24 February 2011

Wisconsin 4: Links

To finally wrap up all this public unionism talk, here are some relevant links and excerpts, in no particular order and without comment from me.
EconLog | David Henderson | Collective Bargaining "Rights"

Almost everyone on both sides of the debate uses the term "collective bargaining rights" to mean the right of a union to bargain with an employer who must, by law, bargain in good faith. It also includes the right of a union to negotiate even for employees who don't want to be members of the union and don't want to pay dues to the union. So "collective bargaining rights" really mean the power to force others--to pay the dues and/or to join the union and/or to give up their power to negotiate with an employer. So the alleged right is really the "right" to monopolize the supply of labor to an employer. That's a phony right, not a real right. It's really a power.
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The Spectator | Alex Massie | Unions vs Government: Wisconsin Edition

Most successful politicians blend pragmatism with principle and calculation with instinct. Obama is no exception. Campaign promises from Guantanamo Bay to Wall Street have turned to shibboleths in office. Obama does want, I think, to be seen as a post-partisan President but his definition of post-partisan is, well, partisan. In any case, he wants to define the parameters of all this himself; like most people his idea of bipartisanship requires other people to agree with him. His idea of the centre is not necessarily Clive Crook's idea and anyway part of the game is to try and shift the centre. [...]

But when it comes to this kind of showdown it's not surprising that he dances with the boys that helped bring him to the White House. This isn't shocking.

Meanwhile, since nothing is so solipsistic as a protest march one should not be surprised by the banners and signs in Madison claiming that Governor Walker is a cheesehead Hosni Mubarak and all the rest of it. Needless to say, this is grotesque.
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The Economic Collapse | Are The Wild Teacher Protests In Wisconsin A Prelude To The Economic Riots That Are Coming To America?

On the one hand it is good to see Americans coming together and standing up for what they believe in, but on the other hand what these teachers are freaking out about shows just how much America has changed. These teachers are not protesting for liberty, freedom or to change the government. Rather, they are protesting because they want things to remain the same. They simply don't want anyone to mess with their pay. Well, the truth is that none of us ever wants to experience a pay cut. It is not a lot of fun. But sadly, states like Wisconsin are so broke that they have to find cuts somewhere. Someone is going to have to make a sacrifice. The teachers in Wisconsin just want to make sure that it is not them.

The rest of the post is a bit (in my view) hyperbolic, but this is an important point. The left and right are equally conservative, they just differ on which realms they wish to resist change.

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Washington Examiner: Beltway COnfidential | Tim Carney | Paul Krugman epitomizes the current liberal divorce from reality

In his column today, Krugman describes the unions as a "counterweight to the political power of big money."

But the unions are big money. Five of the top ten contributors to congressional and presidential campaigns since 1989 are labor unions according to the Center for Responsive Politics. In the last election, 10 of the top 20 PACs were union PACs.

More importantly, it's not as if Big Labor is balancing out the rest of "big money." Does Krugman know that all of the top ten industries contributing to the 2010 elections gave more money to Democrats than to Republicans? That's right: Lawyers, Health Professionals, Securities & Investment, Real Estate, Insurance, Lobbyists, Pharma, Government Unions, Entertainment, and Electric Utilities all favored Democrats in 2010.
Peter Suderman comments:
In other words, a lot of the “big corporate money” spent on political donations in 2010—the money to which unions are supposedly providing a counterweight—went to the same party that most of the union money went to, and the party whose political machine has helped back the union-led protests.
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The Atlantic | Megan McArdle | How Powerful Are the Wisconsin Public Unions?

I've seen some version of this argument on half the liberal blogs I read:
Why bust the unions? As I said, it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state's budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there's not much room for further pay squeezes. So it's not about the budget; it's about the power
There's just one problem with this: if the union hasn't managed to secure anything in the way of extra wages, benefits, or other concessions for the workers--if it is really true that all these things are close to the minimum required simply to attract workers--then who cares whether the union survives or not? What "power" is being taken away?
NB That "Why bust the unions? ..." quote is also from P.Krug's column.

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The Atlantic | Megan McArdle | What's at Stake in Wisconsin?

Especially in an environment like this, where taxpayers are under unusual financial pressure at the same time as the claims on the government are especially high, the choice is not between collecting a lot more taxes, or keeping public worker salaries under control. Oh, many states (and certainly the federal government) may need to raise taxes. But they aren't simply going to raise them high enough to cover any amount of spending. Spending cuts are going to have to be made too, which means that every decision not to cut spending in one place is, de facto, a decision to cut it somewhere else.

