On Monday, I decided to write a column on Governor Walkers's proposal to restrict the collective bargaining rights of public employees. My point was to highlight the historic critique of pubic employee unionization and the insights into collective bargaining in the public sector provided by public choice theory.
The column ran in Tuesday's Milwaukee Journal Sentinel. I'll be discussing it tomorrow on Joy Cardin's show on Wisconsin Public Radio (in either the 7:00 or 7:30 segment). The basic point is that the traditional rationale for unions doesn't work well in the public sector.
Unions are supposed to empower workers in unequal bargaining situations. In economic terms, they are intended to move the supply curve for labor so that the equilibrium wage is higher than it otherwise would be.
But in the public sector, unions tend to, if not capture the employer, exert significant influence on it. This is because the interest of, say, a teacher's union on the composition of a school board and district policy - at least with respect to compensation - is far greater than that of the rest of us. Public choice theory suggests that this will result in unions having disproportionate influence on the public bodies that employ them - quite apart from labor negotiations. To put it bluntly, the officials who employ them may well owe their jobs to union support (or fear their ability to keep them without union support).
Given the absence of competititon in the public sector, this moves the demand curve as well. The distinction between management and labor which supposedly creates the unequal bargaining situation that justifies unions becomes blurred. The result is a tendency for public bodies to reward their union constituents in ways that aren't readily apparent to taxpayers. This is why collective bargaining agreements in the public sector tend to be heavy on fringe benefits and emoluments at retirement.
The response to Walker's proposal is making my point. The "uprising" at the Capitol is unlike the Tea Party. It is the yelp of a large special interest. The alarm with which Democrats are greeting the proposal is, in large part, fueled by concern over losing a large base of organizational and financial support. Walker's proposal is radical not because it is "mean" or will impoverish public workers. It will do neither. What it will do is reduce the influence of unions on public bodies and their ability to serve as political sponsors.
That's what these "days of rage" are about. The Walker proposal may be fiscally necessary but it is potentially a political game changer.