Answering Scott Walker's critics

Answering Scott Walker's critics:
"John Fund publishes the answers that Scott Walker has for his critics. Beyond the slogans and union chants, there are common-sense answers to all those criticisms.

Mr. Walker, like Mr. Thompson before him, hopes to contain the excesses of the past—to enable the modern welfare state to live within its means.

Mr. Walker says that the employee rights that people care about are protected by civil-service rules, not collective bargaining. 'We have the strongest protections in the country on grievance procedures, merit hiring, and just cause for disciplining and terminating employees,' he says. 'None of that changes under my plan.' Mr. Walker notes that the single largest group affected by his proposal are the 30,000 workers at the University of Wisconsin who were only granted collective-bargaining rights in 2009. 'If they only got them two years ago, how can you say they're set in stone?'

And of course, President Obama has set himself up as a protector of workers' rights. But the irony is that Obama doesn't think that those rights are so precious that they should be extended to the federal workers in the Executive Branch that Obama heads.

The governor knows he has become a national lightning rod, but he says he was nonetheless surprised when President Obama jumped into the fray last week by saying that the governor's proposal to limit collective bargaining sounded like 'an assault on unions.' He finds it ironic that Mr. Obama criticized his collective-bargaining changes when federal workers lack the power to bargain for wages or benefits—a fact demonstrated last month when Mr. Obama imposed a wage freeze on all federal workers. Under Mr. Walker's proposal, Wisconsin unions could still bargain for cost-of-living raises or more if approved by a voter referendum.

As Robert Samuelson details, the private-sector unions have been in retreat ever since it became clear that their demands were pricing their businesses out of the global market.

That changed in the 1970s and 1980s. Imports and 'transplant' factories created new competition in steel and autos. Airlines, trucking and communications (telephones) were deregulated, allowing new low-cost rivals into the market. Digital technology and the Internet transformed communications and threatened many industries, including traditional phone companies and newspapers.

For unions, this pitted present members' expectations - for high wages, generous fringe benefits - against companies' needs to lower costs and, thereby, protect future jobs. By and large, union concessions were too little, too late. Corporate managers, their business models besieged, were also slow. Both executives and union leaders underestimated the vulnerability of once impregnable market positions. The downfall of the 'Big Three' automakers epitomized this disastrous cycle. Nonunion firms gained market share; union membership fell. Unions also had a harder time organizing other companies, because both managers and workers feared job loss.

And now the same reality is hitting public-sector unions.

Public-sector unions now face a similar predicament. Among government workers, 36.2 percent are unionized. Their growth partially offset the erosion of private-sector unions (the combined unionization rate for private and public workers: 11.9 percent). Traditionally, public-worker unions flourished in an alliance with liberal Democrats. But the huge loss of state and local government revenue has - like new competitors for firms - transformed the economic and political climate. Labor costs put upward pressure on taxes and downward pressure on public services.

This is why the unions will fight to their utmost against Governor Walker. They can see the writing on the wall and it isn't saying great things about their role in state budget shortfalls.

When people talk about workers' rights, remember what rights the unions have won for themselves. As Robert Barro, Harvard economics professor, writes, the majority of our states have laws in place that force workers to join unions and pay their dues. Only 22 states have right-to-work laws that prohibit such mandates. I guess that the right to work is not one of those rights that liberals want to protect. And they don't care about the economic damage that they do not only to government budgets, but the economies of the states where they have blocked right-to-work laws.

There is evidence that right-to-work laws—or, more broadly, the pro-business policies offered by right-to-work states—matter for economic growth. In research published in 2000, economist Thomas Holmes of the University of Minnesota compared counties close to the border between states with and without right-to-work laws (thereby holding constant an array of factors related to geography and climate). He found that the cumulative growth of employment in manufacturing (the traditional area of union strength prior to the rise of public-employee unions) in the right-to-work states was 26 percentage points greater than that in the non-right-to-work states.

Such reality is anathema to those union workers protesting across the country. And that is why they must resort to slogans rather than reality.