Dialogue: Let's get this business of unions sorted out

By GORDON McLAUCHLAN

I have this great idea that should make everyone happy. Any organisation binding people together for the enhancement of the returns from their commercial activity shall be called a union.

That way, the Employers Federation will become the Employers Union, which it really is anyway, the Business Roundtable will become the National Corporate Union, the Bankers Association the Bankers Union, and so on.

Thus we may be able to eliminate confusion arising from the prevailing credo that those organisations representing employers are concerned primarily with the health of the national economy and the welfare of the whole country, including the poor, while employees' unions are intent on the destruction of the national well-being.

This arises from the theory that all wealth is created by rich people operating from enlightened self-interest who, by making money for themselves from no matter what source, are enriching us all; whereas when poor people make money from higher wages they are acting from ignorant self-interest and stealing money by grossly over-estimating the value of the work they do.

I don't have much of a problem with self-interest as long as its not called altruism or wealth-creation or patriotism or disguised as some other virtue on the one hand and demeaned as selfish and destructive on the other.

Today's thinking - and please don't regard this as an enduring Great Truth - is that when an employers' union supports the withdrawal of your labour and you are made redundant because the employer thinks the value of your work is less than you do and perhaps has found a machine that can do it better, that is a national good and the organisation should be applauded.

When an employees' union supports an employee in withdrawing his labour because he thinks it's worth more than the employer does and he cannot be replaced by a machine, that's a national disaster, anarchic, and the organisation should be punished.

It is interesting that senior executives are seldom if ever seen as overestimating their worth, whereas wage-earners are considered constantly prey to this vanity.

If this seems over-simplified and unreal, then let's measure it against some recent realities urged upon us.

Reserve Bank Governor Don Brash, fresh from a 35 per cent pay rise to nearly $500,000 a year, recently urged wage-earners to practise restraint with wage claims because increases would tend to push up inflation. As Bob Edlin pointed out in the Independent, average wages in the past year increased by 1.4 per cent while chief executives gained an increase of 5.4 per cent. I'm trying to recall a time and economic situation when employers thought it useful for wage-earners to gain pay increases. Economists will suggest that wage rises should match productivity increases, but business executives are under no such economic imperative.

Chairman of the Business Roundtable Ralph Norris urges us to follow the policies of the United States, the standout country in the past decade in achieving near full employment and cutting welfare dependency. That same day I hear a report describing an American charity that provides 600,000 meals a day, many of them to the working poor. Oh that the world was as simple as ideologues of any sort insist.

Xerox Corporation sacks its chief executive and agrees to pay him $US800,000 a year for life. Had that occurred within a communist society it would have been seen as absurd and socially destructive as it really is and the system would have been blamed.

Employees' unions have been given some influence to help members to negotiate fairer wages and conditions but they are, happily, denied the excess of power they wielded in the days of compulsory unionism - despite the spectre of that past that some employers and politicians have tried to conjure up.

It is especially important that employees' unions do not abuse their new influence and do act with mature restraint because, judging by the response to the Employment Relations Act of the employers' unions, it is too much to expect restraint from them.

But really, the best we can hope for is that a kind of creative tension will develop between employers and employees and result in neither group feeling too desperately unhappy.

The point is that capitalism is not a creed that, adopted, provides a society with a set of golden rules for the perfect administration of an economy.

It is to economic organisation what democracy is to political organisation - messy, imprecise, but flexible and capable of being tweaked so that the self-interest of various groups may achieve some sort of equilibrium.

Capitalism, lightly and sensibly regulated by elected governments, spreads economic power around and has a better chance than any other system yet invented of achieving a fair balance of freedoms among various sectors of the population.

The belief that, left alone, a complex, modern capitalist economy will automatically achieve an equipoise just and satisfying to all its internal groups is a gross delusion that seems particularly widespread in New Zealand.