Government Unions

"Through their strong unions, workers and peasants destroy their oppresors." Azerbaijan, 1920s.

“People of the same trade seldom meet together,” Adam Smith famously wrote, “even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” He goes on to say that this cannot, as a practical matter, be prevented. But it is why we have laws against collusion and cartels in business.

But we not see that people of the same trade includes employees. We do not see it, simply because our stereotyped idea of a unionized worker is of somebody poor, although that has not been true for several generations. In other words, any union is ultimately, by its nature, a business cartel, a conspiracy against the public. While we cannot perhaps prevent this from ever happening, we ought certainly not to be passing laws assisting the process.

In the private sector, fortunately, the problem is self-limiting. If the employees of one firm unionize, it forces the prices up, the firm simply becomes non-competitive, and goes out of business. Along with the union.

Unions quickly discovered, therefore, that in order to survive they had to organize and operate across an entire industry sector. At this point, there can be no pretense that their adversary is some imaginary too-rich capitalist making “excess profits”; it is the consuming public. It is everybody not in the union.

And that worked well enough for the unions for a time. It has come a cropper, though, through growing international trade. Unless the union is global as well as industry-wide, consumers can simply seek the products they need at lower prices offshore. So far, unions have not managed to organize world-wide; although of course they are trying to fight “free trade” for this reason.

Hence the disappearance of entire industry sectors from across the developed world. This is not an entirely bad thing; it gives a chance for the poor world to develop. And with the progress of globalization, we can trace the decline of unions everywhere in the manufacturing sector, where they began. Most unionized workers today are in government. There is a reason for that.

There have been two places where it is harder to go offshore. One is personal services. So the developed world has retained its edge in the “service sector.” And the professional associations—unions for service workers--are still having a field day. But they too are beginning to feel the bite. Improved technology has made offshoring more feasible here too. We have seen the rise of call centres, offshore accounting, “medical tourism.” Information technology is cutting into their cartels as well: “citizen journalism” and homeschooling, for example. I wouldn't give them that much longer on the gravy train.

The one place where the cartel works best is government. Here there is no free market, no consumer choice, apart, in democracies, from elections every four years or so. Here, then, is the one place unions can most flourish, and can continue to flourish against all comers. Whenever the union enters into “negotiations” with their bosses, it is really people of the same trade on either side of the table. As Adam Smith pointed out, there is only one way this will go.

For exactly the same reason, here is one place unions should be aggressively prevented. There is almost nothing but conscience to stop them from soaking the rest of society for everything they want, down to the socks and underwear. And this, growing and avaricious government, as Ibn Khaldun pointed out six hundred years ago, is what invariably causes the fall of civilizations.

I have recently read two pieces convincingly arguing that, quite apart from any White House direction, the current American IRS scandal is a more or less inevitable consequence of the unionization of the public service. Unionize the guys with their hands on the levers of power, and they will begin operating in class self-interest. It is obviously against their class self-interest for tax-slashing groups to come into government. Therefore, they will work together to prevent this.

You unionize government workers, and you are creating a ruling class.

Granted, it is not a hereditary ruling class, although there are obvious growing tendencies in that direction. There is sometimes, though not that often, open competition for government jobs, as opposed to hiring relatives and friends. But it would actually be better if government positions were hereditary: then there would be some incentive to leave the living carcass for the next generation. Now, the incentive is for this generation to milk the system for all it can before they pass on, for their inheritors will be strangers.

It was only in the 1960s that government workers were permitted to unionize in North America. I think it is time to chalk that one up as one of the historic bad ideas. Government workers should not be allowed to unionize, and should not be allowed to strike. Their pay should be pegged as a percentage of private sector pay.

If it is not too late. The sad truth is that, by now, as Tim Hudak can attest, anyone running on a platform of cutting government or cutting government salaries is facing into a stiff headwind. The entire machinery of government, in addition to the campaign contributions of all the highly-paid government workers, will be working against them.