September 24, 2009

Free Enterprise or Unions?

By definition, free enterprise is business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. It is also recognized as the free market. This system of supply and demand places emphasis on competition, where only the strong survive and the weak…well…they die. It reminds me of a forced bell curve that was implemented in my college courses where a certain percentage of students needed to fail in order for other students to succeed. Because no one wanted to be in the category that would fail, this method often resulted in students producing the most creative and unique problem-solving techniques to arrive at the best answers to case studies presented to the class. Free enterprise, or the bell curve in this example, allowed for the most productive classroom and class participation for the professors who taught under this method.

A second example would be to think of a potential football team – where only the best players are able to compete for 1 position in order to make the cut and get listed on the roster. I think you get the picture and understand the benefits of free enterprise in the example of the classroom and a football team.

A union, by definition, is an organization of individuals joined to protect their common interests and improve their working conditions. This system of protectionism places emphasis on everybody, where either everybody loses or everybody wins. Now imagine if the classroom was a union…where the entire class would win or fail depending on results. Would some students work harder than others? You bet. Would there be room for errors? You bet. Everyone would be expected to pull their weight for the common goal of the class, but as with any class, you’ll have your class clowns pulling down everyone’s grade.

Think of the tryouts for the football team operating as a union, where either all the players made the team or none at all. There would be some players who wouldn’t push themselves, train, or practice as hard as the others wanting to make the team.

So, from my aforementioned examples one can assume I’m a bit lenient towards free enterprise than I am for a union-supported enterprise. But in what scenario would a union be sufficient? How about the US military? Where every soldier trains together, eats together, fights together, and no man is left behind on the battlefield…even if you die your body is shipped back home. Everyone shares one common goal and there is no room for individuality, but if you make a mistake or underperform – you can rely on your comrades for help…and likewise they rely on you.

Which method is better? A free enterprise or a union…? Both methods are sufficient; however, it depends on the situation in which a method is being used. Which method would be sufficient for healthcare? Should private enterprise lead the way in which some people would have to do without health insurance to keep costs low for others? Or should we back the Obama administration and provide for all even if it meant higher taxes for some of us?

Governments, or unions, should not force over regulated markets, but at the same time free enterprise should not be able to run amuck and reiterate the overall meltdown of the economy again. There is a place for both at the round table of Capitalism, but we must thoughtfully decide the appropriate time and place for both…because too much of any one thing spells disaster.