In the debate over public sector unions a lot of liberals have been arguing that they are a positive political counterweight to corporate interests and a defender of the working man, and without them democracy will fail, the American Dream will die, and the earth will drift into the sun… or something like that. I recently provided an example via twitter that I thought demonstrated this isn’t always the case: teacher union opposition to charter school caps, which you’d hardly call good for working class people.
Kevin Drum responded that a single incidence of union political malfeasance doesn’t make them bad overall. Well that would indeed be a silly argument to make, and were this the only example of unions being on the wrong side of educational reform then that clearly would be the argument I was making. But do I really have to run down the litany of bad policies unions have fought to keep, and good policies they’ve fought against in education reform? A clear indicator of how bad they’ve been is that the most anyone will say in their defense on education reform is that “well, some unions are embracing reform now in some places!”. That’s some defense. As Megan McArdle sarcastically pointed out on twitter “to be fair, it DID only take thirty years”.
But is education reform the only place the public sector unions have been a very important obstacle to good policy? Here’s another important example from Ezra Klein from way back in the health care debate:
I have bad dreams. Nightmares, really. They used to be pretty rare. Every fortnight, maybe. But ever since the public employee unionAmerican Federation of State, County and Municipal Employeestook a knife to Sen. Ron Wyden (D-Ore.), they’ve been coming more frequently.
Wyden, after all, is a liberal Democrat. AFSCME is a left-leaning union. Both are desperate for health reform. But AFSCME is spending its time attacking Wyden. Why? Because Wyden wants to replace the employer tax exclusion (I told you that thing was important!) with a progressive tax deduction that all Americans, not just those with good employer benefits, would get. That means the poorest among us would get slightly more and AFSCME’s members might get slightly less….
They’re hitting Wyden to demonstrate their willingness to attack anyone who touches their tax benefit. This is less an assault on Wyden than a warning to Wyden’s colleagues.
And AFSCME isn’t necessarily alone. The Health Care for America Now coalition, which includes AFSCME and other unions, has come out against touching the employer tax exclusion…
And all this elides a simple fact: Capping the employer health care exclusion is good policy. Eliminating it entirely would be better policy.
Of course, critics will say “Ok, you’ve got two policies charter school caps and the employer tax exclusion for health care.” But education reform is a big one, and obviously about more than charter schools caps, and as I’m sure Ezra would agree, getting rid of the employer deduction would be a really big step in reforming health care. But really, my opposition to unions can stand on economics alone: they’re an anti-competitive cartel, and like other cartels are economically undesirable. It’s union defenders who need to appeal to the political power of unions to explain their desirability. I’m just pointing out some pretty terrible examples where this isn’t the case. See Megan for more.
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Wednesday ~ February 23rd, 2011 at 10:00 am
BSE
“But really, my opposition to unions can stand alone on economics alone: they’re an anti-competitive cartel, it’s as economically undesirable as any other cartel.”
I’m totally with you on unions not being on the right side of all issues, but this is just wrong. This is one of those things that people who take econ 101 and then stop at that, believe but which has no basis in the reality that we see around us.
I think you have to approach the issue here in the context of coalitional game theory. In the absence of unions, solution concept that would best fit what we see is the core, while in the presence of unions, the solution concept that we would see is the shapley value. The reason is that the union, taken as a block, has to be compensated for not defecting from any deal with managment, and the workers have to be compensated for not defecting from the union. The kicker is that the shapley value, not the core, has the properties that we would like to see in the final outcome; the core is not necessarily more ‘efficient’ but it is clearly more ‘manipulable’. And don’t let the core equivalence theorem fool you, it only guarantees the efficient outcome by presuming a fully competitive environment.
My point, is that dismissing a union as a ‘cartel’ is not just wrong, but probably gets you the exact opposite answer than you would find if you do the work carefully, keep in mind frictions, recognize that efficiency is not likely under any mechanism, etc. Or, long story short, its complicated, not at all clear that unionization is a net benefit or net cost for society.
Wednesday ~ February 23rd, 2011 at 10:41 am
Adam Ozimek
I’m sure you can formulate some complicated model wherein cartels are great too. But the fact is the majority of economists regard unions as such on positive grounds. If they support them at all, it’s most frequently on normative grounds. This is the conclusion of “What does theory tell us about unions?” chapter of the 20th anniversary edition of “What do unions do?” (I don’t remember if that’s the exact chapter title, but that’s what the chapter is about). So I disagree that mine is the Econ 101 conclusion, and that sophisticated theory tells you unions are good.
