Labor Market Regulation and the Freedom Red Herring

Police officer Eric White directs rush-hour traffic on Monday in Silver Spring, Md.

Photo by Chip Somodevilla/Getty Images

Chris Bertram, Corey Robin, and Alex Gourevitch say that if you really care about human freedom, you should care about freedom in the workplace by endorsing laws that restrict employers’ rights to fire people at will. Tyler Cowen and Alex Tabarrok disagree, John Holbo adds in a dose of philosophy, and Adam Ozimek tries to reframe the issue a bit.

My standard approach to this is that in almost all political contexts, including this one, both the concept of freedom and the concept of property rights are red herrings. A political movement genuinely focused on freeing people from the coercive authority of the state would spend a ton of time tackling the everyday tyranny of traffic signals, lane striping, jaywalking laws, and the dozens of other similar regulations that impinge upon the day-to-day lives of hundreds of millions of law-abiding American citizens. By the same token, a movement obsessively focused on property rights would be outraged by the fact that every automobile driver and factory owner in America is causing fine particulate emissions to traspass on people’s backyards all across this fine land.

Of course nobody does either of those things. One reading is that the country is full of rank hypocrites. But I think the better way of putting it is that we have political disagreements about market capitalism and that the construction of a functioning market capitalist economy requires considerable infringement of human liberty and property rights in order to facilitate the deployment of modern industrial and transportation technologies. Which is fine. And fortunately the construction of a functioning social democratic economy would also require those things, and so we don’t argue about the principle that people’s freedom to move about the streets should be restricted by little lights or that a non-zero level of air pollution should be permitted.

But that just means that whatever it is we’re arguing about when we argue about restricting the range of permissable labor market contracts, we’re not arguing about “freedom” or about “property rights.”

Sometimes I think we’re arguing about economics, and people simply disagree on what the practical upshot of certain proposed regulations would be. But oftentimes I think we’re arguing about curbing positional competition. You can easily imagine a workplace in which every worker would prefer to work slightly shorter hours and would be willing to accept less pay, and where managers would be willing to make that bargain. But the managers (naturally) look a bit askance at whomever it is they deem to be the laziest worker, and the workers (naturally) are therefore reluctant to present themselves as the laziest in the office. Therefore nobody actually asks to make the hours/pay tradeoff. Group decision-making, whether through a collective bargaining agreement or legislation, can create a situation that most people are happier with. Suppose someone invented a machine whereby a healthy person could sacrifice his own life in order to secure five extra years of life for an ill person. Once some people started making The Ultimate Sacrifice, failure to do so might come to be seen as exhibiting a below-average degree of love for one’s child or spouse, leading to widespread sacrificing even though in public health terms it’s a horrible deal.

These kind of decisions are, I think, completely on par with making it against the rules to cross the street in the middle of road or to attempt to execute a left turn out of the right-hand lane. The idea is simply that to try to have a happy, prosperous, healthy society, it’s useful to have some rules because everyone trying to simultaneously exercise their preferences might lead to an outcome people like less than a more constrained one. But just because some rules might be helpful doesn’t mean that any old rule someone dreams up will actually have the intended beneficial effect. Either way nobody cares about freedom or property rights.

One concept that I was surprised to see both sides of the debate leave off the table is full employment. Nothing is quite so empowering in the workplace as the knowledge that if your boss is a jerk, you’d be able to quit and go get a roughly similar job with a less jerky boss. Even a guaranteed social minimum isn’t nearly as good as another job because there’s disapprobrium attached to being unemployed. In a world of human beings, some bosses are always going to be two standard deviations jerkier than the average boss. Full employment punishes asshole bosses as a class rather than seeking to bureaucratically circumscribe them with a narrow list of specific prohibited abuses. Conversely, most of the pragmatic economic arguments against labor market regulation are developed assuming a background condition of full employment. If governments are going to fail to deliver full employment over extended periods of time (as the governments in the United States, European Union, Japan, and the United Kingdom are doing right now), then all those assumptions are thrown out of whack. Both those who yearn for microefficient labor markets and those who yearn to empower people vis-a-vis their bosses have an enormous amount to gain from a robust full employment agenda.