The Case against Public Sector Unions.

STATE AND LOCAL governments today are, with few exceptions, in deep financial distress. While some governors can offer the recession, the housing crisis, or the loss of an important industry as an excuse for poor finances, many states are simply structurally insolvent--not unlike General Motors prior to bankruptcy. Indeed, California's travails began well before the recession, and warnings about the financial health of Illinois and New York predate the present crisis. It is no secret that the primary cause of the states' long-term problems are their bloated public sectors--particularly their public pension obligations. Public employees unions have wielded huge influence to gain perquisites for themselves at the expense of the public. Early retirement, job tenure, high wages, and generous defined-benefit pension plans have gained increasing attention from commentators and voters, though many public sector perks are intentionally shrouded and confuse the public debate. What has received far less attention is the pernicious effect of public sector union privileges on the provision of public goods in the United States. Public sector unions have greatly distorted state spending priorities and made it more difficult for states to devise innovative public goods that would benefit their citizenry as whole. For example, prison guard unions have directly influenced penal policy, fighting reduced sentences or decriminalization of drugs. Teachers' unions fight charter schools and merit pay. The strong organizational rights of these unions, protected or abetted by statute and regulations, enables their outsized influence on public policy. But crisis is also opportunity. The dire straits of states offer the chance for entrepreneurial governors to abolish public employee union privileges, like the rights to strike, to collectively bargain, to seek binding arbitration, and to collect dues. Public employee unions are the great reactionary force in public life today, using their privileged position both to defend the rewards their members receive and to block innovation. As a result, this recession offers a political opening for both liberal and conservative governors. For conservatives, taking on public employee unions provides a way to eliminate inefficient spending and create a polity of low taxes and lean government. For liberals, it provides a way to redirect spending to effective public goods, like better educational outputs, that public employee unions frustrate. If both liberal and conservative governors moved against public employee unions, the public would have the best of all possible worlds, a demonstration project pitting a low-tax, small-government jurisdictions against a higher-tax, high-value public goods jurisdictions. It would create a fair fight between the attractive options that conservatism and liberalism can offer. Union contracts, however, prevent most state governments from nimbly responding to changing circumstances. This ossification short-circuits the beneficial competition among jurisdictions created by our federal system, which works best when there are not entrenched impediments to government innovation. Private versus public sector unions THE IDEA OF eliminating union privileges in the public sector may seem like a radical one. But society has changed greatly from the era in which industrial unions were born, and, in any event, public sector unions raise substantially different issues than those in the private sector. In the early 20th century, workers were less educated and less mobile, and were indeed subject to exploitation by private companies, some of which had monopoly power in local labor markets or regularly employed private violence. To balance the bargaining power between such companies and their workers in such a climate, the federal government provided the employees with the mechanism of collective bargaining. But the potential benefits of unions in the private sector are very attenuated and probably nonexistent in the public sector. …