The recent goings-on in Indiana and Wisconsin have exposed me to my free market friends. For years I’ve been able to get by without much question, never bringing up unions. This past week though I’ve come out of the pro-union closet and I’m here to say: If you respect the free market, freedom, and libertarianism… you ought to be pro union too. Or, at least, pro their right-to-do-business.
For the record, I want to say that I never advocate government interference in a market. Often unions have called on government to benefit them and this is wrong. What is equally wrong is seeing corporations do the same. Ayn Rand once said:
“It was business, not labor, that initiated the policy of government intervention in the economy (as long ago as the nineteenth century)—and business was the first victim. Labor adopted the same policy and will meet the same fate. He who lives by a legalized sword, will perish by a legalized sword.”
In using policymakers to shield themselves from the bargaining power of unions, companies and governments are intervening in the economy.
I think I should say that The Heartland Institute, and certainly most folks here don’t agree with the following line of reasoning. I don’t know why.
An Infringement on Contract Law
Recently introduced so-called “Right to Work” and other anti-union policies have many of us asking a lot of questions. Like, “Who do unions fund in elections?” and “Why can’t I work some places without belonging to the union?” But many of us fail to ask the root questions; the questions that address the fundamental rights of entities and individuals.
To get closer to these issues we need to start asking: “What right has the government to interfere in an agreement between two parties?” In “Right-To-Work” states, the government puts themselves in a position to void contracts at any point, to over-regulate mutual agreements between parties.
Let’s look at a practical example. Six baristas at Suzie’s Café band together and come to management (Suzie) demanding health care coverage and retirement plan. As part of the new agreement, they also demand that future hires through the end of the contract must also join their coalition. Suzie has the opportunity here to bargain or simply deny the requests of this newly formed union. Lets say, because these are quality employees, that she agrees and signs a contract.
In this scenario, is it really in the scope of government to interfere with this contract? To make it impossible for parties to agree on these terms in the future? Or, in the case of Wisconsin, is it acceptable that the state government say, “Well these employees can bargain for higher pay, but can’t ask their employer (collectively) for a retirement package.”? It seems that this is much less a battle of against corruption and more an infringement on the rights of parties to enter into contracts with one another.
Overbearing Government Regulation
Today our state and federal governments have slowly annexed regulator power in every possible direction. The FCC has recently introduced new regulations on how we get our internet information. The FTC has begun to push for new regulations on how companies can advertise online. The EPA has rewritten the book on over-regulation. The [insert any 3 letter executive branch body] has begun to push for new regulations on [insert previously private aspect of life].
Why then don’t policies that limit our freedom to enter into private agreements, to organize peaceably, to negotiate the terms of our employment… why don’t they get looked at with the same ire from my friends on the side of limited government?
“But it’s My Hard-Earned Tax Dollars”
I think it’s established that private-sector unions ought be acceptable, but many now are suggesting that something inherent to the public sector makes unions bad. Problem is, no one seems to explain well why that is. What is it about the government as employer that makes bargaining for better compensation problematic?
I have heard that the problem occurs because often governments operate monopolistically in some markets. Certainly the government often does operate a monopoly. Schools would be a great example of this. The problem is that where they operate a monopoly the also operate a monopsony. Just as they are the only seller of a produce (education, in the case of schools), they are the only buyer of educator labor. This opens itself to exploitation of the laborers more than exploitation of the buyer of labor. John Merrifield wrote an interesting study on just this idea. He found that, in Texas, monopsony effects of the public education far outweighed monopoly in the market. Teachers were underpaid as a result, what is the equivalent to nearly $3000 annually.
Note: In the case of Wisconsin I want to address another argument I’ve heard that doesn’t really belong here. Folks seem to think because X amount is going toward healthcare, retirement, or the like, it’s fair game for lawmakers to change. The problem with this argument is that employees are given compensation packages. Employers do not care what percentage is going to healthcare and what percentage is going to salary. If we force employees to pay a higher percentage of their healthcare without giving them that money in some other form, we are cutting their compensation.
In Wisconsin they are trying to cut total compensation, then saying, “you legally can’t ask for that back anymore,” by removing their power to bargain for any part of compensation outside of wages. So, as the government cuts their non-wage compensation, teachers will be vilified as they ask to make up the difference in salary increases.
Now, I’m not suggesting that teachers ought to be paid more, given more benefits, or have either decreased. I’m simply arguing that we ought to play by the rules of the market, not take away their right to bargain.
Students’ Best Interest
As someone focusing much of my time on education policy, I see unions demonized by all of my peers. To them all I say: Unions have power in education because we’ve given them power. Unions aren’t corrupting, politicians are just corrupted. Yes, unions are often against reforms that appear to be in the best interest of students. This is true for one reason: they don’t represent students, they represent teachers. The government who promises a free and public education for all citizens are the folks tasked with representing students, and the more they cave to union demands, the less they are successful at their job.
As more and more come out of the woodwork shouting about the great injustice of educators striking or taking “sick days” to demonstrate, I feel the need to shout louder back at them. As a seller of labor, especially when you are often the second wage earner with less mobility (as teachers often are), in a monopoly or oligopoly, you have limited negotiating tools at your disposal. Certainly students are often caught in the crossfire, but to suggest that teachers are wrong to hold out their labor while negotiating is an absurdity.
Lets look at another quick analogy: textbooks. Lets say McGraw Hill is charging $20 per book for biology textbooks to the state of Wisconsin public schools. The state of Wisconsin then says they’ll only pay $17 per book going forward. Would it be wrong of McGraw Hill to not sell them the books? Would it be unjust and unfair to the kids?
Problems with the “Collusion” Argument
So that you all don’t think I’m a total dunce, I want to share one argument against unions that makes me waver. Keeping with theme, I’ll offer an analogy:
If HP, Canon, Lexmark, and Epson CEOs sat around a table tomorrow and decided to set their prices artificially at $500 for a color inkjet printer, would it be legal? The answer is no. This would be collusion. So why isn’t it collusion when sellers of labor get together and set a price? Well, it is and it isn’t. It isn’t because not all laborers join unions. And it is because they do influence prices.
The way I’ve settled this argument internally is by simply deciding that all collusion should be legal.
So, I urge everyone to step back a moment from the rhetoric and emotion in Wisconsin, Indiana, and around the nation and frame the argument just like you would any other government regulation. The government has no place interfering with contract law, collective bargaining, or any other legal agreement between parties—especially when they use these freedoms as scapegoats for their own failure to balance budgets and make good policy.
Leave unions alone, grow a pair, balance a budget, get back to work.