Wisconsin Labor Brouhaha

The Goal Is Freedom
Wisconsin Labor Brouhaha
Do libertarians have a dog in the fight?
Sheldon Richman
Posted February 25, 2011

That's quite a row going on in Wisconsin. The new governor, elected without the support of most government-employee unions, has proposed to cut back the scope of collective bargaining for most state workers. Scott Walker says the budget measure is needed to save money as well as government jobs for the debt-ridden state. (Details here.)

The governor stands accused of leading a nationwide conservative movement to crush unions, but union officials are not shy about acknowledging their own narrow political interest. The Wall Street Journal reports:

Proposals in Wisconsin and other states have "great ramifications" beyond the damage to union coffers and membership, said Gerald McEntee, president of American Federation of State, County and Municipal Employees, the nation's biggest public-sector union.

Unions have told the Obama administration that the state fights could affect the 2012 presidential election by draining unions' political resources, especially in states like Wisconsin and Ohio. "I think it can put him in some [political] danger," Mr. McEntee said of the president.

But let's forget narrow partisan politics and look at bigger issues. Is the governor's proposal really an assault on human rights, as advocates of the Wisconsin state employees allege? (Their raucous protests at the state Capitol are compared to rebellions in the Middle East.)


The Freed Market

A few basics: In a freed market -- meaning no privileges, no bailouts, no legal barriers to competition (domestic or foreign), no patents, no protected banking cartel, no regulatory impediments to self-employment, no vast tracts of government-held land -- workers would be free to form voluntary associations called unions and business owners would be free to deal with them or not. If not, workers would be free to use nonviolent methods to gain recognition for their unions, including strike threats, boycotts, and sympathy strikes, as well as lesser measures. Violence by any party against any peaceful person would be illegitimate. Freedom of association would be complete, and coerced association would be beyond the pale.

Under such circumstances, everyone's demands would be tempered by two powerful factors: freedom and competition. Pay workers too little, and they would be bid away by rivals or take up self-employment. Pay them too much, and rivals would attract customers with lower prices. Demand too high a wage, and risk losing out to someone else willing to work for less. Market rivalry would protect everyone from abuse, which is why competition -- endless hosannas to it notwithstanding -- is usually the target of government intervention.

But we don't live in freed market. We live in an economy where the market has, from the beginning, been fundamentally compromised by pro-business intervention at all levels of government: contracting, debt, subsidies, guarantees, eminent domain, tariffs, patents, land policies, banking cartelization, and so on. (See this.) The pro-business nature of intervention is often obscured by the window dressing of labor, consumer, or environmental rhetoric, but in fact most intervention either was backed by some significant element of the business elite or the regulatory apparatus was captured by it. In contrast to others, business lobbyists have had superior access to power (some of them used to be legislators or regulators), and their firms (unlike smaller or yet-to-launched businesses) have legal and accounting departments capable of handling the hassles.

Under these circumstances, employees suffer disadvantages that would not exist in a freed market: among them, fewer firms bidding for their services and formidable (though not insurmountable) barriers to self-employment or worker-owned firms. Add to this the myriad ways the system raises the price of decent subsistence (taxes, building codes, zoning that separates residences from commercial areas, and other land-use restrictions that subsidize sprawl, for example), and you end up with a mass of people dependent on the employer class, mortgages, car loans, and more. Their lives are made all the more susceptible to disruption by the manipulations of the Federal Reserve and other branches of the government that create bubbles and booms followed by busts and jobless "recoveries."

Most of us were taught in public school that the labor legislation of the New Deal and beyond shifted power from business to labor. Some rejoice while other despair over this. But on closer look, labor legislation looks far more like a program to tame worker organizations, bringing their leaders to the corporatist table as junior partners. (The National Civic Federation and the American Association for Labor Legislation, groups filled with the business elite, had long sought similar laws.) These laws set rules for the formation of unions and the tactics they can use.  When the National Labor Relations Act and the Taft-Hartley amendments came along, the wildcat strike, sympathy strike, and boycott became illegal. Less formal kinds of pressure, such as work-to-rule, fell by the wayside. Things had to be done by the book or else. (The Wobblies were consequently hampered.)


More Bargaining Power

The upshot is that repeal of labor legislation -- much to be desired -- wouldn't reduce workers' bargaining power but increase it. True, no law would stop employers from hiring strike replacements, but strikes were not previously, and need not be, the only or most effective form of labor activism. (See more here.) Of course, along with the labor legislation must go all corporate welfare, guarantees, and other privileges.

Finally we get to government workers and the row in Wisconsin. It is a grave mistake to treat so-called public employment like other employment. Governments are monopolies that get their revenue by force, not through voluntary exchange. Thus they don't face the market test of free competition, and they lack key price information with which to engage in economic calculation. The consequences of this difference are considerable.

As Freeman columnist Charles Baird notes, when government negotiates terms with employees, the parties are coconspirators in the looting of the captive taxpayers. (Government employees aren't taxpayers; they are tax-consumers.) Moreover, government-union bureaucrats and government administrators alike want to build up their fiefdoms. Fundamentally they are not rivals but rather accomplices with a harmony of interests contrary to those of the taxpayers. This is aggravated by the fact that those unions are powerful political actors and rich sources of campaign contributions and manpower. A politician negotiating with a government union whose election support he seeks is unlikely to have the taxpayers' interest uppermost in mind.


Government Education?

Thus even free-market advocates with a natural sympathy for labor in the corporate state finds it hard to side with government employees. How can one sympathize with state school teachers when the government should have nothing to do with education? This doesn't mean teachers are bad people, but they do the work of a bad system, and their unions are among the most powerful lobbyists in any state capital.

Would the working conditions of state workers become intolerable if their unions were restricted? Not likely. But if they did, would it really be so bad if state governments had trouble finding employees?

So, does this mean that free-market advocates should side with the governor of Wisconsin? Actually, no. State governments are in trouble because they spent profligately when revenues were rolling in and now can't meet the pension and other obligations they've imposed on the taxpayers. As a result, they face a crisis in legitimacy. Some governors realize this and are trying to save the discredited system by trimming spending (for now) and making political hay by reining in the unions.  The fiscal hawks even tout cutbacks as ways to produce more revenue in the future. Rarely do you hear a governor call for the shedding and demonopolization of functions like education. (I don't mean the phony privatization of contracting out or tax-funded vouchers.) So this is largely a fight over how to preserve and divide the tax spoils.

Taxpayers may breath a sign of relief if the governor of Wisconsin prevails. But they should have plenty of issues to fight with him over tomorrow.

http://www.thefreemanonline.org/columns/tgif/wisconsin-labor-brouhaha/