Thursday, March 10, 2011

A Serious Question about the Wisconsin Pandemonium

I understand why Democrat politicians and the people who work for them are upset at something that takes away political power from the unions, after all the unions are how the Democrats launder money. I'd expect Republican politicians to be similarly up in arms if the military were suddenly disbanded: a major source of money and political support would have been diminished. And I understand why the actual union members aren't happy about this, they'll lose a lot of their expensive perks and job security. IOW, they'll have to do what everybody else does and actually earn their keep or lose their job. Stay productive or be terminated. Join the real world for once in your lives, union members.

But I don't understand the anger and harshness over what happened in Wisconsin. There are near-riots at the Wisconsin state capitol building, the internet is exploding with left-wing rage, etc. And if you aren't actually a Democrat politican, or somebody who works for them, or an actual union member, you shouldn't be upset at all. Union members are earning above-market-level salaries and benefits at the expense of everybody else. No serious, sober economic analysis of the situation would lead one to think that the lack of competition and efficiency going on among government employees is a good thing. No serious person is going to think "yes, paying too much for labor and going broke by funding golden parachute pensions instead of operating more efficiently and saving the tax-payers money is a good thing."

Which leads me to believe that most of the people who are so angry don't really know much about the actual situation. I think they may be full of misconceptions and half-truths about the situation, but I think if you sat them down and actually hashed out the issues, you'd quickly find that they just don't know much about what's happening. I think many die-hard union supporters who are not actual union members themselves fall into two categories: limousine liberals trying to make a show of how sympathetic they are to "the common man" (as they used to say), and people who don't know much about what enforced unionization actually means.

And the "enforced" is really the nub of the issue. Collective bargaining isn't the problem, really. In effect, a union operates as an employment agency, a subcontractor. But when a business hires an agency to, say, clean the building or do their IT work, there is no government agency forcing them to stick with that particular agency, or to pay them a certain amount, or to prevent them from firing workers who aren't up to snuff, etc. There is truck and barter going on among employers and employees, and through trial and error, guided by the price system, eventually an arrangement will be settled on that is the most efficient one possible.

But enforced unionization prevents this from happening, especially in governments, which are notoriously slow and static anyway. It's probably too subtle a point for the political pundits to go into, and certainly too subtle for headlines, but what is really happening is that the government is foolishly agreeing to hire people for much more than they are actually worth, not fire anybody no matter how incompetent, and go broke paying for top-notch pension and insurance schemes. Leaving aside union politics, this is really just another case of a politically-well-connected special interest seeking rents from the government. The particulars may differ from contractors hired to build public works, or agricultural subsidies, but the economics are the same.

One last point: the slogan I keep hearing is "they're destroying the middle class/working families." I doubt the people saying that have honestly thought about what that means for more than a few seconds, but I'd like to ask them: if de-unionization of government workers means that working families or the middle class are being destroyed, does that mean that the great majority of the working population, which is not unionized, is already destroyed? Why are states which are not heavily unionized thriving economically in comparison to states where unions had free reign?

I happen to think that collective bargaining can actually be a good thing, when unions are not political bodies, do not get special favors or any kind of recognition from the government (such as closed-shop laws, etc.), but when they are honest bodies of workers who have collectively decided to dictate terms of employment to employers. There are times when this has been effective. Where unions go wrong is when they assume that merely be being a union, that they are right and all of their demands are reasonable, and therefore they deserve to have the government force their employers to put up with them. Telling employers what labor to buy and how much to pay for it is exactly the same, in principle, from the government telling you what brand of toothpaste to buy, where to shop, how much to pay, etc.

Unions can be a good thing when they are voluntarily formed and when employers voluntarily abide by union demands, because this is nothing more than a particular mechanism to smooth over the bidding process (Hazlitt).

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