HomeArticlesEconomicsGovernment and Unions: Where’s the Referee?

The culture war in the United States can be compared to one big labor dispute between employers and workers. When the 20th Century began, the United States was in the middle of a great growth of industry, and there were many industrial labor disputes. These disputes occurred in the private sector, between capital and labor. These disputes were settled by governors and courts and eventually legislation was passed that legalized private unions and placed limits on the use of power of both parties, so that labor disputes could be settled peacefully. Government served its proper role of creating rule of law and serving as a referee.

Today the situation has changed. The big labor dispute is between government unions and taxpayers. They battle it out between political parties that represent factions, with Democrats shouting “the rich need to pay their fair share,” and the Republicans repeating the phrase “no new taxes.” If a member of either party gets elected as a governor or president, he (she) is expected to represent the partisan position of the party that elected them. In no case will the government get a leader in the position to settle the dispute, one that sees both the vices and virtues of both sides. We have to ask, “Where is the referee?”

Franklin Delano Roosevelt considered government unions “unthinkable and intolerable.” Even George Meany, head of the A.F.L.-C.I.O. in 1955 stated “It is impossible to bargain collectively with the government.” Since the role of government is to provide rule of law and be the referee with its sovereign power, if it abandons its role of referee and becomes a player, it will inevitably use that power to reward one side at the expense of the other. When this happens in a republican form of democracy, it is a betrayal of the social contract.

Ever since the Republican Party was founded in 1854, backed by industrial capital, the Democratic Party has gradually transformed from what was a populist platform holding Jefferson’s ideal of self-reliant citizens in an agrarian economy, to the party that will fight against the rich to serve the poor and oppressed. These parties have become factions that the founders of the U.S. Constitution wanted to prevent. In my book Life, Liberty, and the Pursuit of Happiness, Version 4.0 I described how the sound political principles of the founders were eroded over years of piecemeal legislation that turned much of the vision of the founders on its head, giving control of government to special interests and taking it from citizens.

“Capital Doesn’t Care,” “Labor Won’t Produce”

Typically we hear from labor that capitalists are cold and heartless. We hear from owners that laborers are thankless, demanding, and don’t care about the company. While this is not always true, it is more likely going to be the case when the interests of capital and labor become institutionalized. Individuals can care, but bureaucracies can’t. Bureaucracies are formed to perform specific institutional goals. They are impersonal, they do not focus on the big picture, and they are easy to abuse. Reinhold Niebuhr is known for his classical study on this problem in his 1932 book, Moral Man and Immoral Society.

In a small family business, where the owners and the laborers all live in the same household, the fortunes of all clearly rise or fall with the success of the business. Especially in a company where the owner is the primary laborer, there is no split between labor and capital because the owner knows that if he doesn’t work he won’t eat. As a rule, where people live in close proximity, in daily face-to-face relations, bonds of family and friendship work towards personal and economic justice. People in community tend to share.

The problems begin when the size of a business is larger, there is division of labor, and relations are impersonal. This is especially true when those who control capital are investors who buy shares and want to maximize profits. They may never see the production facility, care where it is located, or know any of the employees. When such capital is accumulated in 401k pension plans, and a manager is hired for the sole purpose of bringing a return on capital, all environmental and labor concerns are considered enemies of profit.

The reverse can be said of labor. If the labor is a child in a family business he expects to inherit, he will learn the interests of both capital and labor. But, most workers have little knowledge of what is required to make a larger factory work. They are generally hired to perform a specialized task, and are paid only for that. Workers tend not to care for the overall health of the company they work for. They are primarily seeking a wage that will allow them to support their family, have a place to live, and pay for recreational activities when they are not working.

The idea “having a good job” is also the goal of most government workers. They do not have a systems view of government, nor are most workers “civil servants” that would be willing to work without pay. Most seek an increase of salary each year and health and retirement benefits that will continue to provide them security when they can no longer work.

Both private and public labor, having similar goals to have a good job, join labor unions when they believe that, by joining, they can increase their salary, benefits, or vacation time. Their goal is to get get more for what they do. Like owners and capitalists, they want to live better each year than the previous year, and the goal of a labor union is to obtain these benefits regardless of the pressures it puts on the employer.

