Economics

What the Wisconsin Recall Means for Organized Labor

Government employees are tax consumers, not tax payers.

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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.

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  1. Sick of this story.

    1. Come on Tim, this is the narrow margin win that finally killed off democracy.

      1. Yes, there’s nothing like the exercise of the voting franchise to bring an end to democracy. On other forums I’ve seen Godwin’s Law repeatedly broken in response to the humiliating defeat by the unions in the Wisconsin recall. Can’t you be enticed to display a similar degree of commitment to justice and equity?

  2. 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.

    nice

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

    Agree. However, I’ll gladly take any incremental step toward less government. One could argue that taxpayers, realizing that reducing government doesn’t result in chaos and disorder, might start to explore libertarian ideas. Maybe they feel the cooling breeze of freedom on their neck for the first time, and explore more ways to find freedom.

  4. Maybe they feel the cooling breeze of freedom on their neck

    many would demand a government sweater so they don’t catch a cold.

  5. 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.

    This was something that I wondered about when I first found out about taxation and government employees as a kid. I thought “why do they pay them with tax revenue and then have them hand a portion right back? Why not just pay them less and reduce the paperwork and bureaucratic bullshit?” Of course, as you can see, I was an idiot kid for wondering that.

    It was one of the things that made me go “government is a charade” at an early age. So much of it was smoke and mirrors, games played to fool people into thinking it was solid, real.

    1. No. You weren’t an idiot kid – that’s way too harsh. Sure, you were below average, a bit slower than your brightest classmates, obviously no genius. But an idiot? Nah. That would be overstating the case.

  6. Being a current market leader on the planet, persons can still get the ideal services to buyers within the devices of Nike. The disk may possibly transcend the return to companies contented clients use Nike with new merchandise. Moreover it can be probably the most hard activity than other folks cannot be completed.

    1. You can say that again Nike-bot.

  7. GAME OVER MAN

  8. “Government employees may sincerely believe they pay taxes, but they are mistaken.”

    Workers of the World Unite in Parasitism!

    It’s all part of the collectivist attempt to shame private workers into believing that govt workers are morally equivalent as ADDING economic value. Govt workers do not ADD value, they SUBTRACT value for the ostensible purpose of PREVENTING LARGER VALUE SUBTRACTIONS.

    They THINK they add value, and think they deserve high pay for just showing up. The frick they do.

    Let’s say a firefighter crew + eqmt costs $5000 per structure fire. If the structure costs $500k, and the fire crew prevents that loss, then the Loss Prevented is $495k. Statists say the fire crew ADDED $495,000 in value. BULLFECES. This isnt to say that good ones shouldnt be paid well or ones that risk life and limb shouldnt get hazard pay.

    BUT Govt worker pay is Broken Frickin Window spending. It is public insurance against loss. Most public loss prevention whould be privatized, including, as many libertarians believe, public safety services like police and military (competitive service contracts….Army/Navy/AF/Mar compete for security contracts). Govt need only administer high level contracts, arbitrate life and property disputes, and facilitate the access to court records to understand those adjudications.

    Growth and Survival come only from Private TRADING and competitive privatization of public services. Any other act is TAKING, and taking is a net loss to the species.

  9. I can just hear patents screaming “libertarians: y u hate me?!” Anybody want to know how innovative society is without that evil called patents which people use to protect their own inventions like they use a locked door to protect their house? Part of post WWII’s Germany punishment was that we could loot all their patents and all new intellectual property are belong to us. Surprise! There WAS NO new intellectual property. What schmuck would invent and create knowing others could rip him off? Government doesn’t impose patents, it enforces them (like the law) creators impose patents.

    This is the derpy line between libertarianism and anarchy which has been tried for ignoble reasons in the real world (looting of other people’s property as war pillage) and doesn’t work. When the evil called patents came back and German’s knew they were allowed to make money from inventions again they started creating again.

    1. Not sure how intellectual property relates to public unions and the Walker recall.. troll grade: D-, try harder

      1. Because patents are mentioned in the article; what’s the matter, jump straight from the title to the comments section to call people names? Lazy reader is lazy and gets an F minus. Minus. Dr. Wernstrom would be proud.

        Also calling someone a troll because you can’t could up with with an adequate rebuttal is quickly becoming the new reductio ad Hitlerum; it really doesn’t help your case.

        1. Sorry chucklenuts, I missed the word “patents” in there, at least I got the point of the articles.

          So since your brought it up, the onus is on you to tell me what value somebody with a “great idea” but not the means to produce it brings to the market?

