Public Unions vs. the Real Underdog

March 12, 2011

by Chidem Kurdas

Wisconsin governor Scott Walker successfully made the financial case to limit collective bargaining by public unions. Not only have the unions imposed an immense burden on taxpayers, present and future, but they create bureaucratic rigidities that cause dysfunction and, in financial crunches, layoffs of promising employees.

Yet in recent weeks it has become noticeable that these points fail to persuade many Americans.  The Wisconsin bill that just passed and similar reforms in other states face furious opposition, including appeals to the public.  Perhaps it’s not a bad idea to highlight another aspect of government unions, in addition to the purely economic issues.

We need to understand why part of the public supports unions. The best explanation that I’ve seen is from Richard Epstein in Free Markets Under Siege, a 2005 book that analyzes unions and agricultural price supports as examples of cartels in different markets.  These cartels impose social costs and require special dispensation from antitrust law. Why did the rest of the population accept the costs?  “Never underestimate the enhanced political sympathy when the underdog seeks to gain state power,” Professor Epstein points out.

Unions, with their massive alliance of politicians and media, have to some extent hijacked the discourse. The union alliance frames the conflict as one between workers and billionaires. When people believe such two parties are engaged in “a zero-game in which one side, by definition, wins what the other side loses, then it is easy to make the underdogs favorites in the game of life,” to quote from Free Markets Under Siege.

Government unions and their allies have a convenient response to the immediate financial problem. To ease state finances, they offer minor concessions and demand that rich folks pay more taxes. When finances improve, they’ll look to take back the concessions but retain and spread the tax increases. The Wisconsin bill correctly includes measures, in particular permanent limits on collective bargaining, to prevent a reversion back to the previous status quo.

But the contest will no doubt continue. What needs to be clear is that government unions are the Goliath in a battle against taxpayer-voters. Collective bargaining is not just a means of fleecing taxpayers but creates a dominant power in the political system.

Public unions are unique in their ability to shape politics. This is in some measure because of the large sums of money – from worker dues, transferred from taxpayers – unions spend on buying political influence. But unions are not unique in that respect. All organized interest groups channel resources into lobbying.

What makes public unions distinctive as an interest group is that they bring the votes of their members to every election. Government employees tend to stay in unionized jobs and hence have long-term reason to vote for politicians who protect their interest. Moreover, unions continually reinforce the message for their members to vote in their self-interest. Different unions act together. The result is a monolithic block of votes that supports pro-union politicians and punishes those who would limit the pay, benefits or work rules of public employees.

That taxpayers are the financial losers in this power game is obvious. But taxpayers lose also as voters. The specter of a massive front of government employees, organized and backed by union contributions to the right politicians and media campaigns, in effect partially disenfranchises voters who don’t work for the government.

Our votes are less effective because we are not coordinated and supported with a pool of mandatory union dues—-which come from the taxes we pay, of course. Compared to public employees, people are generally diverse in their voting patterns. Even rich men do not act as a monolithic block. For every David Koch, a supporter of Governor Walker – who was victimized by a journalist who impersonated Mr. Koch –  there is a George Soros who supports left-liberal causes.

Wisconsin voters deserve congratulations for their hard-earned win.  Still, the political dominance of public unions leaves the rest of us with weakened representation as we face the threat of higher taxes. This would be the case even if states and municipalities were not in financial trouble. Sympathy for public unions is misguided—-the electorate is the real underdog.

20 Responses to “Public Unions vs. the Real Underdog”

  1. Daniel Kuehn Says:

    I think you’re misdiagnosing the support that a lot of people have for the union in Wisconsin. I come from an open shop state and I’ve never been all that pro-union, but it’s hard not to take issue with Walker. He seems completely unconcerned with the real problems facing the state. All the issues you raise are very real issues but the solution, it seems to me, is for public workers to make concessions on pay and benefits and help Walker figure this out. They have done that through a union mechanism. When Walker turns around and tries to take away that decision making mechanism for no apparent reason, it’s Walker that doesn’t seem especially concerned with the problems facing the state, not the union. A lot of people aren’t in love with unions – but that kind of move still seems hostile and entirely pointless, even for those of us that are predisposed against unions.