A Hijacked Government, the Tea Party, and Occupy Wall Street

Wall Street capital investment firms and national labor unions are both bureaucratic institutions organized for specific, yet conflicting, purposes: one to serve capital, and the other to serve labor. These institutions each attempt to accomplish their goals by manipulating the political system. The founders knew such factions would attempt to manipulate government and that it would require vigilant citizens to prevent them from hijacking government and becoming cancerous.

Over the last 100 years, a banking system, a “military industrial complex,” systems of welfare entitlements, and other interests have become firmly entrenched in a federal government original created for the purpose of protecting borders and the freedom of citizens. These interests, like cancers have used the government to produce bank bailouts, foreign wars, and domestic bankruptcy, while largely ignoring constitutional principles and the original purpose of the government. Today these entrenched interests have taken more than the system can support and it is now beginning to crash.

Individual citizens, trying to live the free self-sufficient lifestyle that characterized Americans at its founding (and the Democratic Party of Thomas Jefferson) have become the odd man out, not finding a home in either a world of concentrated capital, nor the welfare state that has become its antithesis. The Tea Party represents a movement of people who have lost their middle-class American Dream to high taxes, government produced financial bubbles, and out-of control medical costs. The name “Tea Party” is highly symbolic of the American Revolution and an attempt to return control of government to the people.

As taxpayers, they have found an uneasy home in the Republican Party that has championed, in name, constitutional principles, but has its share of entrenched interests. Tea Partiers don’t fit at all in the Democratic Party because they do not seek dependence on a system to care for them and, not being union dues payers, they are enemies of the interests that now govern the Democratic Party. They are called right-wing extremists for this reason, even though they cherish traditional American values. Establishment Republicans find the Tea Party to be a thorn and they are continually trying to coopt it or to make it a servant of corporatism.

Occupy Wall Street is the flip side of the Tea Party. It represents those who have been dependent on the system who are also moving from a middle-class to lower class, or who unable to find work, unionized or other, in the present economic climate. They tend to have more free time to camp out in protest, to pick up less after themselves, and to have less of a sense of direction than the Tea Party. If government is increasingly forced to lay off workers, the Occupy Wall Street ranks will grow. However, they are ultimately the casualty of the same unsustainable system which, like a computer overloaded with viruses, tends to seize up.

Where’s the Referee?

The referee and a rule of law designed to treat all people fairly has been pushed out of government. In 1911, when Iowa button factories encountered violent labor strikes and retaliated with hired thugs toting guns and swinging clubs, the governor of Iowa, who had friends and constituents among both factory owners and workers, stepped in mediating with the force of the state, much like the referee of a football game can call fouls on both teams and apply penalties to both teams. Government was a good referee.

Reinhold Niebuhr, pastor of a church in Detroit that had both Henry Ford and assembly-line workers in his congregation, was thrust into national prominence when he promoted industrial justice in the “Ford Family” drawing on moral and religious principles applied in natural families and religious communities. In 1935, after the legalization of labor unions and development of new laws governing the behavior of both capital and labor, Niebuhr believed the “industrial problem” had been largely settled, with power checked by power.

However, two major factors unsettled the balance of labor and capital since Niebuhr’s time. The first was globalization. This provided an opportunity for owners to choose to locate their industry outside the United States to wherever the greatest profit could be obtained. The second was greater cooptation of government by the interests of both capital and labor. Government, instead of being a referee, became the battlefield. Imagine a football game in which the coaches on both sides take turns bribing a weak referee for biased rulings on a football field. Today our government representatives and even presidents, are like such referees, creating arbitrary legislation and executive orders to satisfy the factional interests that bought their souls with campaign contributions.

Finding a Referee

We need to recreate the role of government as a good referee, enforcing a rule of principled institutions that are not controlled by the interests of factions. We need leaders the equivalent of that Iowa governor who settled the button-factory strike, and laws that do not serve factions at the expense of the citizens. The current two-party system does not allow this. This system is the problem, not the cure. The present system, controlled by two political party platforms, provides American citizens not only with puppet legislators and presidents, but also with partisan members appointed to the courts.

Many solutions to these problems are spelled out in my book. The main point of this article is to emphasize that Americans need to know that fixing Washington requires finding impartial referees and creating laws that reflect sound and fair political principles. To continue to elect those who represent factions and not the principles of good governance will only exacerbate the present problems. Voters need to understand what is in their interest and either reform the platforms of the present parties, or create new parties that promote principles of good governance and reform our political institutions.




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