Public Unions vs. the Real Underdog

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.

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About Chidem Kurdas 58 Articles

Chidem Kurdas is a financial journalist, analyst and writer.

Throughout her career she has held numerous positions, including: Research Analyst at Thomson Reuters, New York Bureau Chief at HedgeWorld, News Editor at Infovest21, Senior Associate Editor at Medical Economics Publications at The Thomson Corporation. She is currently Editor at Opalesque Futures Intelligence.

She holds a PhD in Economics from New School University.

Visit: Mutual Fund Smarts

1 Comment on Public Unions vs. the Real Underdog

  1. The real underdog is indeed the electorate. The massively wealthy corporations innundate the airwaves with anti-labor rhetoric constantly. The unions are the only voice of working people remaining. Corporate wealth has been acting against its interests by driving down the economy for short term gains.

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