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February 22, 2011

Public-sector unions spur political conflict of interest

David Brooks nicely explains a distinction that is lost on many on the left. My reposting of it here is not necessarily a defense of what Gov. Scott Walker is doing in Wisconsin. Walker's crusade is nakedly partisan and offers a double standard to government employees who vote Republican.

The corporate takeover of American politics is deeply troubling. But is that a reason to prefer another dubious alliance -- public-sector unions and their Democratic enablers -- as a counterweight? Here Brooks explains why public-sector unions are more problematic than private-sector unions:

That’s because public sector unions and private sector unions are very different creatures. Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest.

Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races.

Jay here. This is an economics blog, and in economics it's all about the incentives. The incentives in the relationship between Democrat pols and government unions are corrosive. Loyalty to public-sector unions conflicts with Democratic public servants' loyalty to taxpayers and citizens. (Republican public servants, too. Look how Walker is pandering to the fire and police unions.) Of course, fealty to corporate overlords conflicts with Republicans' loyalty to taxpayers & citizens. But as I said, is one relationship less unwholesome than the other?

Posted by Jay Hancock at 1:06 PM | | Comments (13)
Categories: Taxes
        

Comments

Perhaps the time is right to consider a law banning public service employee unions from making political campaign contributions. Clearly union contributions are targeted to candidates most likely to reciprocate with generous salary and benefit contracts for their members. This is blatant conflict of interest at the expense of the tax payer.

Good column, Jay. A refreshing read coming from the Sun.

There are fundamental differences that exist between public and private unions.

If only the Mayor and City Council of Baltimore could see that the same problems exist here in Baltimore. Baltimore will continue to have budget problems as long as the city fails to deal with long-term structural problems created by union compensation.

I don't know, Jay. Seems to me that if a group of people desire to unionize, they should have every right to unionize. Seems very American to me, a human right even. You and Brooks seem to be saying that since government officials are incapable of bargaining fair deals for the public, the solution should be to bar public unions. Maybe we just need better public officials...

I haven't read the entirety of Brooks's commentary on this. But unions and government get further muddled as privatization of government services continues. There are a number of Maryland state agencies that employ private contractors who in turn employ members of private unions that normally wouldn't have anything to do with government, at all.

I'm not particularly pro- or anti-union, but making the delineation between private and public unions is an increasingly outdated comparison.

...and one more thing. Public sector workers typically don't make as much as their kin in the private sector. So this whole incentive conversation seems unimportant. Maybe our government officials aren't half bad after-all. Remember, this economic nightmare we are going thru was not caused by unions. If those wall street crooks had behaved as professionals, unions wouldn't even be on the radar right now.

Private employers are constrained by market forces. Additionally, private unions match the market power of private employers in the battle over the split of gross margins between profit and wages. The key distinction is that it is a battle within a closed private entity that has already extracted a set amount of welfare from society.

Public unions on the other hand are a direct battle between employees and society as a whole (the public that pays their wages through taxes).

Due to this distinction, public unions have no sound place in a system where the government is subservient to the people.

Another stretch on the pendulum swing.

Traditionally public sector employees with a given skill set or education have earned less than they would in the private sector and have accepted that in exchange for the stability and security of the civil service job AND the other benefits that came along with it. Things like health insurance and retirement and tuition arrangements at State schools.

Somewhere along the way those numbers got turned on their ear... but NOT because the public sector suddenly started to have such better wage and benefit deals. No! It is because the private sector employers were able to offer less and less and less in compensation.

Next attrition will be the 40 hour week laws to go along with the 40 hour work week reality that so few have anymore.

One more straw on the camels back...
one more inch along the pendulum.

This is not good people

The whole union donor schemes should be over. At the end political decisions are done based on what is the best interest of the union and not the constituents.

As a public employee, I take exception to Mr. Brooks' logic. If we public employees have such enormous influence over those with whom we bargain, then why don't we all live in mansions and drive late model luxury cars?

I live in a 1600 square foot house. I drive a 6 year old Chevy; my wife drives an 8 year old Chevy. We're not rich.

The Republican ideal is, was and always will be that employees, public, private, whatever, should be paid as little as possible.

Why is it that Wall Street got billions in bailouts, and highly paid executives who nearly drove our economy into the dirt still got huge bonuses, yet us middle class folks are always being asked to take a cut, and to sacrifice?

Well put Jay. Public Sector unions are different than private sector unions. A fair and reasonable point. In the negotiation between the public unions and taxpayers, who looks out for the taxpayers? The politicians? But wait, the public sector unions are among the heaviest contributors to elections. And 90% of those contributions go to Democrats. Where's the balance?

Do other interest groups not help choose who they negotiate with in government? Not Mr. Brooks's strongest distinction.

As for several of the comments, it's impossible to limit the political speech of unions and not others without violating the constitution.

Or maybe they're saying to restrict all campaign contributions? How progressive!

Jay,

Fealty to corporate influence isn't solely a Republican sin. Just look at the collusion between General Electric and the Obama administration. It's rank corporatism.

The real world contradicts David Brooks's (and Jay's) hypothesis.

Democrats who enjoy strong support from public employee unions often say no to those unions. Evidence three years of furloughs and no raises under Gov. O'Malley and Mayor Rawlings-Blake recently reining in police and firefighters' benefits and pay.

That's because no matter how influential public service unions may seem to some, they are not as influential as the electorate. So when union interests conflict with voters' interest, elected officials who wish to stay so will side with the voters.

Besides, if public service unions were as powerful as many believe, how come they couldn't stop Republican foes like Wisconsin's Gov. Scott Walker and New Jersey's Chris Christie from getting elected?

In today's electoral marketplace, public service unions have a fierce and often ruthless competitor--extremely wealthy individuals and corporations who don't like unions, environmental protection laws, our social safety net, or taxes. They've invested undisclosed billions of dollars in a complex of political advocacy think tanks such as the prolific Cato Institute and Heritage Foundation, aw well as the academically cloaked but right wing agenda driven Mercatus Center, Manhattan Institute, Beacon Hill Institute, and Pacific Research Institute.

In recent years, in case you missed it, this small cadre of billionaires and irresponsible corporations such as Massey Energy (remember the horrific West Virginia coal mine explosion) created Republican campaign operations masquerading as nonprofit "educational" charities such as Americans for Prosperity and FreedomWorks, based in Washington but operating in almost all states. They recruite activists, lobbying state legislatures without registering or disclosing, pay for candidate and issue polls, and then robocall, canvass neighborhoods, and pay for mailers, TV and radio advertising in support of Republican candidates and in opposition to Democratic candidates.

To strip public service unions of their ability to collect dues, retain their membership year to year, and collectively bargain for wages, benefits, and working conditions would be to unfairly shift the balance of power to the billionaires and corporations already giving them more than a run for their money, which we all know is really what Wisconsin Gov. Scott Walker and his Republican colleagues around the nation are trying to do.

Steve Lebowitz, Annapolis

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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