A Free Market Negation of Rerum Novarum

ImageRachael Kaplan/ Mrs. Hanson/ Afternoon Class

Apple has come under a lot of fire recently for its outsourced operations in China. Reporters depict workers working 15-hour days and sleeping in the plant where they work to increase efficiency. These people are reported to make 50 cents per hour. The workers are depicted as not happy with the situation. The situation has soured so much so that Apples’ outsourced company FoxConn had to put up suicide nets to keep their workers from jumping off the building to their death.

In the face of such disparity people want desperately to improve the lives of these people. They rack their brain incessantly to find the solution and many people find that the best solution to the whole ordeal is for the government to institute regulations. This school of thought suggests that these people’s lives and general welfare are most improved with the aid of their respective governments. They hold that it is the government who defends the working class against the tyranny of their employers. Their approach may differ; say limiting the hours these workers work, or forcing employers to pay each worker more (a minimum wage), or the most common occurrence is to redistribute wealth from the rich to the poor.

Those who have lived in a socialist country could tell you very quickly that this ideology is not the route to prosperity. These poor souls have experienced these ideas in their full force. In a socialist country possessions are collective. People have no right to their property, most importantly the fruits of their labor. Those who live in a socialist country could tell you nothing is abundant, rather most everything is in short supply. The shortage is due to the lack of incentives. What man would work all day for nothing? There must be an incentive to motivate the inactive into an active and productive state. In a capitalistic state, this incentive comes in the form of monetary compensation, which can be used to buy other products. An important lesson can be derived from the socialist lesson when people lose incentive, people are less productive. With less production there is less wealth. Less wealth means less of everything including food, housing, and general amenities. The goal then is to make each person more productive, so that there is more to go around. Government intervention on behalf of the worker leads to less productivity (the less hours people work, the less they produce; the more expensive it is to hire a person, the less people get hired, the less is produced; the more money taken from one and given to another, the less the working class has to work to earn a dollar, the less produced).

There is a more moderate alternative. Those who see the plight of the Chinese workers and the working class in general suggest, from examples in history, a sort of workers guild, better known today as unions. Its supporters have long held up collective bargaining as the savior of the plebeians. We shall measure it and weigh it then. As we learned from the previous analysis of government intervention and socialism, the fundamental question to ask is whether or not collective bargaining creates or destroys productivity. While it is true that unions do not require government intervention and therefore does not invade upon the liberties of the nation’s citizens, it does in fact hinder productivity. In general, unions lobby for better working conditions, better pay, health benefits, and shorter hours. All of these sound like good things. However, there is no such thing as a free lunch and each of these demands come at a cost to the employer. The cost incurred by the employer is either passed on to the consumer or it is bore by the labor force that will watch its number dwindle with each new demand. An employer can opt to spread costs evenly between the two, but it is important to remember that the consumer and the worker are not separate. They are one in the same. Therefore, in every way collective bargaining is a tax on the many and a benefit to the few (the few who still have their jobs).

Woe is the workingman! Alas it seems that there is no way to help these poor people that work in Apples’ outsourced factories. The third school of thought recognizes this fact and comes to terms with it. The third perspective is to let these people dig themselves out of poverty. They are willing to admit that these working conditions are not ideal and are even tragic. They understand that the work these people are committed to is not in vein. They know that these toils work collectively to create abundance so as to create wealth for the masses and spare these wretched souls much pain. They understand that these conditions are momentary and do not last forever. History is their mentor and they have learned well.

Look no further into the past than the history of America. The rise of the industrial age led to great wealth for America and its trading partners. However, before America’s wealth was created, America was much like early China. Many were poor and few things were abundant. Working conditions by many metrics were much worse in early America than in China. However, over time America’s culture of hard work paid off. In a short time America went on to become the wealthiest nation in history. Before this vast wealth became a reality many looked upon the American worker with pity.

One man, one pope rather, looked upon the difficulty of the American worker and saw only the greed of the employers. Pope Leo XIII wrote Rerum Novarum in hopes of inducing a political and cultural movement toward elevating these people’s lives. His ultimate desire was for unions to take hold. If this did not happen then he said, “the public authority must step in and deal with it”. Rerum Novarum represents the more moderate unionized approach first and the more radical government intervention approach second. As previously pointed out earlier these two schools only hurt the working masses and do nothing to help them. As Ludwig von Mises would meekly point out that Pope Leo XIII forgot that “the employees themselves are the consumers consuming the much greater part of all goods produced”. Indeed, it is clear that Pope Leo XIII is no economist but was not aware that these conditions would not last for very long. He fell into the common belief as Mises elegantly stated “in dealing with employers, the unions (or their advocates) proceed as if only malice and greed were to prevent what they call management from paying higher wages.” They do not see that their role in society is to keep products cheep for the consumer for “ the consumer is king”.

Pope Leo XIII’s call to action was a dangerous one for if he were to get what he wanted then the fortunes of America would have been dramatically stunted. As for those few elites, those employers, whose “greed and malice” prevented the working man from enjoying a better standard of living, Pope Leo XIII would be surprised to know that often times they distribute their wealth to the people they “abused”. Indeed, the true titans of the Industrial Revolution, both Rockefeller and Carnegie, distributed over 90% percent of their wealth. They created libraries, schools, and hospitals to the benefit of the masses. Today the players in the game may have changed but the rhetoric remains the same. People talk of those “elitists corporate fat cats” hording all of the money to the detriment of the masses. In modern times Bill Gates and Warren Buffet are the new Carnegie and Rockefeller. This time however, they are not waiting until their deaths to distribute their wealth. Poverty can only be combated with capitalism for only under capitalism can wealth be created for the masses.

Leo XII, Pope, Rerum Novarum

Ludwig Von Mises, Liberty and Property

Qiang, Li. “Beyond Foxconn: Deplorable Working Conditions Characterize Apple’s Entire Supply Chain-Electronics.” Beyond Foxconn : Deplorable Working Conditions Characterize Apple’s Entire Supply Chain-Electronics. China Labor Watch, n.d. Web. 25 June 2013.


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