A Facebook friend’s debate has me writing too much over there in private that should be written here in the bright light of the blogging sunshine where everybody can check in and …. YELL about it!
The question over there from my pal in Wisconsin was this: “What will be the benefit and what will be the cost of removing the right of public workers to form collective bargaining groups?”
We went round and round about what I see as a critical issue in that debate which are the unfunded liabilities – mostly pension obligations – that seem to have come from collective bargaining aggressiveness. Surprisingly to me there are still a few large hold out advocacy organizations claiming we don’t have a pension crisis – NIRS is the best example. But clearly we DO have a crisis and it’s potentially very serious.
I’m hoping to hear from Fools Gold and Horatiox on this one as I think we may be coming close to an informed answer. The benefit to society: Slightly lower taxes from the reduced pressure on public spending. Assuming that bargaining bumps up public compensation costs by 10% (based on a conservative CATO paper that should not tend to make this a low number) we are probably talking about something like 5-7% “savings” to taxpayers if we eliminate bargaining (I’m assuming 50-70% of the cost of public sector is in form of compensation and related liabilities).
The cost to society: reduced public worker morale, perhaps reduction in productivity, and probably a reduced quality of workers who chose public service. Although these costs are hard to measure, it seems to me that the modest tax increase is probably worth those benefits to the extent the government services are justified.
A caveat for me would be whether collective bargaining tends to increase total public sector employment. To the extent it does it presents potentially much higher costs to the system. I do not believe the public sector is sustainable in current form and size without tax increases that are politically impossible (and ill advised anyway).
So for me a far more important current question is how we can get the softest landing as we scale back the bureaucracy from its current bloated conditions to a manageable size.