Mises on Labor

A relatively flexible labor market has long been one of America’s great economic strengths — as well as of Great Britain relative to Continental Europe. Indeed, to us savage unfettered capitalist denizens of the Anglosphere, France’s persistent high unemployment provides the perfect illustration of the bad consequences that come from a too-tightly regulated labor market. Yet despite this obvious observation (at least it should be obvious), there are growing calls for greater political control of labor around the developed Western world — and part of that trend has chronicled on this very blog.

America is currently embroiled in fights over a proposed hike to the federal minimum wage — despite the job losses that have resulted from similar hikes at the state level — and over a bill to strip away workers’ right to a secret ballot in union organizing drives.

In Britain, a government minister recently described flexible working hours as hours as a “right” that government should strive to extend.

And even in France, where the ravages of politicizing the labor market are so evident, a major presidential candidate, Socialist Segolene Royal, has promised to abolish flexible labor contracts for small businesses and to hold a national conference to set wages. (She is currently down in the polls against her center-right rival Nicholas Sarkozy, but she remains a credible contender.)

The notion that distortions in labor markets are as disruptive as those in other markets is not new — and neither are efforts at just such intervention. But thankfully there’s reason for long-term optimism. Statists have tried to intervene before in labor markets before. Their schemes have failed before, and they will fail again. I leave the reader with an insight on labor from Ludwig von Mises, from his 1922 classic, Socialism:

The shorter working day and the limitation of woman and child labour, in so far as these improvements were in operation in Germany about the outbreak of the War, were by no means a victory won by the champions of the legal protection of labour from selfish entrepreneurs. They were the result of an evolution in large scale industry which, being no longer compelled to seek its workers on the fringe of economic life, had to transform its working conditions to suit the better quality of labour. On the whole, legislation has only anticipated changes which were maturing, or simply sanctioned those that had already taken place. Certainly it has always tried to go further than the development of industry allowed, but it has not been able to maintain the struggle. It has been obstructed, not so much by the resistance of entrepreneurs, as by the resistance of the workers themselves, a resistance not the less effective for being unvocal and little advertised. For the workers themselves had to pay for every protective regulation, directly as well as indirectly.

(Thanks to Iain Murray for the BBC News link.)