Wednesday, July 13, 2011

Public Sector Unions Are a Bad Thing

From a column by Jeff Jacoby, a discussion of why even very liberal Massachusetts has (if only half-heartedly) limited the power of public sector unions:
So unlike their counterparts in the private sector, public-sector unions are rarely constrained by market forces. There are limits to the wages and benefits that labor can demand from private employers. Corporations have to make a profit to stay alive, and both sides know that if costs rise too high, the results may be lost sales, eliminated jobs, or -- if worse comes to worst -- bankruptcy. Consequently, union negotiators cannot insist on the moon, and corporate managers dare not lose sight of the company’s bottom line.

But that check and balance doesn’t exist in public-sector collective bargaining. Teachers’ or firefighters’ or library workers’ unions don’t have to worry about jeopardizing the government’s profits or driving away its customers: Government agencies can’t go bankrupt, and their “customers” can’t switch to a cheaper brand. So why not insist on the moon? Especially when the government managers on the other side of the table generally have little incentive to keep costs down. After all, if the pay, perks, and pensions of public workers send budgets through the roof, what choice do taxpayers have but to foot the bill?

At bottom, collective bargaining in the public sector is profoundly antidemocratic: It denies voters final say over the public they must live under, by forcing their elected representatives to shape those policies in concert with unions. In effect, it transfers to union officials -- interested parties not chosen by the people -- decision-making authority that they have no legitimate right to. That is why until just a few decades ago, it was universally understood that collective bargaining was incompatible with government employment.

Gradually it is becoming clear that throwing the door open to public-sector unions was a serious and costly mistake. It will take years to undo that mistake, but the process has begun. Even, if ever so slowly, in Massachusetts.
This, of course, is why private sector unionization has been shrinking, while public sector unionization has prospered. Unions are simply what economists call “rent seekers,” parties which get money and goodies without giving something of commensurate value in return.

Of course, an increasingly globalized vigorously competitive market economy drives out rent seeking. But people who are comfortably ensconced in the public sector aren’t subject to market forces.

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