Labor Day Reflections, A Day Late and a Dollar Short

Tuesday, September 7, 2010 \PM\.\Tue\.

Labor unions are typically justified as a means of raising the wages of workers. According to this view, workers individually lack the bargaining power necessary to negotiate a decent wage, but by banding together they can increase their bargaining power and gain a higher wage at the expense of Capital.

The perspective of neoclassical economics on this issue is a little different. Neoclassical economists wouldn’t deny that the above story could be true for individual cases, at least in the short term. What they would deny, however, is that unions can raise the real wages of workers generally or over the long term. This is because unions ultimately benefit their members not at the expense of Capital but at the expense of other workers. It’s true that when a union shop wins a wage increase above the market rate this will initially be paid by employers. But according to the neoclassical picture this increase will ultimately be offset either by higher prices or by lower employment (as paying the increased wages leads marginal firms to either go out of business, cut back their workforce, etc.) Since each union benefits its own members at the expense of everyone else, unionizing all workers would result not in higher wages for workers generally, but would lead to the individual gains of each worker being more than offset by the higher prices and lower growth caused by the unionization of everyone else.

Which perspective is right? A few months ago the blogger/economist Tino from SuperEconomy compared the share of workers covered by collective bargaining agreements with Labor’s share of GDP. If the pro-union perspective is correct, and unions lead to higher wages at the expense of Capital, then labor ought to have a higher share of income in countries with more unionization. If the neoclassical picture is correct, by contrast, and unions benefit some workers at the expense of others, then the correlation between unionization and labor’s share of income ought to be small if not nonexistent.

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Jesus, Mary, Joseph and the Stone

Monday, September 6, 2010 \AM\.\Mon\.

On Labor Day it is good to recall Saint Joseph the Worker.  When God decided to partake in our humanity, He could have had anyone for His foster father, and He chose a humble carpenter, a man who worked with his hands.  Why?

The Bible gives us no indication that Saint Joseph was intelligent, brave or resourceful.  He may have been all these things, but the Bible does not tell us.  We know that he was of the House of David, but judging from all indications in the Bible he lived in humble circumstances.  What made Joseph stand out to God other than the fact of his heritage?

Kindness I think, simple human kindness.  This was graphically demonstrated at the very beginning when Saint Joseph first is mentioned in the Gospel of Saint Matthew 1:18 and 19:

Now this is how the birth of Jesus Christ came about.
When his mother Mary was betrothed to Joseph,
but before they lived together,
she was found with child through the Holy Spirit.
Joseph her husband, since he was a righteous man,
yet unwilling to expose her to shame,
decided to divorce her quietly.

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Subsidiarity at Work

Monday, September 7, 2009 \PM\.\Mon\.

dilbert subsidiarity

Everyone here at the American Catholic hoped that you all have had a happy Labor Day weekend.

The principle of Subsidiarity states that government should undertake only those initiatives which exceed the capacity of individuals or private groups acting independently.

Pope Leo XIII developed the principle in his AD 1891 encyclical Rerum Novarum.  The principle was further developed by Pope Pius XI in his AD 1931 encyclial Quadragesimo Anno.

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To learn more about Subsidiarity click here.

To read Pope Leo XIII’s encyclical Rerum Novarum click here.

To read Pope Pius XI‘s encyclical Quadragesimo Anno click here.

For more Dilbert funnies click here.


Saint Isidore the Laborer

Monday, September 7, 2009 \AM\.\Mon\.

Saint Isidore the Laborer

On this day on which we celebrate the workers of America, it is good to recall a simple day laborer who became one of Spain’s most beloved saints.  Also known as Saint Isidore the farmer,  he was born around 1170 and lived his entire life in the vicinity of Madrid, in service as a farm laborer to the family of Juan de Vargas.  Some of his fellow workers complained to Vargas that Saint Isidore was late for work due to his habit of attending Mass each day.  Checking up on his worker, he found Saint Isidore praying while an angel was doing the plowing!  Eventually Vargas made Saint Isidore bailiff of his entire estate.  Tales of miracles surround Saint Isidore.  One relates how he brought the daughter of his employer back to life.  Another tells how he found water during a time of drought.  He was noted for his charity to the poor and to animals.

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