          1. Nice name calling. I didn’t see that coming; you people are usually so mature. And I believe in division of labour: some people are to be inventors, some venture capitalists. I’m certainly not of the school of thought that says you’re not allowed to invent if you can’t produce. Also, “chucklenuts,” no matter how wealthy you are other people can still rip your ideas off. Those horrible things called patents are there to stop it.

  10. just as Esther implied I’m amazed that some one able to get paid $7836 in one month on the computer. did you look at this site link Nuttyrichdotcom

  11. Something Sheldon may have missed: I don’t believe Wisconsin is a ‘right-to-work’ state. If true, there may be many union members who don’t really want to be union members…

  12. “It would be far more efficient for the government to pay them less and not go through the charade of taxing them.”

    Stupid. Income is just one vector of taxation, so paying public workers in ‘net’ dollars with no taxes would be impracticable. Whither sales taxes, property taxes, gas taxes, and excise taxes paid by government employees? And how would it even be implemented as to income tax? State workers pay federal, but not state income taxes and federal workers pay state, but not federal income taxes? How would you compensate the loss of deductability for state workers?

  13. “Spending and taxes go up, and most people have no real say in the matter.”

    Really? I thought we had these things called ‘elections’ were all you have to do is get up off of your candy a$$ once every two or four years and ‘vote’ for the slate of candidates who you think would best control government taxation and spending. Isn’t that supposed to be how it works? Isn’t that why ‘Citizens United’ is supposed to be the cats pajamas around here?

  14. “Thus champions of real workers?those in the productive private sector?…”

    Oh, so the guy driving a truck down the highway is a ‘real worker’ but the guy paving the highway is not a ‘real worker.’ Got it. Check.

    See ya, now.

    1. Lol, in the majority of cases highway construction is contracted out to private firms, not done by government employees.

      1. Oh, even better. So a guy doing the job “contracted out to a private firm” under a prevailing-wage law in a private union is a ‘real worker,’ but a guy working directly for the government doing the exact same job for the exact same hours and the exact same ‘prevailing wage’ one county over is not a ‘real worker.’

        You people are so brilliant; so right about everything. Why doesn’t the voting public recognize your genius?

        1. You people are so brilliant; so right about everything.

          Thank you; it is nice to be appreciated.

          Why doesn’t the voting public recognize your genius?

          Because the voting public is mostly sheeple who couldn’t follow three logical steps in their minds even if their life depended on it. So what’s left for them is being fleeced by peddlers of “compassionate conservatism” or “hope and change”.

          1. I think you are right.

          2. I think you are largely correct in your analysis.

        2. “You people are so brilliant; so right about everything. Why doesn’t the voting public recognize your genius?”

          You seem to be saying the public rejects libertarian ideas because the public is smart and the ideas are stupid.

          But the public supports libertarian ideas time after time. The majority of voters want to legalize gay marriage, let adults buy and drink raw milk, end the drug war, bring the troops home, allow people to buy gigantic cokes, allow people to buy cheap lightbulbs, lower taxes, end affirmative action, shrink government, legalize and tax online poker, cut corporate welfare, allow legal abortions, repeal Obamacare, etc. I’m not making this s#!t up. These are all majority positions, though some margins are slim (e.g. 53-47)

          The reason people have not yet voted for Libertarian candidates in large numbers is not because they oppose libertarian ideas.

          1. I think this is pretty accurate.

        3. U mad bro?

          1. they called me mad at the university

        4. No, whether or not the paving job is contracted out, the money paying for it is still taxpayer money. Neither is a productive or ‘real’ worker.

          The truck driver though–paid by X private company to deliver to Y private company is a productive worker, hence ‘real’. He adds wealth.

    2. Exactly.

      No matter how hard the work is that the road construction crew worker is doing, if it’s paid with taxpayer dollars, it’s a drain on the economy.

      One adds wealth that is taxed to pay the other.

      Simple, really.

  15. Reason told me that this did not make much difference for the presidential election…

    Apparently everyone was going to vote for Walker then going to vote for Obama in November.

    The polls said so….

    The polls no longer say so:

    http://www.youtube.com/watch?v=v60oNUoHBYM

    Reason lied to me!!!!

  16. Say it ain’t so!
    http://www.breitbart.com/media…..ama-ad.png

    1. Ah my old nemesis …..Toni Preckwinkle…….4th Ward!

  17. 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 http://www.maillotfr.com/maill…..22_23.html advocates of liberty complain? The government function should be left to the competitive market anyway.

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