Friday ~ February 25th, 2011 at 12:54 pm
Barry
“But the fact is the majority of economists regard unions as such on positive grounds. ”
And what did the majority of economists think of economic deregulation? My guess is (a) they liked it, (b) they loved it, (c) they predicted all sorts of good stuff (much of which didn’t come to pass, and (d) none of the bad stuff.
Friday ~ February 25th, 2011 at 1:26 pm
Adam Ozimek
So you would rather have not had airlines and trucking deregulated? Just checking, because “economic deregulation” is a pretty big category of stuff.
Wednesday ~ February 23rd, 2011 at 12:02 pm
Hal
Ugh, pointing to serial #fail McMegan just made me throw up in my mouth a little.
Wednesday ~ February 23rd, 2011 at 12:53 pm
Th
Libertarians like McMegan tell us that people freed from government interference to act upon their self-interest will lead to better outcomes than more managed economies. Adam tells us that when employees are free to join together to work in their self-interest, they may join together to form an “anti-competitive cartel” leading to worse outcomes. The Wisconsin public employees have chosen to join together and bargain collectively with their employer. Would either of you deny they should have that freedom? What about states where workers are denied that freedom by the government?
Wednesday ~ February 23rd, 2011 at 1:05 pm
Adam Ozimek
I can’t speak for her, but I’d venture Megan believes in anti-trust regulation, as I do. Read David Henderson on whether collective bargaining is just voluntary exchange and a right:
http://econlog.econlib.org/archives/2011/02/collective_barg.html
Short answer: it’s not.
Wednesday ~ February 23rd, 2011 at 3:05 pm
Th
Are you indicating with that link that you equate a union with monopoly businesses and think they should be banned?
Wednesday ~ February 23rd, 2011 at 1:00 pm
Tweets that mention Unions and good policy « Modeled Behavior -- Topsy.com
[...] This post was mentioned on Twitter by mike, s w. s w said: Unions and good policy http://bit.ly/gKq0vH [...]
Wednesday ~ February 23rd, 2011 at 4:08 pm
Anonymous At Work
Adam,
I think the larger critique is that you assume equivalent negotiating power between individual employees and their employers. That is a false assumption, that is made under classic economic models to simplify matters.
And if collective bargaining is a cartel-like behavior to your way of thinking, can you expand on why, particularly if the number/density of employees belonging to the union makes it a cartel. If that is the case, wouldn’t the ABA, AMA, and almost all trade organizations, including such groups as Chamber of Commerce, constitute “cartels”?
Thursday ~ February 24th, 2011 at 4:35 am
Seth
“… wouldn’t the ABA, AMA, and almost all trade organizations, including such groups as Chamber of Commerce, constitute “cartels”?”
Indeed they would. The “tell” here is that unions are horrifying, wicked, malevolent, freedom-hating institutions precisely when low-status people unionize. Doctors, lawyers, actors, football players? Well, let’s see now … no … those are just good honest “voluntary associations”.
The key difference I can see between the doctors’ and lawyers’ unions and the others is that they generally invest more energy in raising barriers to entry and brand building (including trashing non-members as quacks, etc.) than in direct price setting. But that is in large measure a reflection of greater sophistication about how they position themselves, rather than a matter of superior ethics.
To paraphrase Nixon: “when high-status people do it, that means it is not unethical”.
Wednesday ~ February 23rd, 2011 at 5:01 pm
The worst solution except for all the others? - Economics -
[...] is as an institution that fights to protect workers. Reality is somewhat different. As Adam Ozimek puts it:Kevin Drum responded that a single incidence of union political malfeasance doesn’t make them bad [...]
Wednesday ~ February 23rd, 2011 at 5:49 pm
Hector Rodriguez
“But really, my opposition to unions can stand on economics alone: they’re an anti-competitive cartel, and like other cartels are economically undesirable.”
However, unlike most cartels they are made up of a dwindling class of middle class workers that is being pushed under by wage stagnation and will soon find themselves underwater.
What I would have liked to have seen in this post is a similar strike against the many other types of cartels that operate freely in the U.S. As Brooks wrote in his last op ed we should all suffer equally.