If you keep the unions happy, the service cuts are probably going to hit the programs and districts that serve the poor, because the poor, unlike the public sector unions, don't vote. So while both parties seem to think that they're fighting their usual war over the size of government, this is actually a distributional argument--and oddly, what we think of as the usual party positions are reversed. This time, it is Democrats who are fighting for middle class benefits that will probably come at the expense of the poor.
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What the public worker and pulbic unionized worker wage premium is is a very messy topic, about which I think we would be wise to maintain some intellectual humility.

See Jim Manzi, Tyler Cowen.

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Reason: Hit & Run | Nick Gillespie | Are Public School Teachers Overpaid or Are Private School Teachers Underpaid?

There's no question that it's difficult (though not impossible) to do straight-up apples-to-apples compensation comparisons between the 9 percent or so of public-sector workers and the 91 percent of private-sector drones.

But when it comes to paying K-12 teachers, the issue at the heart of Wisconsin's recent protests and a bunch about to erupt all over the country, that comparison is relatively straightforward because there are private- and public-sector teachers who do the same basic task.

So what gives when you look at public-school and private-school teachers? The National Center for Education Statistics puts it this way: Using 2007-2008 data (the latest available), the average "total school-year and summer earned income" for public school teachers was $53,230 . The equivalent for private-school teachers was $39,690.

That's a whopping $13,540 differential on salary alone.
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The Atlantic | Megan McArdle | The Best Things in Workplaces Aren't Free

The comment threads on Wisconsin are filled with union supporters making some version of the argument that this fight isn't about money because unions have already made wage concessions; rather, the fight is about "power" or some similarly non-monetary issue because what the workers really want is to be able to collectively bargain
  • Pension benefits
  • Health care
  • Grievance procedures
  • Work rules
  • Tenure
  • Sick days and vacation
The people making this argument seem oblivious to the fact that all these things cost employers money. I think they understand that pensions and health care are expensive, but they seem to view the last four as freebies.
The final paragraph also deals with another difference between public sector unions and some private sector ones: the former do not have multi-employer compensation plans as some of the latter do. A minor but not negligible distinction.

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Coyote Blog | Warren Meyer | Public Employee Compensation Packages

For those who really believe state workers in Wisconsin are underpaid, I would ask this question: Which of you business people out there would hire the average Wisconsin state worker for their current salary, benefits package, lifetime employment, work rules, grievance process, etc? If they are so underpaid, I would assume they would get snapped up, right?
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Generally anti-union guys like me tend to discount the good that trade unionism did do in the 20th century. It's something we should be on guard against. But the flip side of that is true as well: it behooves unions supporters to acknowledge all the progress and justice they've impeded as well.

Adam Ozimek offers two current examples, charter school caps and opposition to removing the employer health care deduction.

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The Economist: Democracy in America | W.W. | Public-sector unions and fiscal exploitation

While the liberal-democratic state has proven better than the known alternatives, it creates a number of serious problems on the way to solving others. Among the greatest of these problems is maintaining a system of public finance that does not stray outside the bounds of liberal legitimacy. The power to tax and spend is necessary for the performance of the democratic state's legitimate functions, but it is also a ready tool of exploitation and distributive injustice. An ideally legitimate state does nothing people can do better on voluntary terms, and it takes no more from people in taxes than is necessary to finance necessary public goods. But this is a moral target we never hit because the strategic logic of redistributive democracy reliably errs in the direction of expansion of services, deficit spending, and the abuse of taxpayers and other not-very-organised constituencies at the hands of highly-organised special interests. If we are concerned to minimise exploitation—if we care about the extent to which state violence is public-spirited and not merely criminal—we must go out of our way to acknowledge and guard against the abuses of fiscal democracy.

It is in the context of these concerns that we must consider the function of public-sector unions. If they do anything at all, it is to protect their members' claims on future government revenue from democratic discretion—to limit the power of the elected representatives of the democratic public to set the terms on which union-members will receive transfers from taxpayers. That these transfers come to workers in the form of compensation for services rendered the government seems to confuse a lot people. This is, I think, why people on both sides of the debate are distracted by the question of whether government workers are or are not "overpaid". To my mind, the real question is whether government workers should be granted special legal powers that (a) are unavailable to other groups whose welfare also turns on transfers from the treasury, or on the size of compulsory transfers from their bank accounts to the treasury, and (b) limit democratic sovereignty over the distribution of the burdens and benefits of the system of public finance.
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The Economist: Democracy in America | W.W. | Libertarian unionism

I'VE repeatedly argued that private- and public-sector unions operate in different institutional settings, raise fundamentally different moral and political questions, and that it is altogether reasonable to support private-sector unions while rejecting public-sector unions on account of the nature of their differences. A common response I've heard from the left is that I'm slyly seeking to sow discord by disingenuously arguing that the larger union movement is not in fact one, but is instead a coalition of fundamentally distinct organisations of unequal moral standing. A common response I've heard from the right is basically the same: "you don't really support private-sector unionism, do you"?

