Immigration, Desperation, and Managerial Power

Imagine a situation where it would take 4–6 months for an employer to replace key employees, and the employer knows it. So how does such as employer treat these employees? Now imagine that the labor market is tight so that most employees are ‘key employees.’ It would take months just to fill a low-skill position…

Now imagine a situation where that employer can replace those employees within days, often within 24 hours. How does the employer treat those employees?

With the first, does the employer need a regulator to know not to needlessly expose the employee to dangerous conditions? Does the employer need to be required to pay “a living wage”? Does the employer need a union to negotiate vacation days?

Labor-related regulations and rules — workplace safety regs, minimum wage, etc. — are highly correlated to labor supply/demand. If labor is in tight supply, a worker wouldn’t need most of those regulations; employers would have to compete for labor (compete in wages, benefits, safety, etc.). In tight labor markets, the market drives the incentives, and those incentives are leverage for the employees. In markets with labor oversupply, those market incentives are synthesized by regulators and unions. The power to synthesize market forces creates tremendous power.

So, labor regulations (and their advocates: unions) are entirely demographically correlated. The need for them is mitigated as labor supply gets tight … because people just won’t do certain jobs (dangerous, low wage, etc.). Tight labor markets create choice, which drives competition for labor. We’ve seen that shift over the last century as labor demand grew more quickly than labor supply (and became much more mobile). Some argue that labor regulations made working safer, which happens to be the same false argument that car safety regulations made cars safer. (The majority of car safety improvements occurred prior to regulations and were catalyzed by growing competition among car manufacturers, particularly as imports started to rise. Regulation contributed very little to safety outcomes.)

A review of particular labor markets is instructive. College faculty, for example, are highly trained experts in particular fields and, as such, are members of a very small labor group. They often spend a decade or more learning their craft. However, their labor is generally priced rather lowly (in the case of adjunct faculty, often not far above minimum wage), and they often require unions to synthesize basic leverage in labor negotiations. This situation is not the product of a lack of education or skills but rather is the result of the supply of college faculty far exceeding the demand. (QED: education doesn’t highly correlate to “higher wages”; tight labor supply does.)

So what killed the unions? Tighter labor markets meant they weren’t as needed. Ultimately, the market — with tight labor supplies — substantially obviates the need for government or union leverage; both government and unions are aligned in benefiting from labor oversupply. This means that the general labor framework developed over the last century — regulation, unions, etc. — is not a persistently true framework but is rather a result of labor supply.

I’ve mentioned Burnham’s The Managerial Revolution (1941) many times (the establishment’s historian, Arthur Schlesinger Jr., existed to eliminate Burnham from public consciousness). As Burnham (and Trotsky) would attest, the locus of power in an organization is in the managerial bureaucracy. Labor oversupply increases the power of both the regulatory and the union bureaucracies (note: this is not about ‘money’ or economic matters, per se; it is about power). Union power grows as streets are filled with the underemployed; union protection is vital to the jobs of the desperate. Regulatory power grows if employees are economically disposable widgets; the disposable are exploited and mistreated if not for the leverage of the union and the regulator.

Cesar Chavez — the uneducated workers’ rights icon — knew all this perfectly well. He campaigned vigorously against illegal immigration only to be vitiated by the machine (the government and his own union). The managerial bureaucracy’s power is highly correlated to the desperation of those beneath it. Bureaucracies flourish when desperation fuels the machine of Marxist synthetic domestic division.

And now, apply that framework to Meta’s business model.