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.

Markets & Generosity

Markets and Generosity Tibor R. Machan A frequent though quite unjustified charge against free markets is that they encourage what Karl Marx called the cash nexus or, as it is also put, commodification, treating people as items for sale. The claim is that when people engage in commerce, they are hardhearted, stingy, or as the Oliver Stone and OWS crowd would have it, greedy. But this is a complete distortion. It’s been with us for centuries, starting with how Plato depicted merchants in the Republic, namely, as the lowest rung of humanity, only concerned about the bottom line. Marx made it one of his key criticism of capitalism, namely, that the right to private property is a defense of selfishness. But the claim is very imprecise. The right to private property does secure for one the freedom to make use of one’s life, liberty and property as one judges fit. Yet this can involve distributing one’s labor and resources for charitable purposes, as is well demonstrated by the vast sums wealthy people give away to others. What the critics resent is that they do not get to dictate to those with property rights, that property rights secure people’s liberty to determine how they will act, what they will do with what belongs to them. The critics want to be in charge of everyone’s wealth, which is why they support the public ownership of resources, the means of production, with the concomitant policy that the state, who would of course be the critics, gets to say to what end those means will be dedicated. Anyway, just a few examples of how those in markets are often the farthest thing from greedy can help one appreciate how wrong the critics are about people whose property rights are secure. Not only do some very wealthy people freely part with their wealth for purposes such as helping the poor or the sick or supporting the arts and sciences. In the market place, right where commerce is supposed to have replaced generosity with greed, there are many instances of helpful conduct. I often find that the tiny screws in my eye glasses get loose when I travel and I then seek out a shop where glasses are sold and repaired and ask for help with my problem. Invariably, really, when I ask what the charge is for getting this service, I am waved away with the remark that there will be no charge at all. And this kind of thing happens all over the free market place! It refutes the charge that market processes drive out other forms of human interaction. Indeed, in markets friendships are created, even romance is sparked. The idea that human beings in markets cannot take their eyes off the buck is bunk. Anyone making such a claim must be either ignorant or desperately bent on demeaning human freedom, just as Marx did when he said that the right to property corrupts us to do nothing but act greedily. The fact is that people multitask in markets. They have many different motivations they can fulfill. Yes, mostly in markets they attempt to strike a good economic deal but that’s only a small part of the story. Just as people at a party do not simply seek to have fun but now and then will search out professional advice and even an economic opportunity or two, so in the forums were the main focus is advancing one’s economic well being, to strive to prosper, they often take a break and do something very different. Not to acknowledge this reveals rank prejudice, not any kind of grasp of how things work in the market place.

The Distortions Never Went Away

The Distortions Never Went Away Tibor R. Machan I have been reading into Herbert Croly’s The Promise of American Life (1909). Croly was the founder of The New Republic, which has remained a foremost middle way publication on the American political scene, a champion of the welfare state, of a half way between capitalism and socialism. The central theme of the book is that America should be made into a country that promotes “the welfare of the whole people,” the policy “intelligently informed by the desire to maintain a join process of individual and social amelioration.” Socialism is the idea that what counts for most is the social whole, even humanity in its entirety. Individualist capitalism focuses, instead, on protecting the rights to life, liberty and property of each individual, leaving it to their own discretion whether to embark on various groups efforts, including the improvement of some “whole,” whatever that would be. (As Margaret Thatcher famously said, there is no society as such, suggesting that there are in fact only human individuals who come together in various ways--family, club, corporation, orchestra, choir, team, and so forth. As with my college classes, they are merely useful fictions, the only reality being the students who comprise them.) What American leftists have tried to do is create some kind of hybrid, one that merges the individualist and the collectivist systems of various Platonic dreamers. America itself has been an experiment in which the hybrid has been rejected as futile and even vile, usually an excuse for some in society ruling the rest. Just as Croly and all who have followed him have argued, of importance to the detractors has been some kind of group--the tribe, or race or ethnic bunch or whatever. Even now the major domestic opposition to the American alternative is the communitarian, welfare statist regime, such as the one recently promoted very vigorously by Harvard professor of government, Michael Sandel, in his recently published attack on individualism, What Money Can't Buy: The Moral Limits of Markets (Farrar, Straus and Giroux, 2012). Never mind all the distortions and mistakes in the book, no more valid than those in Croly’s published in 1909. Same old, same old. Individuals are isolated, heartless, etc., markets lead to alienation and such, la di da di da. Paul Krugman pedals this twice weekly on the Op Ed pages of The New York Times, claiming that the country is in the grip of market fundamentalism, something that has never been so in America, let alone elsewhere. (The idea of a fully free market economic system has never swept the country except in some academic corners where a few economists hold forth mostly! Even for them it has only been a theoretic model, little more than that. This has all been laid out quite well by Karl Marx who claimed that in such a system a cash nexus dominates and everyone is commodified, made into an object for sale.) What is interesting is that despite the fact that the mixed economy has been the rule in America for as long as there has been an identifiable economic order, those who want to reject all parts of capitalism, all elements of economic freedom and install a planned system (presumably with them and his ilk running it all) have lied and lied about just how pervasive freedom is. Sure, relatively speaking America has had greater freedom in the economic realm than have had other countries, although this must always be qualified with the historical fact that slavery, which was the darling of the socialist George Fitzhugh, violates all tenets of capitalism. (Fitzhugh defended, as Wikipedia points out, “racial and slavery-based sociological theories in the antebellum era.” He held that "the negro is but a grown up child" who needs the economic and social protections of slavery and maintained the socialism is the system under which this can best be realized!) Do folks like Sandel ever point this out? Does Krugman mention that market fundamentalist hasn’t ever swept America? No. The truth doesn’t advance the cause of a failed system like socialism (or its miniature version, communitarianism). So big lies must be deployed to block out the truth, namely, that America has had mostly a mixed economy and full free enterprise hasn’t ever been tried here. And the biggest one of these lies is in what the era had been self-designated, namely, the progressive era! “Progressive” my foot--it is the most reactionary movement the country has ever seen.