On Unions

The mental disconnect that far too many people have about businesses is that a business exists to provide jobs to the workers. This is not true.

Businesses exist to provide a profit to the owners.

Jobs are a side effect of a successful business. Think about it. How many entrepreneurs started out as just them and hired workers as their business grew? Most of them. The second most common cause of business failure is from growth and the entrepreneur not being able to make the jump from doing to managing the doers. Yes, success can kill a business.

Everything in running a business comes down to a costs benefits analysis. No matter how many columns are in your accounting ledger, they all add up to one thing, is it an asset or a liability? Income or loss? Plus or minus?

Which brings us back to the price of labor. If I am forced to pay twice what my competition does for labor, and about the same price for everything else, my competition has an advantage over me. He can make his stuff cheaper than I can. That means he can sell his product for less than I can and still make a profit. If my product is interchangeable with his in the eyes of the customer, then he's going to sell more than me. To compete with him, I have to convince the customer that there's something about my product that makes it worth the extra money.

This is where the appeals to emotion begin. I cannot cite facts that my product is truly better, it just costs more because I had to spend more to make it.

If I cannot get my labor costs down to the same level as the competition, I have to find other ways to reduce the cost to make the product. Like cheaper materials. Like designs that are cheaper to make and don't last as long. This path often leads to my product being both more expensive and inferior to the competition. This situation leaves me with only the customers who have fully bought into the emotional appeals.

Remember, a business exists to make the owner money. As a side effect, workers have jobs and earn money too. If the company becomes unprofitable, for any reason, the owners will not be making money. If the owner is not making money, why keep the doors open?