August 9, 2010


The Case Against Public Sector Unions: A powerful force for unaffordable benefits (John O. McGinnis and Max Schanzenbach, Policy Review)

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.

Unlike many important reforms, there isn't even any reason for the GOP to be skittish about these--W paid no political price for his war on the civil service.

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Posted by Orrin Judd at August 9, 2010 5:26 AM
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