Posts tagged monopoly

Column on Revisiting Public Service Labor Unions

Mar 10th

Posted by Tibor R. Machan in Uncategorized

Revisiting Public Service Labor Unions

Tibor R. Machan

When one criticizes public service unions this doesn’t imply at all that one is critical of labor unions per se. Because public service is mostly monopolistic–only one first class postal service, only one Medicaid, only one DMV and road system, only one school system–and funded from taxes which are not voluntary, public service labor unions are themselves basically legally protected monopolies. If the teachers at the local elementary school demand something and the parents do not want to meet those demands, the parents have nowhere else to go to get their children educated unless they accept having to pay double–the taxes that go to the elementary school and the tuition that pays for a private alternative.

In contrast, if Toyota’s auto workers demand something from the company and costumers don’t believe they should receive it (for whatever reason), they can go to Ford or VW and not have to keep buying cars from Toyota. This is a huge difference. This is what permits public service labor unions to hold their costumers over a barrel–public school teachers will continue to be paid even if the parents of their pupils no longer want to deal with them. This is why some citizens are complaining about public service unions in particular, not about unionized labor in the private sector. And this is also why public service laborers are able to pull down such hefty pensions–there is no one else offering their service so their terms have to be met.

But from all appearances the members of the public service unions throughout the country, most visibly now in Wisconsin, speak as if they were members of plain old labor unions, comparable to unionized workers in the private, competitive market place (e.g., auto workers). This is an understandable tactic. Most Americans who give the matter any thought at all see unionization as a right all working people have. Not too many may exercise this right these days, admittedly, but they have it, just as you and I have the right to sing in our showers or travel to France even if we do not choose to do so.

So if the controversy were about whether Wisconsin’s and other states’ public union workers should have their right to be members of a labor union legally protected, they would be supported by most Americans. The fact is, however, that public service union members aren’t at all like private sector union members. They enjoy a legally protected monopoly. And that is a violation of the rights of their customers who have nowhere else to go to obtain the service that the public service unions provide.

Maybe a comparison will help to grasp the point. Imagine that those who work at the Department of Motor Vehicles in some state decide they want longer vacations or more pay or better retirement benefits. If they do not receive these, they threaten to walk of their jobs. (In many places throughout the country they are legally forbidden from doing this, precisely because they are so different from private sector union workers.) Drivers in those states have no alternative but to deal with the DMV so the workers there will receive what they demand. There is no other option. The option of banning strikes is for most people in the country a pretty harsh, out and out un-American measure!

Clearly the relationship between public service union members and those for whom they provide their service and the relationship between private sector union members and their costumers is entirely different. But if this is acknowledged, citizens may come to view the position of the public service union members, as well as the benefits they have managed to obtain in their collective bargaining with their public agencies, very differently from how they view it while thinking the two are alike.

Not even the news agencies that report on the current conflicts in Wisconsin (and very possibly in neighboring states) appear to appreciate the difference between public service and private sector unionization. Yet this is a vital fact and understanding it would change dramatically how the vast majority of citizens are perceiving the current controversy.

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Column on Public Service Work and Unionization

Feb 13th

Posted by Tibor R. Machan in Uncategorized

Public Service Work and Unionization

Tibor R. Machan

Just now in many states of the United States of America, especially in California, there is a crisis brewing in the public service employment region. No longer to public service employees are expected to be motivated by service, as distinct from their private sector colleagues who are pretty much looking for the best deal they can strike with potential employers. In public service work one is supposedly doing part of one’s labor from a sense of devotion to the public good, not from the private motive! Or so you may have thought.

Consider, however, why labor unions exist in a free society: to facilitate employees’ efforts to improve their bargaining power in negotiating with employers. This, in turn, presupposes a free market system. Employees are free to organize into unions so as to bargain and get a good deal and employers are free to hire different workers whose offer they prefer to those of the organized group’s. But most importantly, prospective customers are free to find some other firm from which to purchase goods or services, ones not seriously encumbered by crippling labor disputes.

Now public workers are different because they work for public or government agencies that are usually monopolies. Only one first class mail delivery outfit, the US Postal System; only one source of “free” education for which property owners are forced to pay, etc. You get the point.

So when public workers threaten to strike, there is usually nowhere for the customers to go to purchase the services they want other than the government agency that employs these public workers. When public workers organize into a union and threaten to go on strike, their employers are the only game in town. There is nowhere else the customers can go to obtain these services, no competition with public agencies and, therefore, with public services workers.

Now this is patently wrong. If customers aren’t free to shop elsewhere, if they are hostage to the government agencies providing the public service, those who work for those agencies ought not to be able to threaten and walk of their jobs. That’s especially so with the likes of members of teacher unions whose income depends upon confiscated resources, obtained via taxation. In free markets if the employees want to use their sizable numbers to improve their bargaining power, they aren’t the only one’s with such clout. Customers can also leave the employee and shop elsewhere for their wares without breaking the law. But if taxpayers want to change the employers with whom they want to deal, those in public schools or private ones, they aren’t free and will be breaking the law if they stop paying taxes.

All the wrangling about public service unions and how they are able to secure for their members enormous retirement benefits tend not to take these points into consideration. These unions are very different from labor unions in free market systems where such workers must compete with others and offer terms to employers that are not impossible to meet and which competing workers are free to contest. They aren’t exorbitant as are the pay demands of a great many public service unions, especially in the state of California. And while economists use the term “demand” to characterize what customers want from providers, actually no demands are in play at all–they are just proposals from which the parties can walk away until the deals have been struck. But in the case of public service employees there really are demands being made–”You will pay us this, or we walk off the job and no other options for obtain our kind of work are available to you!”

America is supposed to be a free country, as are in fact all others supposed to be, and here some semblance of such a country had been attempted. But public service unions, as many other “pseudo-market” agents–companies receiving subsidies and protection from foreign competition–are subverting this attempt. It is high time to put an end to it all.

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