Common Themes

State Sector Unions and the Failure of Democracies

Most Western nations are facing fiscal crises. National, state, local body, and municipal deficits have ballooned as rampant entitlement welfare spending has far outstripped tax revenues. Now, sovereign defaults are conceivable in many cases, likely in some. Government debt paper is no longer a risk-free asset.

Government revenues to fund an ever-expanding monster of more and more entitlements simply cannot keep up. Then the critical tipping point is reached when the productive sector of the economy begins to contract, tax revenues--which already could not increase fast enough to fund the exploding state sector spend-ups--decline, and the fiscal death spiral begins.

How did it come to this? How can it be prevented in future? We believe the current crises are an inevitable end-game of Western democracies. Modern post-Enlightenment Western democracies are built upon electoral bribery and corruption. Political parties compete to bribe electors with government spending and entitlements in exchange for their support. Voters use their suffrage as a right to be sold to the highest bidder on the hustings. Their votes are up for sale every election.

We note the irony present in the brouhaha over the alleged bribe from the Obama administration to a Pennsylvania congressman, Joe Sestak not to run for the US Senate against a Democratic candidate favoured by Obama. Such behaviour is clearly against US federal law. The defence is that everyone does it. Too true. Bribery and electoral corruption has become the name of the game for all Western democracies now.

Societies which are built on such fundamentally unethical political arrangements cannot survive, let alone prosper. Because the state administers justice and backs virtually all it does by the sanction of law and punishment, the fundamental construct of Western democracies, upon which they are all built, is that justice is up for sale and that officials and political leaders and voters willingly conspire together to defraud one class of people and favour another--and when the defrauded run out of money, they all go on ultimately to enslave future generations with massive unpayable debts.

This will not change until a generation arises which accomplishes a peaceful revolution to clean up the current evils and prevent the very possibility of such corruption occurring again. Probably such a revolution would need to exclude by entrenched constitutional structures the very possibility of laws which have regard for relative economic situation or relative wealth of some at the expense of others. It would need to define all laws, acts and policies of redistribution to be necessarily and intrinsically unjust and unconstitutional. Progressive taxation constructs would therefore be excluded from the outset. Moreover, almost all legislatively enforced and sanctioned entitlements would need to be excluded as unconstitutional from the outset. The only entitlements recognised would be the legitimate expectation that government would provide for the common defence against military attack, access to fair and impartial courts, and the just punishment of criminals.

In the meantime, we must do what we can to limit the corruption and bribery and extortion that are so fundamental to Western democracies. Here there are lots of things which can be done. None of them will solve the fundamental flaws, but they can help slow the growth of the monster.

Here is one idea. A common thread in all the fiscal crises now upon us is the disproportionate power of public sector unions which over decades have negotiated and indirectly voted themselves (through the electoral mechanism) bigger and bigger entitlements. Every state government in the US which is in fiscal trouble is suffering under state sector wage increases and state sector pension entitlements that are now out of control and can no longer be financed.

Given that state employees traditionally and historically gave up certain political freedoms by virtue of their responsibility as public servants (such as public disagreement with and organising to oppose government policies) we propose that all state sector unions need to be de-registered and the right of free association be curtailed for all state employees preventing them forming unions in the future. Their inevitable conflicts of interest are just too great. Moreover, because they are not subject to the discipline of market forces as faced by all non-state-sector unions, all state sector unions enjoy quasi-protected status which allows them to be successful in negotiations, even though demands are unreasonable, in ways that private sector unions cannot. Moreover, governments are all too often soft-negotiators since they are not spending their own money, but the people's. It is far too easy for venal cowardly governments to capitulate to state sector union demands for the sake of domestic peace, lest political and public support be lost.

It is now apparent in Greece and in New Zealand that state sector unions have been a significant factor in promoting reckless government spending through cosseted wage bargaining with the state.

De-registering all state-sector unions will not solve the intrinsic problems of all Western democracies. It would just curtail the rate of decline. But it would be a very useful step to take.