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I have waited 50 years for this: a showdown between the teachers’ union and a state legislature. It took successful revolts in Tunisia and Egypt to get members of the teachers’ union into the streets. They see themselves as liberationists. In fact, they are Mubaraks.
We are now seeing the equivalent of Custer’s last stand. The question is: Who is Custer in this confrontation, the governor or the teachers’ union?
The average teacher’s salary for the state is $49,000, but that does not count medical benefits and retirement. The total compensation package for Milwaukee teachers is $100,000. This is for eight months of work per year.
The teachers are not teaching. They are taking a paid sick leave in the streets of Milwaukee. The union is telling the voters and the state legislature: “Either we retain our privileged position, or else!” Are we seeing a replay of Blazing Saddles?
THE PATCO SHOWDOWN: 1981
The symbolic showdown between the Federal government and a government union came in 1981, Reagan’s first year in office. The head of PATCO, the air traffic controllers’ union, called a strike. This strike was illegal. He did not care.
Reagan had for years been president of the Screen Actors Guild. He knew how to deal with unions. He knew that the voters would not tolerate blackmail: “Deal with PATCO or we will shut down the friendly skies.” He issued a deadline. They had to be back at work on a particular day or else lose their jobs. A few of them went back to work. Most did not. The government hired replacements, and PATCO was busted. No Federal union has attempted anything like PATCO’s walkout since then. They got the memo.
There is a huge teacher glut nationally. (Glut: oversupply at an artificially high price that is set by the government or a government-licensed monopoly.) The ability of Wisconsin’s school districts to replace every teacher on strike with a certified teacher over the summer would be easy. They could probably replace them at 70% of today’s benefits package.
The union’s leaders know this. They know that the benefits reflect the privileged position of the union-restricted access to bidding. If every qualified teacher in America who wanted to bid was allowed to bid, the compensation packages offered to teachers would fall like a stone.
If Reagan could replace over 11,000 PATCO workers out of 13,000, without shutting down the airlines, think of how easy it would be to replace every striking teacher in Wisconsin.
We are back to Blazing Saddles.
THREATENING A FROZEN LEGISLATURE
The 14 Democrats in the legislature have adopted a unique way to keep the governor’s proposed union-busting legislation from getting passed. They have refused to show up. The legislature lacks a quorum by one vote. So, there can be no new legislation dealing with money. The Democrats supposedly are all in hiding in Illinois. They receive salaries for this. Call it a paid vacation.
I hope the idea spreads. I would prefer to pay legislators to flee the state rather than pass laws. I would even support expense accounts for AWOL legislators.
Think about this. The Democrats are saying: “no new funding laws.” The story of Br’er rabbit and the brier patch comes to mind. Think of the legislatures of the United States in which there would be no new spending laws passed from now on. I would call that deliverance. Yet this is the Big Gun in Wisconsin. Somehow, I don’t think the newly elected governor will regard this as a threat to be taken seriously.
The threat is obviously bogus. Any political party that threatens to hijack the political process is going to find itself out of power after the next election. The Democrats will return to the legislature, and the political battle over the teachers’ union will get settled, one way or another. Their bluff will not work.
We are back to Blazing Saddles.
Both sides are jockeying for support by the voters. The union thinks the voters will back its demands. The governor either thinks otherwise, or else he just does not care. He has indicated that he will not budge.
The political question is this: Is the public’s concern over the retirement packages offered to unions greater than its concern over showing support for public employment unions? We do not know yet. What we do know is this: voters eventually vote their pocketbooks. If voters perceive that they will be called to sacrifice for the sake of retired government employees, they will rebel. It may be now. It may be later. It will take place.
In much the same way that protests in the Arab world have been spreading, so have union protests. They have taken place in Ohio and Iowa. But the protesters represent a minority: the unions. The protests in the Arab world represent a long-suppressed majority of voters. The unions think that the key is public protest by shutting down the government. That is unlikely to work for minorities that are deep into the voters’ pocketbooks.
THE ECONOMICS OF TRADE UNIONS
To understand what is at stake, you must first understand the economics of all trade unionism.
Members assert the moral authority and legal right to use violence against any person who offers to work for less than the union is demanding. Usually, this violence is hidden: the government’s threat of fines against employers who hire non-union members, but not always: violence against “scabs.” Members assert that if they get a majority vote in favor of this legalized violence in one company election, they should continue to exercise it forever. The union decides who gets membership. It reserves the right to exclude people. This restricts the labor market, thereby raising wages for members. The members assert a legal right to “their” jobs in a strike. After the strike, they must be re-hired by law. All people hired in the interim must be fired. The unions claim to represent “labor,” but at all times the vast majority of laborers are not members. Legislation favoring union members discriminates against the vast majority of Americans, who do not belong to unions. The goal of all trade unionism is to raise costs of production. The economic effect of higher costs is reduced output. The economic effect of reduced output is the reduction of wealth for most customers. Excluded workers must seek employment with firms that were their second-choice. This subsidizes firms that are not unionized: a larger supply of labor at a reduced price.