BTW the Charter school example was a weak one for they have shown no significant improvement over public schools in graduation rates and states without strong union protection, like Texas show a race to the bottom.
Check our statistics, I live here and our graduation rate is horrible and we are about to close down award winning schools in order to make a budget (but thankfully there are no union members in the street to stir up problems).
What is really galling is that in a few years we will be hearing what horrible teachers the U.S has because no one can pass muster in math and science, despite the fact that we have spent the past year vilifying them in the media.
Wednesday ~ February 23rd, 2011 at 6:35 pm
The worst solution except for all the others? [The Economist] | DreamInn
[...] is as an institution that fights to protect workers. Reality is somewhat different. As Adam Ozimek puts it: Kevin Drum responded that a single incidence of union political malfeasance doesn’t make them [...]
Wednesday ~ February 23rd, 2011 at 7:07 pm
Console
Well, since this conversation comes about due to events in Wisconsin, it’s worth pointing out that Milwaukee has one of the largest charter programs in the country. It’s resulted in the same utter lack of accomplishment as any other “reforms” in american public schools but what are facts when we can claim parade around eggheaded technocratic solutions as “good policy”
http://www.brookings.edu/papers/2009/03_charter_lavertu_witte.aspx
Wednesday ~ February 23rd, 2011 at 7:16 pm
Console
(full disclosure, i’m a member of the national air traffic controllers association)
As for public unions, in my mind they are just like any other special interest group. It’s pointless to talk about competition, monopolies or any free market nonsense because the government isn’t a business and is not subject to market pressures. You could have the best school system in the country and still get your budget cut because the quality of service isn’t what decides your budget. I could be the most productive employee ever and still get hit with a pay freeze because the housing market in my city crashed and killed property tax revenue.
The fact that special interest groups can get in the way of good policy only matters if good policy is the natural result of democracy. And that’s not true at all. So we treat government like government (and recognize that democracy is necessarily compromise between people with competing interests) and leave the economic talk for actual markets.
Thursday ~ February 24th, 2011 at 7:06 pm
Gimlet
That’s why public-sector unions can’t be defended along the same lines as traditional private-sector unions.
http://www.professorbainbridge.com/professorbainbridgecom/2011/02/the-case-against-public-sector-unionism.html
Thursday ~ February 24th, 2011 at 7:58 pm
Console
That’s all nice in the abstract, but I have to go with what Chait says. I mean it’s not like there aren’t states that already exist without collective bargaining rights. Some of them have the highest public corruption in the country (Louisiana) some have the worst schools (Mississippi). I’m sorry but the main checks on patronage and corruption have dick all to do with unions. Maybe on the margin there’s some effect, but there isn’t enough to justify why public employees should be subject to the full wrath of something as fickle as a damn politician. I mean damn, look at the Wisconsin situation. Is pay being cut because the employees are being unproductive, or is it being cut for a completely different reason that has nothing to do with their production? It’s the latter. So why not have a union that points the finger and says someone else needs to take a hit too.
The most that one can really say is that having a Union raises the cost of labor for an employer. But a government isn’t subject to the same pressures as a private sector employer so it’s amusing to think you’ll magically get some gain out of lowering those labor costs. If your civil institutions still suck, you’ll just become another Mississippi. There’s more to the world than supply and demand.
Thursday ~ February 24th, 2011 at 3:45 am
WI Protests are Changing the Way We Think About Public Policy « Chasing Fat Tails
[...] perspective. Apologies if I haven’t typified him correctly). He’s been using the following argument: unions are an anti-competitive cartel, so they’re inefficient; they’re also large [...]
Thursday ~ February 24th, 2011 at 5:49 pm
basketballisthe#1sport
Unions are the collective voice of workers who are powerless without the union. Workers SHOULD be able to influence public policy and the rules of the workplace. The contempt for unions trying to influence public policy is not surprising. Libertarians have always held in contempt the idea of democracy. “I fear no evil for the MARKET is with me.”
Power should not be solely controlled by capitalists and technocrats.
Saturday ~ March 19th, 2011 at 6:50 pm
Republicans Wage War Against Americans | Schismatism
[...] all the talk that public unions tend to bargain for ineffective, bad public policy to protect themselves, it’s more than obvious that the Republican Party [...]