May 18, 2008

In California, unions have the upper hand and will eventually take over

This pretty much sums up the current situation with public unions and how they are contrasted with private unions. Again we are reaching a tipping point as the Vallejo potential bankruptcy all but too painfully points out. this is all about greed and control and "we want what they have" mentality. It has to come to an end sooner or later. The Housing crisis may bring it to a head quicker due to the shortfall in property tax revenue which will be hitting home soon. This is a showdown between the taxpayers and the "ruling elite"...the public employee unions, the spinless political hacks we let get elected and their pork barrel dog and pony show.

The trouble with unions
Napa Valley Register

When I read the recent Register article about the service workers unions approaching the City Council for support in unionizing new hotel workers, all I could think was here comes trouble. I hope the City Council does not help them.

I think most people believe that unions counterbalance management in a sort of equal relationship, one side representing one point of view, the other another, and that it all balances out equally assuring fairness. But it is not an equal relationship, the unions soon grow to have more power than management and can control the entire situation to the point that the employer becomes harmed, even bankrupt.

Let me first of all say that often times unions have done a lot of good, so I am not necessarily opposed to them in total.

But there are two main reasons for unions having an unfair advantage that it is important for people to understand. This happens in both private unions and even more so in government.

The first reason is that labor unions all link together as a large unit, while the employers, be they government or private, have to act independently by law. If you can control the position of labor across a whole field of employment, say all the firefighters in the state acting together, then each individual local government is far out manned.

The second is that they are not a feature of a free marketplace, but are an invention of the government to control a free market place. Unions only exist because government laws and regulations mandate them. A marketplace, on the other hand, would exist whether the government regulated it or not.

What that means is that by taking away some of the freedom of employers and employees to freely associate on whatever terms they prefer, you lose economic efficiency. On an economic basis, there is just no way around it.

Vallejo's safety unions are a good example of how that harms us.

The salaries they have negotiated are a shocker they are so high, yet they have refused to negotiate and caused the city to go into bankruptcy. And yet they still won‚t negotiate, they have no incentive to do so. And there is little that the city can do about it. In a non-union environment, Vallejo would have cut salaries, benefits, rearranged work schedules and a number of other things that would have saved the city through tough times. The same thing any household would do when budgets were tight.

The lesson? Union contracts cause the management of a company or government to lose control of the very thing they are supposed to run. And the unions have no responsibility to manage it themselves, even though they control it.

Of course, the automotive companies are yet another example where union demands and economically unfeasible contracts could not be gotten out of and they have bankrupted the entire auto industry in America. And which automaker has risen to the top and avoided all this? Toyota, which does not have unions.

Because unions are a government regulatory creation, they are slow to respond to changing economic circumstances, if at all. The only real control over them is whatever the employer can exert.

An employer, be that the government or private, has an organic limit on its behavior. A company has to please its customers or it will go out of business. The government is limited by what it can extract from taxpayers.

But the unions have no organic limit built into their economic system. The company or government can go bust and the unions can remain unaffected. We have seen that with both Vallejo and the auto industry. They are only limited by moral suasion and whatever the management can convince them to do.

The auto industry could have chosen to keep their prices high, but if customers won't buy that is it, they are done. On the other hand, if General Motors had just decided not to pay their union workers as much, they would have been hauled into court and fined.

This is an incredibly important point for the public to understand about unions, because this is not about whether anyone or I likes them or not, it is about the way economic reality functions. There is an organic limit built into what a government or company can do, but there is no limit built into what a union can do. Therein lies the problem.

If you doubt this, all you have to do is look at what has happened. The auto industry, Vallejo, state worker pension and medical benefit unfunded liabilities, the fact that the city of Napa is mandated to pay a salary rate based on bankrupt Vallejo salaries even when it makes no sense, these are all things that no one would do unless mandated by law.

The fact is that the way the system is structured, especially in California, unions automatically have the upper hand and they eventually will take over. This is pretty much what has already happened to the California state legislature. Lets not encourage this in Napa.

Lakewood Accountability Action Group™ LAAG | | Lakewood, CA
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