    Look at the other decisions the Wisconsin Republicans have made. They drop the appropriations portion of the bill so the collective bargaining portion could pass without Democrats. If they announced that they would pass the appropriations part of it and drop the collective bargaining part of it, in all likelihood the Democrats would have returned! It’s not the budget crunch where there is wide disagreement! So who here really cares about state finances? Most people can tell it’s not Walker.

    The other point is that, whatever the excesses of unions (which I think most Americans are well aware of), these are teachers – they’re not industrial workers. Everyone in America knows at least one teacher, they know what a tough job they have, and they know they’re not paid especially well. You call it “rooting for the underdog”. Most people would call it “we know these sorts of people and there’s not all that much more to cut”.

  2. Daniel Kuehn Says:

    And I should say – I notice this is a habit with you, going back to your Constitution post too. Instead of actually investigating what other people think about issues you seem to like to impute a weak argument to them.


  3. Good post.

    Collective bargaining is not a right, but a statutory privilege. The Wisconsin legislature repealed the privilege. Any number of other states (e.g., Virginia) already forbid collective bargaining by public employees. How is the end of the world?

    Whatever the merits of unions in the private sector, the argument doesn’t hold for the public sector. First, they have civil service proection. That is aleady a privilege.

    Second, as implied by Chidem’s post, the “bargaining” is a shame. In the public sector, the unions negogiate with politicians they’ve elected. They are “bargaining” with themselves. The taxpayer is left out of the equation.

  4. Current Says:

    I don’t know very much about the specific situation here. But, I’ve noticed that in the last decade and a half teaching has become a bit of a different thing…

    Where I’ve lived in Britain and Ireland it’s become quite easy to live off welfare for long periods of time. What’s often forgotten is that every teenager is quite aware that their future will probably give them the opportunity of living off the state, even if not immediately then quite soon after they finish their education. In the past young people who disliked work, had little ambition and had few material desires knew they would have to do some sort of job, that isn’t true any longer.

    I think this has made teacher’s jobs much more difficult. I think that even if much more effort and resources is put into education it will have minimal effect. That’s certainly what’s happened in Britain.

  5. Daniel Chiarilli Says:

    Good post, Chidem. I would disagree with Daniel’s suggestion that most Americans are aware of the excesses of unions, although of course I can’t rightfully claim to know what most Americans think. When I flip by Rachel Maddow or look at OpEds in The New York Times or even Facebook posts of what feels like the majority of my friends, I am far more likely to see a reference to unions and union workers that has them as the little guy, or as the voice of the disappearing middle class (Krugman) pitted against the bogeyman (Koch brothers, for instance). In this casting, there is very little assessment of the political significance or power of unions, let alone excesses.

  6. Daniel Kuehn Says:

    Daniil –
    Certainly, but I think that’s because in this case the union doesn’t appear to be the problem.

    Take a look at the public discussion of Michelle Rhee’s work with the teachers’ union in DC in the last couple years. There was some concern that Rhee was taking a slash-and-burn approach, but for the most part everyone recognized that it was the teachers’ union taht was the obstacle to progress. It wasn’t just libertarians or conservatives pointing out the problem with the union in that case. Americans aren’t dumb – they can recognize who is being productive and interested in progress and who isn’t. Often unions are the problem, but in many cases they aren’t. You’re seeing positive reactions to the union in Wisconsin because it’s pretty clear that in this case the union is not the problem and that Wisconsin’s budget really isn’t Walker’s priority at all.

  7. Paul Kilmartin Says:

    I don’t get your argument, Daniel. Sure, I get the point about asking for opinion rather than speculating.

    But the notion that “the union is not the problem and that Wisconsin’s budget isn’t Walker’s priority at all”.

    On the merits, the Walker bill limits the right to collectively bargain on wages up to the rate of inflation, and then gives an out (referendum) for bargaining for a higher rate. WHy outrage over that? Sure, it strips the union from being able to get compensation through benefit plans. But nationally, state and local benefit plans have an unfunded liability of $3 Trillion dollars! Governments and unions have worked symbiotically to create this mess. Wisconsin didn’t have the worst case of unfunded liabilities, but to say it had no problem is not looking at the numbers.

