26 January 2011

Rent seeking unions harm society

From the Economist:
Public-sector unions enjoy advantages that their private-sector rivals only dream of. As providers of vital monopoly services, they can close down entire cities. And as powerful political machines, they can help to pick the people who sit on the other side of the bargaining table... the American Federation of State, County and Municipal Employees was the biggest contributor to political campaigns in 1989-2004... such influence is more decisive in local campaigns, where turnout is low, than in national ones.

Even if they fail to elect “their” candidates, public-sector unions have a relatively easy time negotiating with politicians. Private-sector bosses are accustomed to playing hardball with unions because they know they can go bankrupt if they don’t. Politicians have no such discipline: they can always raise taxes or borrow from future generations. Those who have challenged the unions have often regretted it.

[snip]

Do the public exist to serve public-sector workers with their high pay and inflated benefits, they ask, or do public-sector workers exist to serve the public?
Bottom Line: Unions protect workers from exploitation by employers, but greater power means that they can turn the tables and exploit employers us. Read the story if you want to see why American schools are so bad.

7 comments:

  1. David: Apropos, would you please explain to us about the salary, benefits (health care, retirement, any access to public housing, etc). that you receive as a public(?) employee in The Netherlands? Are there unions for teachers there. How is the situation different between our two countries? What would we have to change to provide decent education to our children in the US? Is busting public unions enough? What else is necessary? What happens when we have busted the unions?

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  2. @FC -- good question, and thanks for making it so one-dimensional. The big problem with teachers unions is pay for performance and hiring and firing. I am -- as far as I know -- not protected by anything other than my short-term contract that's based on doing a specific job. The worldwide market for economists is pretty competitive: that's why there were over 100 applications for many academic jobs this year.

    What about lifetime tenure for professors? Yes, that's a problem, and I do not support tenure for them -- but at least their (college students) can choose among hundreds of universities. Younger students do not have the benefit of such choices in the US (in the NL, they do), and that's why -- the primary reason why -- the US educational system is the worst in the OECD. Read about our miserable PISA performance here: http://www.newyorker.com/arts/critics/books/2011/01/31/110131crbo_books_kolbert?currentPage=all

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  3. For those interested in school choice I would recommend the Foundation for Educational Choice (http://www.edchoice.org/) founded by Milton and Rose Friedman, and the Institute for Justice (http://www.ij.org/) as two organizations worthy of support.

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  4. You're right about unions political clout, but when was the last time you saw a union shut down an entire city? Not lately.

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  5. @DW -- they can still be harmful to students (or prisoners) without such a overt outcome.

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  6. I believe this union exists to take candy from babies. This is the union that deducts $100 a year from my hourly wages, for a temp/seasonal job without benefits. I did not "join", or sign anything indicating I was joining this union. I derive utterly nothing from this union at all; they get a hundred bucks to give to people that already have benefits? I'm lost.

    I'm also in the Musicians Union, which will go after flakey bar owners that don't pay our guarantee, and insure our gear if the place burns down or someone nicks a guitar or microphone.
    I only pay $50 into that union, voluntarily, I might add.

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  7. In reply to DW (via email), I wrote:

    They can do harm without shutting down the city...

    DW replied:

    So can politicians who put employees on involuntary furloughs and try to eliminate their promised pensions and healthcare benefits. There are no good guys here.

    and then I replied:

    But the pols are the bosses...

    I agree that contract nullification is a bad move, but that's what you get with a bilateral monopoly -- arbitrary outcomes that please nobody.

    [and that's the problem -- not enough competition :)]

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