Thursday, May 7, 2015

Business Regulations: The Two-Edged Sword

As the campaign season nears and GOP hopefuls line up for the nomination slot, we're hearing a lot more of the old Conservative rap about government regulations cripple businesses and ruin the economy.  Uhuh.  You won't hear any of them voicing the Libertarian attitude of fair is fair: take the regulations off everybody.  None of them even stop to consider that a lot of those regulations on business were passed with the clandestine urging of the Captains of Industry themselves.

No kidding.  For example, the National Labor Act established the National Labor Relations Board, the 8-hour day, the 40-hour week, and the minimum wage -- all of which the unions had been asking for -- but it also outlawed a lot of effective union tactics, such as the sit-down strike, which the bosses had serious trouble countering. That law was quietly pushed by the bosses, as much as by the unions themselves.  Truth is, the bosses were willing to give some concessions about wages and hours in order to hobble the power of the unions, which had been growing steadily for the last four decades.  The power and membership of the unions peaked in that decade, and have been shrinking ever since

There are other laws, usually requiring particular standards, that were likewise pushed by bosses of particular industries for no better purpose than to cripple their rivals.  There's the legendary tale of the whiskey company that usually aged its whiskey seven years, which got the state legislature to pass a law requiring that all whiskey sold in the state had to have been aged in the barrel for a full seven years -- knowing that their chief competitor aged their whiskey for only five years, and had nothing older than five-years-aged product for sale, and therefore couldn't sell their product for the next two years.  Consider the fate of the Tucker car, how its production was ended and its company ruined by various government regulations and bureaucracies, much to the delight of the Big Three car companies, which couldn't match the Tucker for quality.

Now what would happen, really, if all those pesky government regulations were swept away -- especially if government regulations on labor unions, consumers' unions, whistleblowers and investigative reporters were swept away too?

Konrad Lorenz told of how his dog had a snarling rivalry with a neighbor's dog, and the two of them would bark and snap and howl marvelous threats -- so long as there was a good sturdy fence between them.  One day repairmen pulled down part of the fence, without informing the dogs about it.  When they came outside and started their usual bark-fest, they snapped and snarled along the length of the fence until they suddenly came to the gap.  Now this should have been their golden opportunity to settle the the rivalry with a roaring fight, now that there was no longer any barrier between them.  Ah, but neither dog took advantage of it.  After an instant's staring at each other, they both ran back to where the fence still stood, and went on with their usual threat-contest.  The truth is, neither of them really wanted to deal -- unrestrained -- with each other.  As Kipling put it, in his poem The Female of the Species, "...Man accepts negotiations, man accepts the compromise.  Very rarely will he squarely push the logic of a fact To its ultimate conclusion in unmitigated act."

The economic Little Guys -- labor unions, consumers' unions, whistleblowers, etc -- have long endured the unrestrained power of the rich and powerful, know how to deal with such, and would be willing to take on the Big Boys in the absence of government protections.  'Tis the Big Boys who really don't want to deal with the unrestrained vengeance of their victims, with no government shield between them;  the wiser heads among them remember that the Labor Wars of the early 20th century really were shooting wars, and it wasn't just the strikers who got shot.

This is why all the GOP hopefuls, when boasting of how they'd get rid of all those nasty government regulations on businesses don't really mean it.  The Libertarians do.  If Libertarians were to win, it would be fun to watch all those not-so-sincere pundits of the Free Market run like dogs to get back behind the fence.

--Leslie <;)))><   


Ori Pomerantz said...

Why were sit-down strikes effective? I can see two vulnerabilities in the idea:

1. Staying in a private property when told to leave it is trespass, and therefore an excuse to bring in the cops.

2. The factory owners can lock the toilets and put guards on the doors that don't let anybody in. How long would people stay in a place without food, water, or toilets?

Technomad said...

I don't know if you've ever read it, but The Myth of the Robber Barons tells about how the big businesses that operated because of government subsidies tended to be driven out of business by other firms that did not depend on government help. In one case (steam travel by water between New Jersey and NY) the competition operated illegally at first, since the existing company had a legal monopoly.

Aya Katz said...

I am not sure that big labor unions can qualify as "the economic little guys." However, I am all for removing all the regulations, both for and against labor unions, as well as every other participant in the economy.

Great story about the dogs, BTW!

Leslie Fish said...

Hi, Ori. Yes, the bosses thought of those factors too. The problem with calling the cops into the factory was that in the ensuing scuffle the precious *machinery* could get damaged -- and the unions could fairly claim that it wasn't sabotage. As for locking the toilets, et al, the strikers handled that with pre-arranged buckets, which could be lowered or lifted out the windows. There's many a merry tale of bosses' goons trying to interfere with the buckets, only to get hit with the contents. Ahem. The sit-down strike was an effective tactic. There are others which were likewise banned, that could be revived if/when the law allows.

Hi, Nomad. It isn't just that one book that has noted the phenomenon. Note that Ayn Rand, of all people, spends much of her classic book vilifying the "crony" capitalists who suck from the govt. teat and suborn politicians to pass laws that hobble their more efficient independent rivals. And don't get me started on the long and complex history of fuel-ethanol vs. petroleum. That would take a whole other article -- a long one.

Hi, Aya. Remember that even the "big unions" are really made up of a host of littler ones, plus chapters in individual shops/mills/factories -- any one (or more) of which can choose to opt out. "Big labor" is actually an illusion, carefully fostered by... well, you can guess. Yes, you can tell that I'm all in favor of removing *all* the regulations too -- including all the gun-control laws in the country. It would be fun to watch the results when, as Kipling wrote, "Thou art delivered to thine own keeping; Only thyself afflicteth thee."

Prof. Godel Fishbreath, Otter said...

There is a bothersome and somewhat frightening video: Humans need not apply".

This is a bit off topic, but wait.
If that scenario does come true, (and the dude is persuasive) There will need to be a change in attitude toward work. It used to be that work was an inconvenience that was justified by the need to get food, etc.
It could happen the jobs will be more a privilege.
If that is so, then you will find the left in favor of guns to alter the terms of the revolution. Because people dont change their minds that quickly, and a robot run 1st world economy would need that change.

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