Machan's Archives: The Real Scoop on Public Service Unions, Part I and II

Machan's Archives: The Real Scoop on Public Service Unions Part I In the wake of Governor Scott Walker's survival of a recall vote, initiated by friends of Wisconsin's public service unions, let explore again just why such unions are perverse. Bona fide Labor unions work within a free market system where firms compete for customers who are normally able to switch from sellers of wares and services if they want to. Public works are noncompetitive, however. Workers who belong to public unions conduct their labor negotiations without their employers facing any competitors. The USPS, for example, has a monopoly over first class mail delivery; teachers at public schools are working for monopolistic employers--students must attend school and the funds are confiscated through taxation and not obtained through voluntary exchange. So, as the saying goes, public workers have the taxpayers over a barrel--there are no alternatives and in most cases one cannot refuse to deal with these workers. So public workers unions are not genuine free market agents. As such they are able to have their terms met by the taxpaying public basically at the point of a gun. The public must deal with these workers otherwise they face legal sanctions. There is nowhere else to go apart from moving out of the state to another where the same situation obtains, where once again public unions possess monopoly powers and customers have nowhere else they can turn to get a different deal or to avoid dealing altogether. In a genuine free market place unionization would involve organizing workers in a firm that competes with others for customers and with which customers are free not to enter into trade. So the unions would not be able to engage in extortionist practices, making demands that must by law be met. If one’s child attends a public--or, as some prefer calling them, government--school, and teachers decide they want a higher salary or other benefits, the option of leaving the school doesn’t exist because one will be taxed to pay for it anyway. The same basic setup exists when it comes to any public work and unions. So for these folks to unionize is quite unjust. Indeed, the rationale behind public works is not the same as behind private works. In the latter all the parties are involved so as to get the best deal they can find and bargaining occurs to bring this about. Public works, however, are supposed to amount to public service, something done not for profit but as a commitment to the public good or interest. Anyone who views public work as if it were the same as private work is suffering from a misconception or perpetrating a hoax. Accordingly, all the people who work for governments, which are all supported through confiscatory payments--that is, taxation--are strictly speaking ineligible for unionization. Public work in contrast to private business is something legally required and paid for involuntarily. So unlike going to the grocery store, of which there can be several in one’s neighborhood and which one can actually avoid if one decides to do with little food and household supplies, in the case of public services citizens are not free to deal with others or walk away from the providers. Clearly, then, the original idea of labor organization into unions does not fit the public service situation. Unfortunately, this is rarely kept in mind. Thus when in Wisconsin or anywhere else for that matter public service employees are insisting on retaining the benefits they have obtained through bargaining with the government they were getting a very special deal. Public policy imposed their services on the citizenry and now the citizenry is no longer able to come up with the loot previously extracted from them via what comes to extortionist means. Yet, because much of the population--egged on by people who would very likely just as soon impose public services on everyone in every line of work (just check out Paul Kurgman’s column in The New York Times last Monday [2/21/11])--has sympathy for the usual laborer or worker when these are often dealing with powerful firms in a free market, the unions are getting a free pass in their current conflict with their employers. This situation needs to be seriously reexamined. It may indeed imply that the entire idea of public service, let alone public service unionization, is misguided. Part II Just now in many states of the country, including California, there is a crisis brewing in the public service employment region. No longer are public service employees expected to be motivated by service, as distinct from their private sector colleagues who are pretty much looking for the best deal they can strike with potential employers. In public service work one is supposedly doing part of one's labor from a sense of devotion to the public good, not from the private motive! Or so you may have thought. Consider, however, why labor unions exist in a free society: to facilitate employees' efforts to improve their bargaining power in negotiating with employers. This, in turn, presupposes a free market system. Employees are free to organize into unions so as to bargain and get a good deal and employers are free to hire different workers whose offer they prefer to those of the organized group's. But most importantly, prospective customers are free to find some other firm from which to purchase goods or services, ones not seriously encumbered by crippling labor disputes. Now public workers are different because they work for public or government agencies that are usually monopolies. Only one first class mail delivery outfit, the US Postal System; only one source of "free" education for which property owners are forced to pay, etc. You get the point. So when public workers threaten to strike, there is usually nowhere for the customers to go to purchase the services they want other than the government agency that employs these public workers. When public workers organize into a union and threaten to go on strike, their employers are the only game in town. There is nowhere else the customers can go to obtain these services, no competition with public agencies and, therefore, with public services workers. Now this is patently wrong. If customers aren't free to shop elsewhere, if they are hostage to the government agencies providing the public service, those who work for those agencies ought not to be able to threaten and walk of their jobs. That's especially so with the likes of members of teacher unions whose income depends upon confiscated resources, obtained via taxation. In free markets if the employees want to use their sizable numbers to improve their bargaining power, they aren't the only one's with such clout. Customers can also leave the employee and shop elsewhere for their wares without breaking the law. But if taxpayers want to change the employers with whom they want to deal, those in public schools or private ones, they aren't free and will be breaking the law if they stop paying taxes. All the wrangling about public service unions and how they are able to secure for their members enormous retirement benefits tend not to take these points into consideration. These unions are very different from labor unions in free market systems where such workers must compete with others and offer terms to employers that are not impossible to meet and which competing workers are free to contest. They aren't exorbitant as are the pay demands of a great many public service unions, especially in the state of California. And while economists use the term "demand" to characterize what customers want from providers, actually no demands are in play at all--they are just proposals from which the parties can walk away until the deals have been struck. But in the case of public service employees there really are demands being made--"You will pay us this, or we walk off the job and no other options for obtain our kind of work are available to you!" America is supposed to be a free country, as are in fact all others supposed to be, and here some semblance of such a country had been attempted. But public service unions, as many other "pseudo-market" agents--companies receiving subsidies and protection from foreign competition--are subverting this attempt. It is high time to put an end to it all.