paulbissett.com

The problem with public-service “unions” (and any industry that gets public subsidies) is that they are not truly negotiating with their managers (the elected representative) in an arms-length transaction.

In an arm-length transaction the unions would negotiate with management for a share of the corporate profits.  If the company pays too much of its resources to shareholders, management, or union, then the company goes out of business. There is an inherent requirement in union negotiations that they do not try to take an excess share of profits because in doing so, they will eventually destroy the company and themselves.

Governments have no profits; they just have tax- and fee-based revenues. The control and use of the taxing authority of the government resides in the elected officials. An elected official that is beholden to a public-service union (or any other subsidy receiving industry) is not dealing in an arms-length transaction in negotiating with the unions for their pay and benefits.

In a polarized political environment, this “corrupt” situation is exacerbated because both the unions and the elected official are fighting for their paychecks. If the elected official loses their elected position, they lose their paycheck, power, and podium for advancement. There is a direct benefit for the union-leaning politician to give more pay to the unions so the unions can give more direct campaign contributions, as well as support the politician through volunteer efforts. This effect more tightly weds the favored politician to the union because each are fighting for their preservation against those tax-payers who would direct the available tax revenues to other uses.

This is not a theoretical possibility, but in fact the reality of today’s political environment. Public service unions were the largest single supplier of election funds in the 2008 elections outside of the political parties themselves. These funds were given almost completely to the Democrats, who promised to continue to support their pay and benefits.

This is a “corrupt” system, where corrupt is defined as being unsupportable in the long-run because eventually the tax revenues can not support the system and the system collapses upon itself. See Greece’s current economic conditions for an example of what happens in the long-run if this system is allowed to become entrenched.

The same problem extents to any industrial group seeking subsidies or other transfer payments from the government, whether it is the oil & gas industry, the farming industry, etc.  If those payments are used to lobby or elect political representation, it is bad for democracy, it is bad for the economy, and most importantly it is very bad for tax paying citizens.

It is very bad for citizens because this is a corruption of the democratic system required to maintain economic balance and longevity to any civil society.

Updated March 14, 2011:
In Wisconsin, police and firefighting unions are threatening to boycott businesses that do not support their efforts to over-turn the recent Wisconsin laws.

The subtle long-term threat about which I wrote has moved into direct threats against citizens from the civil servants responsible for protecting those citizens.

Free association is a guaranteed right in this country. No one has suggested otherwise in any of the reasonable debates about public service unions.

The police and firefighter unions were explicitly excluded from the new Wisconsin laws. Yet, the police and firefighter unions are leading the threats against businesses if they do not sign a petition to rescind these laws.

“Corruption” has taken on a new definition with respect to the impact of public service lobbying on democracy.