Trade unions in India have demanded economic stimulus packages intended to increase employment in the next budget. They also emphasized the need for a national minimum wage law, which would bring in NREGS workers too under it. Curiously enough, the memorandum also calls for a prohibition on the entry of foreign companies and big corporates into the retail trade. Higher wages are expected by labor leaders when industries which make such higher wages possible are supposed to be regulated and taxed out of existence. Ayn Rand had the typical anti-capitalistic mentality in mind when she criticized people who desire cheap gasoline and at the same time want the industry to be taxed out of existence.
We all have long known how determined the trade union representative is in saving the little man, the hapless worker from the oppression, suppression and exploitation by the wicked capitalist. The unrepentant trade union leader is marked by an ever exceeding cynicism, self-imposed economic illiteracy and stupefying moral bankruptcy. In his eyes, if left to himself divorced from the clutches of the state, the businessman is omnipotent. What makes him really dangerous is not his omnipotence as such, but the fact that he is full of caprice and whim. His range of planning hardly proceeds beyond a day, and he has always had a hard time coming in grips with the fact that others too are driven by selfish motives. The only hope of the worker then lies in the totalitarian state. By the virtue of its cozy alliance with trade union thugs, the state can put a solid rein on his excesses by disciplining him whenever he exercises his whim. In the process, the state successfully legislates out of existence an artificial construct of “heartless” economists: the age old law of supply and demand.
Intellectual dishonesty is apparent in the claims of labor union leaders. If higher wages could be legislated into reality with no cost, we would have achieved it long back. The fact that they don’t demand a drastic raise in wages is enough proof that they are fighting their own knowledge that artificially higher wages would put many out of their jobs. Observe the fact that they stand in the way of any progress like increased capital investment which would significantly improve the lives of workers and show them the way out of poverty. Whatever their motives it is not a genuine concern for laborers. As labor leader Fred Kinnan says in Atlas Shrugged: “Didn’t they scream that they were the friends of labor? Do you hear them raising their voices about the chain gangs, the slave camps, the fourteen-hour workday and the mortality from scurvy in the People’s States of Europe?”
The notion that the Government can raise the living standards of workers violates virtually every known principle of economic science. The fact that wages are determined by the marginal productivity of labor which in turn depends on the level of invested capital is so fundamental to the issue that no labor leader can claim ignorance of it!