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Unions, Value, and Your Paycheck 3

Even government is supposed to be worth what it costs.

By Petrarch  |  March 8, 2011

In the first two articles in this series, we explored the immutable, inescapable iron law that nobody - no person, no family, no company, no nation - can spend more than they earn forever.

It's often hard to determine exactly how much value one individual worker produces, but at the company level it's easy: is the company making a profit or a loss?  A company making a profit, by definition, is producing more value than it costs to make, so society is automatically better off.

How does this apply to a government?  Governments aren't supposed to make a financial profit like companies are; but there's no doubt that many of the things government does actually do benefit society.  We're all better off being protected from foreign enemies by the army, from criminals and looters by the police, and from fire by the fire department, not to mention the benefits of well-maintained roads and bridges.

Productivity Matters in Government Too

Just because government can and does provide beneficial services does not mean that all government services are helpful.  It's been well documented how child protection agencies do more damage to children than abusive parents do; as awful as child abuse is, government doesn't seem to have the ability to improve the situation.  Yet states continue dumping money into child protection agencies, "punishing" their eternal failure with yet more taxpayer dollars.

Public education has been an American fixture for well over a century; most people would find it hard to imagine a country without it.  Education certainly provides a societal benefit; our Founders believed deeply that their republic would work only if the people could be kept well informed, which at the very least implies the ability to read.

However, time after time across this nation we see the complete inability of public schools to educate efficiently, and in many cases they can't educate effectively either.  The Democrat-cancelled D.C. voucher program proved that deprived inner-city kids, when removed from their failing public schools and placed in private schools on taxpayer-funded vouchers, were able to improve drastically in every way at half the cost.  Efficiency is all about better outcomes for less money; public schools are poster-children for the exact opposite.

This, to a large measure, is what the fight between Wisconsin Gov. Walker and his teachers unions is all about.  CNS News reports:

Two-thirds of the eighth graders in Wisconsin public schools cannot read proficiently according to the U.S. Department of Education, despite the fact that Wisconsin spends more per pupil in its public schools than any other state in the Midwest.

In the National Assessment of Educational Progress tests administered by the U.S. Department of Education in 2009—the latest year available—only 32 percent of Wisconsin public-school eighth graders earned a “proficient” rating while another 2 percent earned an “advanced” rating. The other 66 percent of Wisconsin public-school eighth graders earned ratings below “proficient,” including 44 percent who earned a rating of “basic” and 22 percent who earned a rating of “below basic.” [blockquote]

By any definition, the people of the state of Wisconsin are overpaying for the service they get from their public schools.
What should they do?  Well, what does any good American do when they're being ripped off - by their car mechanic, by their cellphone company, by their airline?  Switch to a different vendor, of course!

That's what millions of Americans did when the UAW drove up GM's costs while not offering more value: people got used to buying non-union Toyotas instead.  Rather than produce more value than they paid, GM and its unions produced less value: that is, they lost money.  Eventually they ran out and went bankrupt, only being saved by political intervention and your tax dollars.

The virtue of the free market is that customers don't have to pay the price for a company's mistakes more than once - you didn't have to buy an overpriced GM car if you didn't want to.  Over time, this keeps union demands in check: take too much and the company collapses, throwing everyone out on the street and destroying the union parasite along with its host.  From Pittsburgh's steel mills to Eastern Airlines, examples could and do fill many books.

Greed, Lies, and Laziness

That is not true for public-sector jobs.  If the DMV is providing lousy service, there is nothing you can do about it: the government has a legal monopoly.  The same is true for the police, the fire department, any number of bureaucracies - almost everything the government tries to do.

With education it's even worse.  Yes, any parent has the right to take their kids out of public school and send them elsewhere, but they still have to pay for the public school via taxes regardless of whether their kids are there are not!

Imagine a situation where, if you didn't want to have an AT&T phone, you were free to pay for a Sprint phone if you liked - but you still had to pay AT&T for their phone you weren't even using!  How un-American!  How unjust!  Yet that is precisely what the public-school monopoly does.

What's more, the Wisconsin public schools are a monopoly piled on top of a monopoly.  Not only do the public schools themselves have a monopoly on "free" education, but the teachers unions have a monopoly on providing teachers to those schools.  In addition, thanks to cushy union contracts, the union has yet another monopoly on providing health insurance to most of the teachers, at an extra cost of $68 million per year.  Where else would we tolerate this kind of greed and double-dipping in taxpayer funds?

If the Wisconsin schools were an ordinary company, they would have failed in bankruptcy long ago because nobody would ever choose to pay the enormous amounts they demand for such lousy results.

Because they are government agencies, though, they can't go bust - taxpayers are simply forced to pay ever more by the power of the law.  The teachers unions don't have to persuade anyone to use their services; in fact they'd just as soon you didn't, because you're going to be paying them regardless.

A situation like this seems bizarre and unnatural, as indeed it is.  In the last article in this series we'll examine why public-sector unions by their very nature are a conflict of interest and a conspiracy against the taxpayer, and have no place in a free society or a country which cares about results.