Well, I do. Sort of. It's complicated because American labour law is complicated.

The right of workers to band together to improve their bargaining position relative to employers is a straightforward implication of freedom of association, and the sort of voluntary association that results is the beating heart of the classical liberal vision of civil society. I unreservedly endorse what I'll call the "unionism of free association". My difficulty in coming out wholeheartedly for private-sector unions as they now exist is that they are, by and large, creatures of objectionable statutes which have badly warped the labour-capital power dynamic that would exist under the unionism of free association.
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Reason: Hit & Run | Damon Root | Whitewashing the History of Organized Labor

As scholars ranging from the liberal political scientist Ira Katznelson to the libertarian legal historian David Bernstein have now documented, organized labor’s rise to power typically came at the expense of black workers. Consider collective bargaining, the legal arrangement whereby a union selected by a majority of employees receives the monopoly bargaining power to exclusively represent all employees. This valuable union tool first became part of federal law under section 7A of the National Industrial Recovery Act of 1933. Since blacks were barred from the vast majority of unions at that time, collective bargaining served as a de facto ban on all black workers in unionized shops.
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Tomhall.com | Jonah Goldberg | Public Unions Must Go

A crucial distinction has been lost in the debate over Walker's proposals: Government unions are not the same thing as private-sector unions.

Traditional, private-sector unions were born out of an often-bloody adversarial relationship between labor and management. It's been said that during World War I, U.S. soldiers had better odds of surviving on the front lines than miners did in West Virginia coal mines. [...]

Government unions have no such narrative on their side. Do you recall the Great DMV cave-in of 1959? How about the travails of second-grade teachers recounted in Upton Sinclair's famous schoolhouse sequel to "The Jungle"? No? Don't feel bad, because no such horror stories exist.

Government workers were making good salaries in 1962 when President Kennedy lifted, by executive order (so much for democracy), the federal ban on government unions. Civil service regulations and similar laws had guaranteed good working conditions for generations.

The argument for public unionization wasn't moral, economic or intellectual. It was rankly political.
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Both of these posts from The Economist's Free Exchange columnist are nuanced. He has some thoughts on both the pro- and anti-public sector unions side.

"Are public sector unions different?"
"The worst solution except for all the others?"

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I linked this earlier but didn't excerpt, so here it is again:
Reason: Hit & Run | Peter Suderman | The Difference Between Private and Public Sector Unions

If private sector unions negotiate deals that make their respective industries more expensive to operate, and thus their products more expensive, consumers have the right to buy less, or to go elsewhere to get what they want. Businesses can send fewer employees to Las Vegas conferences. Families can pinch their food budgets if labor costs at grocery stores make prices more expensive, or replace their cars less often if union benefits add too much to the price of an automobile. If too many people opt out, or buy too little, the company in question goes out of business. And unless the government offers a bailout, that’s the end of the story. When dealing with the private sector, unions generally have some incentive not to overreach to the point where their employer goes out of business.

The story’s not the same in the public sector. When government employees negotiate added salary and benefits, those who are not directly employed by the government—which is to say, the vast majority of taxpayers—can’t really opt out. So one of three things has to happen: 1) Taxes are raised to pay for the added compensation costs. 2) Services are cut in order to pay for the additional compensation. 3) The additional compensation isn’t ever paid—a situation that usually comes with, at minimum some sort of minor political drama, if not a serious showdown.
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The Economist had good coverage of public sector unions back in January, pre-Wisconsin. There are too many points in that article to be able to quote.

Here is their editorial:
The Economist: Leaders | The Public Sector Unions: The battle ahead

“Industrial relations” are back at the heart of politics—not as an old-fashioned clash between capital and labour, fought out so brutally in the Thatcherite 1980s, but as one between taxpayers and what William Cobbett, one of the great British liberals, used to refer to as “tax eaters”. People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense (see article). In many rich countries wages are on average higher in the state sector, pensions hugely better and jobs far more secure. Even if many individual state workers do magnificent jobs, their unions have blocked reform at every turn. In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.

