"Most people are in arrested development and cannot use logic." Jacob.
"Competition and capitalism are hated to-day because of their tendency to destroy poverty and privilege." William Hutt
"America is unique in that our economy is totally dependent on global charity." Peter Schiff

Thursday, July 7, 2011

Was Cool Hand Luke a Scab?

BP Hires Prison Labor to Clean Up Spill While Coastal Residents Struggle
Defense Contractors Using Prison Labor to Build High-Tech Weapons Systems Prison labor seems like a win-win to many, but a closer look reveals a race to the bottom for skilled workers.

Two articles about how honest workers are losing their jobs and the bread from their very mouths from unfair competition of criminal prisoner gangs. Over at the mises.org forums, someone asked what is the Austrian take on this. Fasten your seat belts, guys and gals, because this is a complex issue.

There are three areas of discussion here, one Austrian, one libertarian, one moral.

The Austrian question is a scientific one, with no judgements. Just as the science of physics will study how to make nuclear weapons without entering intoi the question of whether making such weapons is good or bad, so too austrian Economics studies the question of the economic effects of using prison labor, without going into the question of whether such effects are good or bad.

Then there is the Libertarian philosophical question. Many Austrian economists are libertarian, and vice versa, but the two areas of study are distinct. The question here would be, whose libertarian rights, if any, are being violated when prison labor is used?

Finally there is the moral question. Now that we know the effects of using prison labor on all parties involved, and we know whose rights are being violated, if anyones, let us sit back and decide what the Right Thing is in such a situation. This last is, of course, the trickiest, because it is very subjective, and difficult to impossible to prove, what the Right Thing is any situation.

From the articles the poster linked to, I imagine the main question she was asking is what's with using prisoners, and thus depriving honest hard working people those jobs taken by the prisoners?

Let's begin with an extreme case, slave labor. Austrian economists claim that their research shows slave labor to be financially unprofitable to the economy as a whole in every society it was implemented. Indeed, the articles seem to indicate that the states are losing lots of money keeping prisoners, with the profits of having them clean up the spills being a drop in the bucket to what it costs to feed them, house them, guard them, etc.

From a purely economic standpoint, the best thing to do is set them all free.

But let us assume that, right or wrong, someone has decided that these guys are not going free, let the cost be what it may. What does AE say about such a situation? In such a case, the question becomes, what is the effect on an economy of using these prisoners instead of union workers? [Remember, we are discussing the economic effects, not the question of right and wrong. That will come later].

One key thing to keep in mind is that we should not look at the effect on one small group only , such as the prisoners only, or the taxpayers only, or the unions only, but the effect on everyone.

AE says that the more voluntary the situation, the better it ultimately is for the economy as a whole. Now we are assuming that the prisoners have no say in the matter. They cannot bargain with BP for a higher wage, or join the union. They are stuck with whatever deal the warden makes with BP. In other words, they are so many cattle at the disposal of the warden. Given that situation, AE claims that whatever agreement is voluntarily agrred on between the parties involved, BP, the unions, and the warden, is the most productive one for the economy as a whole. In other words, if the warden outbids the union workers, as seems to be the case, that is economically best for the largest group of people. In this case it is all the consumers who are getting a good deal by BP saving money and being able to sell their stuff more cheaply. Thus all other sectors of the economy benefit as well, since the consumer has more money left to buy other goods and services. The consumer puts more food on the table, more jobs are created in all othe industries, and the economy thrives.

If the unions manage to coerce BP, by law or by other violence, to hire them only, that means the entire community is being coerced as well, to lose purchasing power and jobs, and hand the money and the jobs over as free gifts to the unions.

That is the purely Austrian analysis of the situation, with no judgement placed on what is the right or wrong thing to do.

Now for the Libertarian question. Whose rights are violated in such a situation? I'm very ignorant on these matters, and leave it to others. My guess is that the prisoners and the taxpayers are having their rights violated.

Finally, the moral questions. Is such a situation Right? If not, where are the Wrongs with this picture?

And a sub question, given that the prisoners are to be prisoners, should all consumers lose money, all industries lose money, and all workers lose employment, whether they want to or not, to give the union workers jobs and money?

I will not attempt to answer these q's because as I said before, they are very subjective.

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