The Functions of Trade Unions: The Case for Selective Transfers to Government

Recent actions in Wisconsin by Republican Governor Scott Walker, and Republican leaders in other states, have prompted heated debate over the general role of trade unions. Both sides have tended to obscure various dimensions of the facts--in some cases enormous facts.

The Wisconsin case

As to the specific case of public employees in Wisconsin, many liberals have jumped to the conclusion that Wisconsin public employees are undercompensated compared to private-sector workers with similar skills. Yet it appears, on the basis of a recent report by the McClatchy Tribune, that when total compensation is analyzed, including, not only salaries, but benefits, including retiree health insurance, and the economic value of greater job security in the public sector, Wisconsin public employees receive about ten percent higher compensation than similar private-sector workers.

On the other hand, many conservatives have reacted to such data by declaring that various public employees are "overpaid"--without asking how many private-sector employees are underprovided with health insurance, grievance procedures, vacation time, and secure and reasonable retirement income.

The general issue

As to the general issue of the overall role of trade unions, the history is mixed. Collective bargaining has brought legitimate and important protections to workers facing large employers, private and public, where no other means has been available. On the other hand, the history also includes excessive union power that has produced inflationary wage demands and excessive protection of incompetent, irresponsible, or surplus employees.

The problem of achieving a desirable balance of power between employees and management is complicated by the fact that, while in some other countries unionization is massive, with great diversity in attitudes of union leaders in different countries, in the United States unionization is far more limited, and is uneven. This inherently means inequalities, even great inequalities, in conditions and benefits in different parts of the economy.

The problem of inequalities

Trade unions influence decisions in the following areas, among others:
(1) Wages and salaries.
(2) Working conditions, including health and safety issues.
(3) The internal juridical situation governing grievance procedures.
(4) Health insurance, for active employees and retirees, which should be a basic social right.
(5) Retirement income, a part of total remuneration from, it should be noted, society.
These are separable functions. There is no "economic" necessity whatever for functions (4) and (5) to be connected with employers at all.

As to (4), if health insurance is decided by collective bargaining, the inevitable result will be inequalities in its terms. This function should be transferred altogether to the federal government in the form of a universal national healthcare system.

As to (5), in the United States people can do similar work for the same number of years and yet receive greatly unequal retirement incomes, depending on the types of employer or the state of the stock market at given points in time. The optimum approach would be a universal social-security system, including corporate executives, the self-employed, and farmers, funded by compulsory taxation, providing defined benefits, with adjustment of the terms (taxation, benefits, and ages of retirement) to accommodate demographic changes.

The collectivistic approaches proposed here meet profound opposition from a huge part of the American business community, which, for historical reasons, is far more hostile to the welfare state than its counterparts in Western Europe and Japan.

This is one of the great realities of "American exceptionalism"; it points directly to an "exceptional" case for a market socialism in the United States, for large firms, with taxing downward of great personal wealth, for nothing would be more effective in reducing the direct and indirect power of America's conservative business community.

Here is a vast blindness of American liberals. The term "liberal," referring to economic philosophy, directly denotes "within the framework of capitalism," particularly corporate capitalism, i.e. "liberty" for private property, including big property, with all the oligarchic political power this entails.

American liberals, because of their own psychology, fail to ask themselves why they are liberals and not socialists.