Wednesday, October 7, 2009

Local and State Governments are going bankrupt because ...

Government workers and their unions:
Once upon a time public sector workers received less pay than their private sector counterparts in return for better benefits and greater job security. But that bargain has been breached. Public sector wages have more than caught up, while the differential between public and private sector benefits has increased so much that public sector work, particularly for the unskilled, is greatly coveted. To protect such benefits, the unions have tenaciously opposed Senator Max Baucus's plan to tax expensive health insurance plans to finance an extension of coverage. Supporters of public sector union power have developed a rationale for the government employees' gold-plated perks. The argument is that public employees are the vanguard of the working class. As such, the benefits they achieve will eventually have to be matched by private sector employers.

Private sector unions have a natural adversary in the owners of the companies with whom they negotiate. But public sector unions have no such natural counterweight. They are a classic case of "client politics," where an interest group's concentrated efforts to secure rewards impose diffused costs on the mass of unorganized taxpayers. Also unlike private sector unions, those in the public sector can achieve influence on both sides of the bargaining table by making campaign contributions and organizing get-out-the-vote drives to elect politicians who then control the negotiations over their pay, benefits, and work rules. The result is a nefarious cycle: Politicians agree to generous government worker contracts; those workers then pay higher union dues a portion of which are funneled back into those same politicians' campaign war chests. It is a cycle that has driven California and New York to the edge of bankruptcy.

Read the whole thing.

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