As a guy who’s been studying the effect of labor unions ever since he was a little economist, I’ve noticed something important about their long term consequences. Labor unions are designed purely to increase costs, and they use their ties to politicians as a mean to compel businesses to endure them. But businesses must respond to immutable laws. Costs must be held lower than revenue if a business is to survive, and no law can change that… at least not permanently. So with the politicians stacking the legal deck in favor of the unions, the businesses saddled with socialized labor always end up in one of three places.
The first place is for the lucky few who see technology advance in their industry. This allows them to automate their processes, and thereby better manage their labor costs by replacing the union labor. The second place, for those that can’t automate, is that an alternate source of labor is employed to supplant the union either through moving the company’s operations overseas, or by moving the foreign labor to the location of the company. The third place, by far the most common, is for those companies coping with unions to eventually go broke. Bankruptcy for the corporate host is as much a part of organized labor as the picket line.
Think back on the history of unions and you’ll see exactly what I mean. Railroads were the industry where unions really had their start in America. For transporting freight they were largely supplanted by technology in the form of inexpensive trucking. This was in effect, a form of automation; and it allowed a few freight carriers to survive. But for transporting passengers the labor costs were inherently higher so instead, the railroads went broke. The few that still operate today, (like Amtrak and the nation’s few commuter rails) do so exclusively as wards of the state – producing a loss but continuing to operate thanks to massive subsidies taken from the taxpayers by force.
That’s just one industry. Look at any of the others that have seen high union penetration over the years and you’ll see that they have all come to one of the same three ends. Heavy manufacturing: outsourced to Japan, China and Mexico. Light Manufacturing: either automated or outsourced to the third world. Textiles: outsourced. Construction: Components like brick making have been outsourced overseas, while assembly of them has been outsourced locally to illegal immigrants. Automotive: Either bankrupt or outsourced with a token domestic effort like the passenger rails, still operating only thanks to gigantic taxpayer subsidies. Coal and other Mining: Either replaced by technology in the form of refined crude oil, or highly automated. I can go on, and on.
So this raises the question then. If unionized institutions all either automate, outsource or go broke, then which of those effects can you imagine unions having on the civil service? Can you envision the government bureaucracy automating? How do you make wealth redistribution a function of technology? How about being outsourced? I suppose some tasks can be handed off to private institutions, but in this context ‘outsourced’ means that the labor is drawn from a pool not subject to the same restrictive labor laws as those supporting the union. So unless you can imagine something like the DEA or Medicare being run by illegal immigrants, clearly that can’t apply. The point is, if the first two options aren’t a part of our future with public service unions, then we really only have the third option remaining.
Liberals would disagree. They don’t think economics is constrained by immutable laws. They think the rules of economics can be bent and twisted until the results achieved manifest support for their political goals. Regrettably that can be made true temporarily. For a short time external resources can be added to the equation and used to make up any shortfall created by a union’s costs. As an example, GM can operate at a “profit” so long as the definition of profit is allowed to include billions in taxpayer subsidies from which GM supplements its ordinary revenue, or nominally lowers its prices.
But eventually the earth spins, the sun rises, and the immutable laws of economics must be answered. Eventually the piper must be paid. So how do you imagine we’ll be offsetting the higher cost of socialized labor in government? Is there anywhere else we can borrow from to make up for it’s current inefficiencies and those promised for the future by the union’s increasing political influence? The obvious answer is no. When the money runs out (which at this rate is in about 4 years or so) our government will simply go broke. There is no other choice.
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