    The argument here is clearly about political power, and the unions don’t want to lose theirs, because that is how they line their pockets with taxpayer money. It’s not about the teachers — Walker’s effort was to prevent layoffs. In this case and others, the Union was far more eager to allow layoffs than the carve out givebacks. Unions exist to restrict supply, thereby causing an increase in the unit price. Monopoly pricing. LEft-leaning interest groups have backed their ally, because union members provide votes for their special interests.

    Look, I don’t particularly care to take the government’s side in an anti-government dispute. The unions have absolute monopoly of labor in the bargaining. The government has an absolute monopoly in the providing of “key services”, such as education.

    If we’d end the monopolies, by allowing free competition in both realms, then we’d see happier parents and happier teachers, and more productive students.

  8. Daniel Kuehn Says:

    I’m not sure I said pensions were “no problem” in Wisconsin. In fact I did note there was a problem, and that Walker seems to be less concerned with that problem than he is about reducing union power. I did say that unions don’t seem to be a problem here. That should probably have been “unions aren’t the major problem here”. The point is not that they are blameless, just that the don’t seem to be the major obstacle to a solution.

  9. Daniel Kuehn Says:

    The whole reaction against the union just seems strange to me too. Yes, the pensions and benefits are a problem and as a practical matter of course I think all reasonable people should agree that the union needs to give a little, simply to come to a solution. But the sort of blame of the union that you hear from some people is very odd. If my private sector employer came to me and informed me that in fact he wasn’t sure he could make good on all our contractual agreements after all I may bite the bullet in the interest of keeping the job I’m happy with, but I wouldn’t be too pleased if someone tried to blame my employer’s inability to make good on me. Two parties contracted for some very important work (educating children), that some people think teachers’ took low pay for because of their dedication to a job. This isn’t glamorous work, after all. What is the real problem here, two parties that were happy with the agreement ex ante or a political system that isn’t willing to make the investments to keep the contract? Of course both sides have to give, but the knee-jerk reaction against the unions is astounding to me. Wisconsin is tied at second with several other states for the lowest literacy rate in the country (http://nces.ed.gov/naal/estimates/StateEstimates.aspx), and I’m guessing they do decently on other measures as well. It’s not Wisconsin teachers that are dropping their end of the bargain. By all means, lets share the sacrifice but I can’t get on board with piling on the union when it’s the state that hasn’t met its obligations.

  10. Daniel Chiarilli Says:

    DK,

    The comments that I am noticing that are decidedly pro-union are made in the context of this debate, but are about the unions in general, to be sure – they are responses to what their speakers call union-busting, and an historical moment, &c. Teachers and their compensation, and the budget of Wisconsin for that matter, are very quickly lost. Meadow and Krugman and the NYT are talking about unions, the institution.

    But whatevs.

  11. Daniel Kuehn Says:

    Google Michelle Rhee – I think you’ll find some interesting stuff.

    And of course Maddow is going to be pro-union through good and bad! I hope that’s not your barometer for public opinion!

  12. Roger Koppl Says:

    I really don’t like Daniel Kuehn’s supercilious remark that Chidem has some “bad habit” of imputing a “weak argument” to others rather than “actually investigating what other people think.” I really don’t see it in either the of posts he refers to. Regarding the post here, I have certainly heard commenters mushing private and public unions together and depicting Walker as attacking unions as such. And in the other post she lines up her target quite carefully with appropriate links. Even if Chidem had gone after a straw man in each case, I would have preferred Mr. Kuehn to stick to particulars rather than launch into global comments on the supposed bad habits of ThinkMarket bloggers. Even if I were to see a mote in Chidem’s eye, I might hesitate before attempting to cast it out.

  13. Daniel Kuehn Says:

    Roger –
    Duly noted, and I’ve always enjoyed the blog – but it’s an odd critique of me when both of these posts consist of Chidem casting out a mote in others’ eyes in the first place.