While union membership has collapsed in the private sector over the past 30 years (from 44% of the workforce to 15% in Britain and from 33% to 15% in America), it has remained buoyant in the public sector. In Britain over half the workers are unionised. In America the figure is now 36% (compared with just 11% in 1960). In much of continental Europe most civil servants belong to unions, albeit ones that straddle the private sector as well. And in public services union power is magnified not just by strikers’ ability to shut down monopolies that everyone needs without seeing their employer go bust, but also by their political clout over those employers.

Many Western centre-left parties are union-backed. Britain’s Labour Party gets 80% of its funding from public-sector unions (which also, in effect, chose its new leader). Spain’s sluggish state reform may be partly explained by its prime minister’s union membership. In America teachers alone accounted for a tenth of the delegates to the Democratic convention in 2008. And the unions are more savvy: this time, the defenders of vested interests are not brawny miners spouting Trotsky, but nice middle-class women, often hiding behind useful-sounding groups like the National Education Association (American teachers) or the British Medical Association.
They also had a good discussion of this in one of their podcasts:

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WSJ | James Taranto | The Means of Coercion: The privileged are revolting in Wisconsin

Here is the contradiction of progressivism. Progressives tell us they want the government to do more. But they can’t win elections without public-sector unions. Because they are beholden to those unions, their main priority when in power is to increase the cost, not the scope, of government. Because resources are finite, the result is the worst of both worlds: a government that taxes more without doing more. This is unsustainable economically. Fortunately, as Wisconsin voters showed last November, it’s unsustainable politically as well.
That hints at what we might call the "liberal case against public sector unionism."

1 comment:

  1. I basically agree with the caveat that I've already mentioned, and as usual I don't think you and I are too far apart on this, both of us coming from a classical liberal stances but both of us seeing the status quo bias in the current political context differently. What it comes down to for me is that without unions there's no "big money" elite to fight corporate big money, and if corporate big money can continue to pay for the legislation they want, I think we have to encourage worker (free) association. In an ideal world, what I would like to see is workers coming together to collectively bargain without compulsory unionization. I would like corporations to make hiring decisions that aren't based on the union-status of their contract bidders. I would like to see nearly no legislation about unionization at all, except some explicit protections to workers if they are hired non-union but decide to unionize later. But we just don't have that world at all.

    In the world we have, it's easier to get rid of labor protections than it is to get rid of corporate interests and labor protections are harder to bring back. In the interest of maintaining a more economic equality I don't see any way but to back explicit pro-union laws, public or private. As long as capital markets remain more fluid than labor markets, that's all we can ever hope for.

    That doesn't mean that the status quo is ideal even given the political and human contexts. There's plenty of room, even within a pro-labor setting to edit license arrangements, performance review, and termination requirements and probably other things I'm not thinking of.

    Of course that doesn't get back to Wisconsin and the derelict congressfolk and the distinction between stoppage and delay. I guess to me it's a spirit vs letter notion. What they're doing is illegal but not necessarily immoral. I don't see them as heroes, but I also don't see them as fundamentally abandoning their ideals. I mean, they were elected to protect the interests their voters and they seem to be doing just that. The delay is to let Walker know the seriousness of what he's doing so that voters know when they vote against him they won't be voting alone.

    Like you I don't really care for the high-rhetoric drapery, but that's more than half of all politics. Nobody there is saying what they mean, not Reps Dems Govt or Unions. They're all there fighting for "Me" but they have to say they're there for "You." Nobody signs up to fight a war over money, but we love that we can sign up to die for "truth, justice, and the American way." Same thing in Wisconsin (or Indiana...which is funny given that my first comment on this issue said 'glad they aren't my reps but probably wouldn't care if they were'--turns out I didn't really care).

    Is this stoppage annoying and costly and arguably "undemocratic?" yeah, it is. But at the same time, Madisonian democracy is supposed to have levers to stop the tyranny of the majority. If Republicans refuse to negotiate, then the minority frequently reaches out to annoying and potentially illegal procedural moves to protect their interests.

    This is often cast as either "Democrats lost the election so now they have to take their lumps." I don't really like that argument at all. Politics is negotiation and losing elections doesn't mean losing any or all ability to effect political outcomes. If Republicans are truly failing to negotiate, then something has to be done to force accountability and a huge public demonstration seems like the right thing to me. Now, if they are negotiating and that story is getting lost in the mix, then maybe the Wis statehouse should get back to the work of The People.