What the Wisconsin Recall Means for Organized Labor

Government employees are tax consumers, not tax payers.

The failed gubernatorial recall effort in Wisconsin has generated a degree of political hostility that is extraordinary even by today's standards. Many people interpret Gov. Scott Walker's efforts to limit collective bargaining by government-employee unions as a general attack on workers and their right to organize. That may be the case, but it's not the only interpretation available.

According to MSNBC, more than a third of those who voted to retain Walker were union members. Commentators like Chris Matthews are befuddled by that finding. Why would union members vote to retain the guy who limited collective bargaining by unions? It's possible these people thought recall was too drastic a measure in a policy dispute, but another possibility suggests itself: maybe private-sector union members don't regard government employees as brothers-in-arms.

That wouldn't be hard to understand. The average person correctly perceives government as out of control. Spending and taxes go up, and most people have no real say in the matter. Where does a lot of that tax money go? To government employees, of course. I don't mean to cast aspersions on any particular person, but let's face the facts: Government employees are tax consumers, not taxpayers. Nongovernment workers earn their money in the marketplace, and tax collectors at all levels forcibly extract a large portion of it. Government employees naturally want an ever-larger share.

But aren't government employees taxpayers too? No, they are not. Their pay is tax money. When government employees appear to pay taxes, they're merely rebating some of the tax money to the government. It would be far more efficient for the government to pay them less and not go through the charade of taxing them. Government employees may sincerely believe they pay taxes, but they are mistaken.

This analysis sheds light on the bargaining that takes place between governments and government-employee unions. Both sides of the negotiation have a basic goal: extraction of wealth from the taxpayers. And those taxpayers have no seat at the table! It is hardly an exaggeration to say that collective bargaining in the government realm is a conspiracy against the taxpayers, who of course include workers in private employment. If there is a harmony of interest, it is between government workers and their employers, not between government workers and private-sector workers.

Thus champions of real workers—those in the productive private sector—need not wring their hands over the limits put on government unions. No one has a right to tax money—that is, stolen money; therefore no one has a right to bargain, collectively or otherwise, to obtain it. If as a result of limits on bargaining, fewer people want to work for the government, why should advocates of liberty complain? The government function should be left to the competitive market anyway.

This is not to say that all is well in the private sector. Generations of government intervention have reduced workers' bargaining power in favor of employers. Any interference with the free market that suppresses competition—occupational licensing, patents, subsidies, land-use restrictions, trade barriers, special tax treatment—reduces the number of firms bidding for workers' services and also reduces self-employment opportunities. Even the labor laws reduce workers' influence by, for example, outlawing wildcat strikes, sympathy strikes, and secondary boycotts. Abolishing the vast edifice of federal labor law would be more liberating for workers than for employers.

Does this mean we should applaud the governor of Wisconsin? Actually, no. State governments are in trouble because they spent profligately when revenues rolled in, and now they can't meet the future pension and other obligations that have been imposed on the taxpayers. As a result, state governments face a crisis in legitimacy. Some governors realize this and are thus trying to save the discredited system by trimming spending (for now) and making political hay through reining in the government unions. The fiscal hawks even tout cutbacks as ways to raise more revenue. (Why is that a good thing?) But have you ever heard a Republican governor call for leaving education to the competitive market or abolishing all occupational licensing and zoning?

This is largely a fight over how to preserve a crumbling, corrupt system so that the people don't start thinking libertarian thoughts.

Sheldon Richman is senior fellow at The Future of Freedom Foundation in Fairfax, Va., author of Tethered Citizens: Time to Repeal the Welfare State, and editor of The Freeman magazine. This article originally appeared at The Future of Freedom Foundation.