Left-Libertarianism and Economics

I count myself firmly in the left-libertarian sphere.

I wonder, though, that there's some economic misunderstandings (too much left, not enough libertarian) in many of their posts. I'll take 3 that I've read multiple times to illustrate my point.

1. Kevin Carson on government unions.
2. Kevin on banning nuclear power
3. Michael Kleen on sweatshops.

In response:

Unions are good insofar as they put the workers interests at the table, and purchase very low cost improvements in Quality of Life. However, they do a lot more than that, and almost all of the rest of it is bad. They attempt to create monopoly (monopsony) power for the workers. Simple economics says that in a moderately competitive environment, in the short term, the quantity of labor needed is relatively inelastic, so the capitalists profits go instead to the workers. Fine. But in the long term, everything is elastic, and increasing the price of labor decreases the number of jobs, and possibly drives some firms out of business, thus increasing the price of goods, and decreasing total competition. Furthermore, in real life, unions are far more often than not, accomplices with corporations, pursuing corporatist policies via lobbying that ultimately restricts competition, and screws everyone else, in exchange for benefits for the owners and workers of whichever large company we're talking about. Net loss for everyone as soon as lobbying happens. Public sector unions do all that and worse. Given a pre-existing government monopoly environment, public unions increase both the cost per unit and the quantity purchased of labor, thus screwing the rest of us without recourse to exit in the absence of competitive pressures.

Kevin is correct that the nuke-subsidy sucks. Especially nuke-subsidy for Uranium rather than Thorium reactors. But nuclear power is best understood here. Despite all the fear-mongering, Nukes are much safer on a Death/Injury per KWh rate than ALL other forms of energy used today. Nukes are also generally cheaper, and far better for the environment...certainly better than Fossil Fuels or Wind...and Hydro is really scary for large scale disasters.

Michael simply mistakes his western sensibilities about sweatshops for those of the folks working there. Poverty is the natural condition of humanity. Blind, bone-crushing poverty. If your life currently consists of picking through the city dump in Manilla, barefoot, hoping to find enough food not to starve...or 14 hour days doing subsistence farming...a 12 hour day paying $0.25/hour is a helluva good deal. That's $18/week, $1000/year...a 5x improvement over your other choices. If a company will put a sweatshop in some city paying $0.25/hr, and saving hundreds or thousands of people from sub-$1/day poverty...that's an unmitigated good. If because they can pay $0.25/hour, they open 3 more such sweatshops...that is a HUGE benefit to the lives of the folks who work there...If they have to pay $1/hour, they may not even open the first one, as a matter of profitability. So the question is not...sweatshop or pay well. The question is ... is it profitable for a company to open a factory there at all. Most commonly, a company (who is not in Ho Chi Minh City for the good of the Vietnamese, but for the Nike stockholders) has to decide whether the expected ROI is worth building a factory there. If it is, they build a sweatshop, and rescue 200 or 5000 people from poverty...that's fabulous. If they don't...sucks for the Vietnamese. And if they build one, and then find out that it costs too much because the rules changed, or the workers took over the factory, then Reebok (and Mattel, and Intel) chooses to build their new factory in Bangladesh instead. And the growth that would get Vietnam out of poverty by baby steps is aborted, and which made Singaporeans richer than Europeans over the last 50 years is aborted.

I remain firmly a left-libertarian anarchist. Freedom is a penultimate good for human beings (after wealth). And the (just) purpose of social compacts is to protect the weak and unlucky against the fortunate and strong. And governments largely do the opposite. But economics is powerful stuff, and we can't ignore it to get the results we want. Many results (Unions, Sweatshops, etc.) are economically given, and have little if anything to do with political considerations. If you want different results, you need different wealth distributions...as Kevin points out elsewhere.