§ 14. Political and economic considerations. The question of the closed or open shop has some very broad aspects. Is the closed shop, and are the other policies of trade-unions, morally right; and ought they to be legally sanctioned ? Such questions are not for the economist alone to answer. They involve moral and political considerations - not merely existing formal law, but the fundamental issue of personal liberty and of interference with the liberty of some citizens by another group acting without political authority. For example, if a workman is unable to earn the standard rate8 and is not permitted to take less, he is forced to move to a place where there is no union, or is forced out of the trade entirely. In the latter case he probably is compelled to take a lower wage than he could get in his regular occupation. Likewise, this change artificially increases the pressure of competition and reduces the wages of others in the occupation to which he turns. So, in the case of persons prevented from becoming apprentices in a trade, or kept from taking work by threats, or by the dread of boycott, or by the fear of violence, in any degree however slight, there is present an element of personal coercion by the organized laborers. This is the price others are made to pay for a favorable effect on the wages of the organized laborers. Now, the more strictly economic question concerns the part as to the effects upon wages, and hardly extends to a judgment on the moral rectitude (and the desirability in law) of such acts and policies. One who fully shares the feelings of the organized workers will believe that the winning of a strike or the general improvement of the strikers' condition is so important that it outweighs the evils to other individuals and to society as a whole. Indeed, to one in that state of mind the evils appear very small or non-existent. The economist can only issue the warning that the commonest illusion he encounters is the belief of each class - commercial, banking, manufacturing, wage-earning - that what is for its particular interest is, in a peculiar manner, for the general interest, so much so as to justify favoring legislation or special exemption from the general law, or even sheer lawlessness.

8 See J11.

§ 15. The public's view of unions. We may, however, observe the view of the onlooker striving to be impartial. The attitude of the public in labor disputes, and particularly in regard to the closed shop, is a vacillating one. The general public sympathizes in large measure with the unions in their efforts up to a more or less certain point; but the public does not like to see organized labor with the power to dictate terms absolutely to the employers, any more than it likes to see employers crush the union. The unions are effective in varying degrees in strengthening the bargaining power of the workers, and accordingly the results vary not merely in degree but in kind. The public wishes to see "fair play," and up to a certain point the union is a device to get fair play. In truth, what is in the public's thought, somewhat vaguely, is approval of unions as far as they go to establish a real equality in competitive bargaining with the employers, but disapproval where the power of the union gets greater and becomes monopolistic. It is at this point that organized labor loses the sympathy of most of the "general public" outside of unions. When the union tries to force a higher wage than the market will warrant, when it strives not to establish but to defeat competition, the public condemns. It sees, though not quite clearly, that such action makes an unstable equilibrium of wages, which tempts to constant friction and discord with employers and with unorganized laborers. It sees also that if the unions force a wage higher than a fair and open market affords, this is rarely done at the expense of the employer; that in the long run it is at the expense of the purchasing public itself, including the unprivileged workmen.

In accordance with these facts and opinions there has developed, at least in one respect, a pretty definite conviction on the part of the public regarding the closed shop, namely: the closed shop should go only with the open union. A union under the closed-shop policy is exercising a quasi-public function, that of controlling the industrial action of private citizens against their will. The union, therefore, in this view, must, with anything like the closed shop, cease to be a purely private, voluntary organization, and become in some respects subject to public regulations as to its internal rules and administration. This view, however, is very unacceptable to the leaders of organized labor in America, and there the question now stands.

§ 16. Effects of organization upon general wages. A question different from that discussed above is as to the effect that the organization of labor has upon the general level of wages, including those of unorganized workers. The thought has sometimes been expressed by sympathetic social students outside of trade-union circles that, but for the organization of labor, wages in general in America would be no higher than they were in 1850. This seems to be assumed in much of the argument of labor leaders, for they speak as if all wages, but for trade-unions, would be at the starvation level, and they credit everything above that level to the work of the unions. In Trant's book already referred to, which was reprinted and circulated by the American Federation of Labor as representing its theory and claims, all the advances that have been made in wages are attributed to the trade-unions. This claim is peculiarly effective in America, where wages are and always have been relatively high. But proof of the claim is lacking. As we have seen, fewer than one in sixteen of all gainfully employed and fewer than one in twelve of those working for contractual wages have been organized. On no principle of value could the mere organization of one twelfth of the wage-earners, without permanently withdraw-them from the labor market, explain the relatively high wages of the other eleven twelfths. In many lines where labor is not organized, as in teaching, clerical, professional, domestic, and agricultural services, wages have risen as much or even more than in most of the organized trades. The underlying economic forces determining the general level of labor incomes in a country are much more fundamental in nature than labor-unions or protective tariffs.9 The trade-union authority already cited seems in another passage to admit a view not essentially unlike that just expressed when he says: "Capital is increasing faster than population. It seems therefore merely in obedience to natural laws that wages should rise."

The only reasons ever suggested for thinking that the organization of one twelfth (or any larger proportion of the wage-earners) could in any general way raise the labor incomes of those remaining unorganized are: first, that organized labor sometimes leads the way in securing favorable legislation ; and, secondly, that if organized workers get higher wages this sets a standard which it is easier for the unorganized then to attain. Both of these suggestions may have some little validity in special cases, effecting slightly a small proportion of the unorganized workers, but neither touches fundamental causes of general high wages. "Whereas it is clear that when the unorganized laborers constitute the main body of consumers for the products of organized labor (and this unquestionably is in large measure the case) any increase in wages that can be secured through organization by a portion of the workers must, in part, be subtracted from the "real" incomes of the unorganized workers. The employer is middleman, not to a great degree the ultimate consumer, of labor.10 Some part, it is true, of the higher wage might be taken from profits or from wealth incomes, but this would still leave the unorganized workers the losers.

9 See Vol. I, pp. 227, 439, 466, 504-507; and above, ch. 16, 3 8.