Then there is the economics of trade unionism within civil government. All of the previous applications of the law of supply and demand apply. There are some new twists, as in twisted arms.
Inside a geographical area, a civil government exercises a monopoly or near-monopoly. Citizens cannot seek alternative sources of supply. The union exercises clout at election time: a concentrated focus. The government comes to voters in the name of necessity. The government union works under the umbrella of this government claim of necessity.
With this as background, consider the economics of government officials when dealing with trade unions.
Governments for 70 years have promised higher retirement benefits rather than offering immediate pay raises. Elected officials run up the bills for future elected officials. Union leaders go along with this, since they can claim easy victories. Union members actually believe that they will receive these enormous retirement and health insurance benefits. They vote for politicians who make these promises on behalf of future politicians. Politicians seek these votes. The general public until 2009 has ignored these promises, believing that future taxpayers would pay them. The combination of focused beneficiaries (union members) and unfocused victims (present taxpayers who will live long enough to become future taxpayers) has led to enormous state and local public debts — debts that cannot be paid and so will not be paid.
Beginning in 2009, a minority of voters, called Tea Party voters, has become aware of what their predecessors should have seen as far back at the 1960s: the unfunded liabilities of the state pension and medical insurance programs are escalating rapidly. In short, politicians will not be able to kick the can for another decade. The bills are coming due.
The voters will not elect politicians who insist on paying off these debts, let alone politicians who campaign on a platform of continuing to make these promises to union members.
THE SLOW DEATH OF AMERICAN UNIONS
The teachers’ union members are acting as though they are convinced that the New Deal’s attitudes toward unions in general did not die in the 1970s. They are wrong. We are no longer living in the 1970s. This is taken from a Website written by university-level professional economic historians.
Outside the United States, unions grew through the 1970s and, despite some decline since the 1980s, European and Canadian unions remain large and powerful. The United States is different. Union decline since World War II has brought the United States private-sector labor movement down to early twentieth century levels. As a share of the nonagricultural labor force, union membership fell from its 1945 peak of 35 percent down to under 30 percent in the early 1970s. From there, decline became a general rout. In the 1970s, rising unemployment, increasing international competition, and the movement of industry to the nonunion South and to rural areas undermined the bargaining position of many American unions leaving them vulnerable to a renewed management offensive. Returning to pre-New Deal practices, some employers established new welfare and employee representation programs, hoping to lure worker away from unions. Others returned to pre-New Deal repression. By the early 1980s, union avoidance had become an industry. Anti-union consultants and lawyers openly counseled employers how to use labor law to evade unions. Findings of employers’ unfair labor practices in violation of the Wagner Act tripled in the 1970s; by the 1980s, the NLRB [National Labor Relations Board] reinstated over 10,000 workers a year who were illegally discharged for union activity, nearly one for every twenty who voted for a union in an NLRB election. By the 1990s, the unionization rate in the United States fell to under 14 percent, including only 9 percent of the private sector workers and 37 percent of those in the public sector. Unions now have minimal impact on wages or working conditions for most American workers.
Union membership is lower today than in the 1990s. This is from the United States government’s Bureau of Labor Statistics.
In 2010, 7.6 million public sector employees belonged to a union, compared with 7.1 million union workers in the private sector. The union membership rate for public sector workers (36.2 percent) was substantially higher than the rate for private sector workers (6.9 percent). Within the public sector, local government workers had the highest union membership rate, 42.3 percent. This group includes workers in heavily unionized occupations, such as teachers, police officers, and fire fighters.
Sally Field won an Oscar for Norma Rae, a 1979 film about unionizing a nearly bankrupt textile plant in the South. The film won 9 Oscars and had nominations for six others. That movie was a classic example of Hegel’s statement, “The owl of Minerva flies only at dusk.” He meant that the justification of a practice peaks at the end of that practice’s dominance. So it has been with trade unions. In 1979, the movement was in steep decline. After 1981, it collapsed, except for government unions. Now a government union is trying to pull off a Norma Rae. It is way too late.
The governor of Wisconsin says, “We’re broke.” The state has a $3.6 billion deficit. In order to cut this deficit, he says, “collective bargaining is the key,” he says. The unions must lose this hammer lock. He learned this when he served in county government.
I think we really are seeing the equivalent of Reagan’s busting of PATCO. If the union loses, this will throw the fear of politics into the hearts of government union officials all over the United States. They will know — and their members will know — that the days of strikes are roses are over. The days of “Deal with us, or else,” is going to be answered: “Go ahead and shoot.”
Karl Marx wrote of the reserve army of the unemployed. Today, we have a reserve army of underemployed and formally certified. These people will bid for jobs that are not protected by union rules against making bids.
I have waited half a century for this. I wish that Sylvester Petro had lived to see it. He stood firm against strikes and roses when it was academic suicide to do so.
February 23, 2011
Copyright © 2011 Gary North