May 17, 2010

Guilds and unions are necessary to assure the quality of workmanship, or so they have always told us.
In the middle ages, the Guilds were associations of tradesmen. Goldsmiths, blacksmiths, leather tanners, etc, all self employed, banded together to exclude new competitors, hold down the wages of their employees, and maintain uniformly high prices for their products and services.
A guildsman had no incentive to maintain high quality, or improve his quality, as that would be seen as an attempt to compete against his fellow Guildsmen.
Guilds were government creations. They were granted a charter by the King.
Their nearest equivalent today might be the American Medical Association, which over a hundred years ago was empowered by the government to qualify medical teaching schools and license medical doctors. These powers were sufficient to limit the supply of doctors, stifle competition among them, and control what they learned.
The result is that those who are licensed to practice medicine need not compete. They have little incentive to provide their best efforts. Their monopoly enables them to make buckets of money, so medical expenses take up a very large slice of our income.
Unions a century ago had no political power, so they used violence and intimidation to establish monopolies and extract higher wages, supposedly from their employers, but in effect from the consumers.
In the course of the 20th century, unions gained political power, so the coercive force of government enabled them to limit competition and extract higher wages. But union members feel no incentive to provide their best efforts. At times they intimidate those who do their best because it shows up their own careless attitude. Their pay is set according to their job description and seniority, and competence and effort won’t improve their pay.


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