fbpx

A Happy Result of the Elections: The Blow to Public Sector Unions

There are no permanent partisan victories. The gains of the Republicans on Tuesday are likely to give more opportunities for victories for the Democrats sometime in the future as the party in power exhausts it agenda, makes mistakes, or is blamed for issues over which it has little control. But elections can have more enduring effects on policy and social structures.

One of the most notable consequences of this election was the setback it dealt to public sector unions. Importantly, the losses came at hands of both parties. Republican Scott Walker was reelected in Wisconsin after rolling back the power of public sector unions. Gina Raimondo gained the governorship of Rhode Island despite using her position as that state’s Treasurer to restructure public pensions and thereby earning the enmity of public sector unions. In my own home state of Illinois, Governor Pat Quinn lost in state where the most important mainstay of his party is public sector unions, whose pensions and other exactions have made Illinois the state with one of the lowest credit ratings and worst business climates in the nation.

The decline in political power and legal privileges of public sector unions would be the single most salutary structural improvement in the states where they enjoy such privileges. The right of public sector unions to check off dues, to mandate collective bargaining, and/or to strike gives them unaccountable power in the delivery of public services. As a result such public services are often more expensive and less efficient. Worst of all public sector unions exercise this leverage to gain above-market, unfunded pensions that need to be financed later—at a time when those who have negotiated those pensions have left government.

It is mistake to analogize unions in the public sector to those in the private sector. In the private sector, negotiations over wages are genuinely two sided with management vigorously representing the interests of shareholders. By contrast, in the public sector the real party in interest—the citizens of the city or state—are generally not well represented at the bargaining table. The elected officials cannot be counted on to negotiate effectively because they want the campaign contributions and political muscle that unions can bring.

The recurring dilemma of democratic politics is that politicians often benefit by giving away benefits to such concentrated groups at the expense of the rest of us. Privileges for public sector unions exacerbate this fundamental problem rather than diminish it.

Fortunately, the problems such unions are creating are becoming more apparent as Detroit and cities in California burdened by municipal pensions declare bankruptcy. The election returns this year show that voters are approving solutions that politicians like Walker and Raimondo are devising.

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on November 06, 2014 at 12:30:26 pm

[I]n the public sector the real party in interest—the citizens of the city or state—are generally not well represented at the bargaining table. The elected officials cannot be counted on to negotiate effectively because they want the campaign contributions and political muscle that unions can bring.

The recurring dilemma of democratic politics is that politicians often benefit by giving away benefits to such concentrated groups at the expense of the rest of us. Privileges for public sector unions exacerbate this fundamental problem rather than diminish it.

Quite right.

And I eagerly await McGinnis's next blog post entitled "Business tax cuts are bad because the real party at interest -- the citizens -- are not well represented at the bargaining table." What's good for the goose....

read full comment
Image of nobody.really
nobody.really
on November 06, 2014 at 18:14:30 pm

The assumption in your contention is that the money that businesses earn belongs to the citizens; while it may have, at one time, belonged to the individual citizens, each citizen whose money ended up in a business did so voluntarily - and with foreknowledge of what they were doing. quite simple - you make something - I like it - I give you my money.
How did it become the governments and through the government once again the citizen's money!

What is more, the fact that a reduction in corporate tax rates may occur does not necessarily represent a diminution of my own pocketbook; this is clearly not the case when politicians agree to (under)fund rather handsome pension benefits for the public sector. It comes out of my pocket directly in the form of increased property / sales, excise taxes.

A tad bit different, one could argue but Nobody really would argue with that!

read full comment
Image of gabe
gabe

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.