​​Teamsters Bailout = Cynical Politics

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Earlier this month, President Joe Biden announced that he would bail out the Central States Pension Fund to the tune of $36 billion. The fund serves members of the Teamsters union, and $36 billion would make it the largest federal bailout to date of a pension plan.

Biden’s announcement reveals much about the state of our politics.

First, today’s largely socialist Democratic Party constantly professes concern about “fairness” and often invokes the philosophy of egalitarianism. But Teamsters have long made far more than the average American worker, so bailing out their pension fund brings to mind George Orwell’s depiction of the everyday reality of socialism in “Animal Farm:” “All animals are equal, but some animals are more equal than others.”

Second, America’s Founding Fathers abhorred democracy because of its tendency for a political majority to use its power to violate the property rights of others. (Marx and Lenin, by contrast, saluted democracy for that exact reason—it empowered the taking of private property.) The preamble to our Constitution states that one of the fundamental purposes of the federal government was to “promote the general welfare.” As is so often the case these days, the pension fund bailout repudiates that constitutional principle and instead promotes a special interest.

Third, the $36 billion that Biden promised the Teamsters is to be taken from the $1.9 trillion so-called “American Rescue Plan” that was passed in the name of COVID-19 relief. This shows that the American Rescue Plan, which has been a major contributor to the inflation that Americans are now suffering from, is doubling as a political slush fund. No wonder so many Americans are sick of politics.

Let’s take a look at the historical economic backdrop of unions in America and see whether the Teamsters have a legitimate claim on the American taxpayer for a pension fund bailout.

In the 19th century, when the union movement in the United States started, workers were at an awful disadvantage. In the simplest economic terms, the supply of labor exceeded the demand for it, and so wages were grimly low. Workers joined unions for the purpose of demanding (if not always receiving) higher wages. As general prosperity spread and more entrepreneurs had access to more capital, both the demand for and the productivity of labor increased, pushing wages higher. (If you care to learn some details, the text of F.A. Harper’s booklet “Why Wages Rise” is available free online, courtesy of the Foundation for Economic Education, Inc.)

As unions gained increasing political influence, they eventually obtained powerful legal privileges—most notably from the monopolistic powers granted to them by the 1935 Wagner Act. The privilege of preventing employers from hiring replacement workers empowered union members to extract above-market wages. Progressive politicians were willing to grant this political leverage to unions because of the popular perception that this gave union workers a fighting chance for higher wages in their struggle with (allegedly) greedy big businesses.

The underlying economic reality wasn’t so simple. Union workers extracted higher wages because employers were forbidden to hire replacement workers who were willing to work for less. Thus, unions were organized against fellow workers as much as they were businesses. And because businesses had to pay those higher wages, they raised their prices higher than they otherwise would have; in other words, unions were organized against and benefiting at the expense of consumers, too—not just fellow workers and businesses.

Sometimes, the only way a company could convince workers to come back to work and do their jobs was to promise enticing retirement plans, including handsome pensions. But by paying higher wages than they would have under open competition, companies’ profits were squeezed. That meant that they had less money with which to fund pension plans.

And so here we are, decades later: pension plans are becoming insolvent, in part, at least, due to earlier concessions made to unions. And the union workers who have enjoyed above-market wages over the years at the expense of fellow workers and consumers now expect their long-time victims’ taxes to be used to bail out the pension plans of those who fleeced them. And Joe Biden is all too happy to oblige them. Why? Because unions and the Democratic Party are joined at the hip; unions overwhelmingly support Democratic candidates, and Democratic officeholders protect union privileges.

The “general welfare” of Americans and the rule of law are the big losers morally, and the beleaguered American taxpayer is the big loser economically.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Mark Hendrickson

Mark Hendrickson is an economist who retired from the faculty of Grove City College in Pennsylvania, where he remains fellow for economic and social policy at the Institute for Faith and Freedom. He is the author of several books on topics as varied as American economic history, anonymous characters in the Bible, the wealth inequality issue, and climate change, among others.

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