A Fireside Chat for the Twenty-First Century

The "fireside chat" is associated with Franklin Delano Roosevelt. Scott Walker, who gave his own version last night, may share some things in common with FDR. For those of you in Dane County, stay with me.

It's not that FDR was "really" a conservative. I dislike Presidential revisionism and FDR was a conservative as much as Reagan was a liberal, i.e., not at all. FDRs was quite clearly - in American terms - a man of the left - someone whose views would probably render him unelectable today.

It's not simply that he was FDR of collective bargaining in the public sector. He wasn't but that point has been made and Walker's opponents are determined to ignore it and the reasons behind it.

No, it's that Walker - like FDR and Reagan - appears to believe that he was elected to do something other than secure another term. That's rare in a politician. (Incidentally, I give Obama credit for the same quality even as I disagree with what he wants to do.) Walker has diagnosed a problem and proposed a solution that creates the structural reform that his diagnosis calls for.

Unions are an effort to grant labor near-monopoly power and move the supply curve up. The result - in almost every case - is as follows. First, unemployment happens. Employers will hire fewer people if they must pay more. Second, for those lucky enough to keep their jobs, compensation will be higher. If you regard the world as a Dickensian place made up of greedy and powerful employers exploiting defenseless workers, this might be a good thing. If employers are earning greater than competitive profits, the job loss may be small and the wage gain may be high.

I would argue that this dark satanic world is no longer the one we live in. But it is almost certainly not the world in which public employees live. Management is unlikely to play Scrooge to WEAC's Cratchits because WEAC members pool their resources and exert a disproportionate influence on whether Scrooge stays in charge of the counting house.

Collective bargaining in the public sector simply isn't adversarial in the same way that it is in the private sector. This is why Democrats - who are elected to represent the government's "management" - support collective bargaining. You will find almost no manager in the private sector who wants anything to do with unions. Yet Democrats seem to want to pay state employers more of the taxpayer's money.

The reason is simple. There is no special interest that is more important to keeping Democrats in business. In supporting public employee unions, they are simply doing the honorable thing. Having been "bought," they are staying "bought," i.e., they are supporting the folks who put them where they are. The problem is that when you combine this with collective bargaining protection - essentially the right of employees to try to fix the price of labor, you run the risk of collusion.

Of course, these collusive results are not popular with the rest of us so they tend to be made opaque - hidden in the form of work rules, fringes and promises to retirees. Walker understands this and knows that closing the immediate budget gap is only the beginning of the fiscal challenge that Wisconsin is facing. In limiting the nature of collective bargaining agreements that states and local units of government can agree to, he is attacking the structural problem. He is actually doing something that might, for better or worse, make a difference.