Wisconsin: like Egypt or like Greece?

I feel compelled to comment on the union protests in Wisconsin, in which my pal Rachel is taking part. Furthermore, I must line up against her. The protesters are demonstrating against the governor's plan to increase public employee's contributions to their health insurance and pensions, while removing their right to collectively bargain over benefits and work rules.

Like many predominantly-Democratic states (e.g. New Jersey, Illinois), Wisconsin has a) overly generous benefits for public employees, and b) a budget crisis (in this case, a $3+ billion deficit). In Wisconsin, public employees (per the above link) "get a generous defined-benefit pension with minimal contributions on their part" and "also only pay 6 percent of the cost of their health-care premiums." This is simply unsustainable. The governor proposes that they pay 6% of their salary towards their pension and pay 12% of their health insurance premiums. Seems modest to me, especially since pensions are all but extinct outside of government.


I also oppose the protesters because they have dipped into the liberal grab-bag of unseemly protest tactics: Astroturfing, invoking Hitler, exploiting children, and skipping work.


But on a larger level, I support this plan because public employee unions are unnecessary, and even harmful. As Charles Lane explains:

But there is an obvious distinction between public and private sector workers. The demands of the former are constrained by the competitive market; it's not in their interest to bargain their firms out of business (or so one hopes). The demands of public sector workers, however, face no such market discipline. Government services are generally a monopoly. When governments try to pass higher labor costs along by means of higher taxes, the public has no choice but to pay up. When you add union political clout to the mix, neither party to public sector contract talks has an incentive to hold down costs. I repeat: This is not collective bargaining. It's political log-rolling. And it's a formula for fiscal ruin, as states from coast to coast have learned.

The employer-employee relationship in the private sector is analogous to that in the public sector. Public officials in many cases owe their elected positions to their employees, as unions are heavily involved in election campaigns. As The Economist writes:

Even if they fail to elect “their” candidates, public-sector unions have a relatively easy time negotiating with politicians. Private-sector bosses are accustomed to playing hardball with unions because they know they can go bankrupt if they don’t. Politicians have no such discipline: they can always raise taxes or borrow from future generations. Those who have challenged the unions have often regretted it. California’s former governor, Arnold Schwarzenegger, tried to fight the unions in the court of public opinion, only to be outgunned. Others have attempted a more stopgap approach, only to get the blame when services are disrupted.

It is telling that it has taken a fiscal and economic crisis to finally create a political opportunity to put the brakes on public employee compensation. It is also telling the lengths protesters and legislators in Wisconsin are going to in order to fight this bill. As I said up above, the sacrifices Wisconsin's governor is asking for are modest. To the leaders of these protests, this is more about maintaining untouchable political power, and the unions are all in.