Collective Bargaining and the Individual
The debate over the government employee protests in Wisconsin has skipped over a fundamental question: Why does collective bargaining exist in the first place? Equality seems to be the motivation. Workers in the same occupation who have the same amount of experience should be compensated the same.
The attempt of an egalitarian society is pointless. Equal opportunity is a cherished American ideal. But enforced equality in outcomes undermines both the incentive to excel and the right to the full fruits of one’s own labor.
Every individual in society has unique needs and wants. That makes it impossible for groups of inherently diverse individuals to organize behind a given set of “true” collective goals — unless government requires it.
Collective bargaining needs the force of government behind it because, in a free market, there is no sound economic argument for it. What incentive does an employer have to arbitrarily give certain fixed wages to certain workers because of their membership in a given organization? There is no economic reason why an employer would pay his most effective employee the same wage as one who doesn’t perform as well.
It makes no economic sense to pay a set wage for a certain service when it is done at varying levels of productivity. A fixed negotiated wage that cannot reflect changes in productivity distorts incentives for employees, as they are owed the same wage for any amount of production, at any rate of efficiency.
That also gives employees good reason to reject collective bargaining. When an employee’s contract is predetermined with no regard for productivity, it undermines the incentive to produce at a higher rate, and thus earn more. When an employee sees a coworker who is not as efficient get equally compensated, the incentive for that employee to put in more than the bare minimum is gone.
Productive laborers in a free market can earn more when they negotiate with their employers based on their own individual worth. The only justification for collective bargaining is to create a sense of equality among workers. Yet in what kind of free society would equality benefit the most productive individuals?
Collective bargaining eliminates the individual’s freedom to work on his own terms and to earn according to his abilities and effort. This helps perpetuate an inequitable situation. Union officials have a pecuniary incentive, in the form of union dues, to increase union membership. The more money a union has, the greater its ability to lobby government — which imposed collective bargaining in the first place.
This trend is especially pernicious in government, where unions have a strong incentive to promote the growth of government and increase the number of government employees. Union-friendly elected officials then benefit from public sector unions’ campaign contributions.
In all this, taxpayers are at a disadvantage. It is much easier for a small group that derives concentrated benefits from the status quo — government employee unions — to organize itself to lobby for special benefits, than it is for a large, diffuse group that bears the cost of those benefits — taxpayers — to organize in order to push back against said special interest lobbying.
Worse, this cycle repeats itself. However, in times of financial crisis this cycle can be stopped. Not only are the assets no longer available to take from taxpayers to give to the special interest group, but taxpayers finally realizes that those diffused costs are no longer insignificant, and organize themselves.