free market, the setting of price at where a seller is willing to sell and a buyer willing to buy, there only “fairness” as defined by the amount of work that a worker produces.
ONE doesn’t have to be Sherlock Holmes to look at these three situations and see the commonality.