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The Political Economy of Government Employee Unions

February 26, 2011
Thomas J. DiLorenzo
2/26/2011

The main reason why so many state and local governments are bankrupt, or on the verge of bankruptcy, is the combination of government-run monopolies and government-employee unions. Government-employee unions have vastly more power than do private-sector unions because the entities they work for are typically monopolies.

When the employees of a grocery store, for example, go on strike and shut down the store, consumers can simply shop elsewhere, and the grocery-store management is perfectly free to hire replacement workers. In contrast, when a city teachers’ or garbage-truck drivers’ union goes on strike, there is no school and no garbage collection as long as the strike goes on. In addition, teachers’ tenure (typically after two or three years in government schools) and civil-service regulations make it extremely costly if not virtually impossible to hire replacement workers.

Thus, when government bureaucrats go on strike they have the ability to completely shut down the entire “industry” they “work” in indefinitely. The taxpayers will complain bitterly about the absence of schools and garbage collection, forcing the mayor, governor, or city councillors to quickly cave in to the union’s demands to avoid risking the loss of their own jobs due to voter dissatisfaction. This process is the primary reason why, in general, the expenses of state and local governments have skyrocketed year in and year out, while the “production” of government employees declines.

For decades, researchers have noted that the more money that is spent per pupil in the government schools, the worse is the performance of the students. Similar outcomes are prevalent in all other areas of government “service.” As Milton Friedman once wrote, government bureaucracies – especially unionized ones – are like economic black holes where increased “inputs” lead to declining “outputs.” The more that is spent on government schools, the less educated are the students. The more that is spent on welfare, the more poverty there is, and so on. This of course is the exact opposite of normal economic life in the private sector, where increased inputs lead to more products and services, not fewer.

And now… the rest of the story. …..

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2 Comments leave one →
  1. Beth permalink
    March 1, 2011 1:55 pm

    We have lived too long with a government that believes what is good for them is good for the people. A government that allows private sector jobs to go overseas for the express purpose of obtaining higher profits for shareholders and pensions, at the cost of private sector jobs in the US. A government that thrives by insuring its citizens live in such constant fear and uncertainty that they will take orders and pray for the best. A government that has created a system of rewards that constitute preferential treatment for the few and as a result a class system. A class system that provides a better standard of living for those in its employ. A system of the state that that enslaves all to its ‘group think’ mentality by ignoring the education of 3 generations. A system that corrupts the very fabric of a country formed by the people, for all its people.

    The dominoes of unemployment, bank fraud, pension bankruptcies, state and local government failures, commercial real estate crashes, the coming student loan fiasco, and ignorant citizens leaves our country in the hands of the wealthy few who have the private military and a nation of slave workers ready to do their bidding. We have succeeded in turning this country into a copy of what we left 250 years ago! The few of us who see this may not have enough time and power to significantly change anything, but I will go down fighting for the very life of my country. Will you?

  2. Eric permalink
    February 27, 2011 11:19 pm

    Why doesn’t anybody address the people on welfare .They got working people fighting each other and taking cuts in pay and give backs, but don’t touch the free ride

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