The Coming Battle Over Public Sector Unions ... A Case of 'Tax Payers Vs. Tax Eaters' :: Political News and commentaries

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January 8, 2011

The Coming Battle Over Public Sector Unions ... A Case of 'Tax Payers Vs. Tax Eaters'

Interesting editorial at The Economist on the city, state, and federal governments' looming battle with public-sector unions ... a case of "tax eaters" vs. the tax payers ... and clearly a case of the tax-payers against the liberal-progressive, union-supported, Democrats.

LOOK around the world and the forces are massing. On one side are Californian prison guards, British policemen, French railworkers, Greek civil servants, and teachers just about everywhere. On the other stand the cash-strapped governments of the rich world. Even the mere mention of cuts has brought public-sector workers onto the streets across Europe. When those plans are put into action, expect much worse.

"Industrial relations" are back at the heart of politics -- not as an old-fashioned clash between capital and labour, fought out so brutally in the Thatcherite 1980s, but as one between taxpayers and what William Cobbett, one of the great British liberals, used to refer to as "tax eaters". People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else's expense (see article). In many rich countries wages are on average higher in the state sector, pensions hugely better and jobs far more secure. Even if many individual state workers do magnificent jobs, their unions have blocked reform at every turn. In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.

While union membership has collapsed in the private sector over the past 30 years (from 44% of the workforce to 15% in Britain and from 33% to 15% in America), it has remained buoyant in the public sector. In Britain over half the workers are unionised. In America the figure is now 36% (compared with just 11% in 1960). In much of continental Europe most civil servants belong to unions, albeit ones that straddle the private sector as well. And in public services union power is magnified not just by strikers' ability to shut down monopolies that everyone needs without seeing their employer go bust, but also by their political clout over those employers.

Many Western centre-left parties are union-backed. Britain's Labour Party gets 80% of its funding from public-sector unions (which also, in effect, chose its new leader). Spain's sluggish state reform may be partly explained by its prime minister's union membership. In America teachers alone accounted for a tenth of the delegates to the Democratic convention in 2008. And the unions are more savvy: this time, the defenders of vested interests are not brawny miners spouting Trotsky, but nice middle-class women, often hiding behind useful-sounding groups like the National Education Association (American teachers) or the British Medical Association.

[...] Private-sector productivity has soared in the West over the past quarter-century, even in old industries such as steel and carmaking. Companies have achieved this because they have the freedom to manage -- to experiment, to expand successful innovations, to close down bad ones, to promote talented people (see article). Across the public sector, unions have fought all this, most cruelly in education (see article). It can be harder to restructure government than business, but even small productivity gains can bring big savings.