    Or is your concern simply my observation that I’ve noticed it on multiple occassions? If that’s the case, I was not under the impression Chidem was that sensitive to criticism (most bloggers aren’t that sensitive), but if she is I’m more than happy to clarify I didn’t mean anything personal by the observation.

  14. Mario Rizzo Says:

    I wonder to what extent contracts made by the state with unions who have the “right” to exclude others have the same moral claim to be adhered to as contracts between private parties. There is much meat for classical liberal discussion of this case, if not on this blog.

    In any event, as the federal and state governments head toward “bankruptcy” many contracts, so-called, will be abrogated because of budgetary considerations. I include in that the “social contract” of Social Security.

    Those who think these kinds of contracts are on a par with classical contracts will be in for some head spinning.

  15. chidemkurdas Says:

    Interesting question, Mario. If we think of the state that made the contracts with the unions as the agent and taxpayer-voters as the principle, the fact that the unions have so much power over the state certainly points to a severe principal-agent conflict.

  16. chidemkurdas Says:

    Daniel Kuehn–
    I’m not sure I understand your critique that I don’t investigate what people think about the issues, give that I linked to an extensive and recent survey on attitudes toward this subject. It is the second link in the original post.

  17. chidemkurdas Says:

    Paul Kilmartin–
    Re “Governments and unions have worked symbiotically to create this mess.” Symbiosis is an excellent word for this relationship– economic and political interdependence between unions and governments, a collusion that works against taxpayers and the majority of voters.

  18. Michael Metz Says:

    An honest member of a union admits that during the humble beginnings of collective solidarity the union member preferred to focus on exclusively the three simple issues of hours, wages, and working conditions. Once unions made gains on these three issues, the union member continues to raise a new issue after another issue after another new issue and so on forever. A union member is now perpetually wanting only what he wants without giving in for the larger collective of his own community.

    A union member is not different than any other human in wanting to meet his selfish wants. A union member like any other human prefers having his own power and authority however out of balance it is with the larger collective of his own community. A union member prefers greedily increasing his own monetary benefits without sacrifice to the larger collective of his own community he claims to serve.

    A union member prefers power through government action providing him special legal authority like collective bargaining. A union member paid with taxpayers’ monies overreaches the larger collective of his own community when demanding special collective bargaining legal authority. A union member paid with taxpayers’ monies already has enough power with his access to an infinite resource of money through taxes. A union member having both access to an infinite resource of money through taxes and the legal authority of collective bargaining is way out of balance with a worker in the private sector who has only a finite resource of money.

    A union member paid with taxpayers’ monies, compared to a worker in the private sector, does not have to perform with production to gain money. A union member paid with taxes has no concern about making money for his employer – such employer can always go to private producers with the requirement of taxes to fill coffers of the union member’s employer who pays the union member with the collected tax money. A union member paid his wage with taxes does not need an extra legal authority of collective bargaining, compared to a worker in the private sector, because he has an employer who can always raise interest free money to pay his wages through taxes.

    A public union member prefers having the other people in his community pay his pension, with taxes, without him paying any of his money from his government paycheck. A public union member prefers having an employer who can always go to his neighbors to collect taxes for his pension perpetually. The public union member dying does not stop others from paying for his family. A public union member prefers having others take care of his own. A public union member prefers his form of elite entitlements and he wants the government, who is supposed to be of the people, to cater to his every whim. A public union member willingly uses any tactic of leverage to get his way regardless whether his tactic is in the best interests of the community he claims to serve.

    A public union member prefers having the other people in his community pay his health insurance premiums, without him paying any of his money from his government paycheck. A union member wants everything his own way, regardless whether his benefits are much better the worker in the private sector (even a unionized private sector worker) who pays for the entire lifestyle of the public union member through taxes.

  19. chidemkurdas Says:

    Michael Metz–
    Re “A union member paid with taxpayers’ monies already has enough power with his access to an infinite resource of money through taxes.”
    Good point but I’d qualify the infinite there — “apparently infinite”. It seems to be infinite from the point of view of the public unions, but it is in fact finite as taxpayers face budget constraints.


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