Arnold Kling  

Two Long Reads

Two Mock Interviews... Usage-Based Pricing for Books...

1. Bloomberg discloses information it obtained on banks receiving loans from the Fed. The Bagehot adage is "lend freely, at a penalty rate." The Fed got the first part.

2. Lee Ohanian argues against the excesses of public sector unions. For all his data, I think he does not address the more fundamental issue. Public sector unions are political organizations with a purpose of advancing the interests of [some] public sector employees against the interests of everyone else. As I have pointed out many times, my county government is a subsidiary of its employee unions, not the other way around. Public sector unions are institutionalized corruption, pure and simple.

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COMMENTS (6 to date)
Julien Couvreur writes:

In defense of public sector union, I would say that public employees (say teachers) are victim of the government monopoly on education too.
The set of available employers is dramatically reduced as a result. It seems natural they would want to organize to protect from such a powerful employer.

Basically, I wouldn't blame the union itself as much as the monopoly. The union is bound to arise (for all kinds of reasons).

Dan Hill writes:

Public sector unions are comprehensive proof that the fundamental assumption of progressives - that goverment agencies and agents can magically be trusted to act according to only the most noble incentives - is untrue. If it were true government as an employer would always do the right thing by its employees making public sector unions absolutely redundant...

Pandaemoni writes:

@ Dan Hill:

That isn't necessarily true. As Kling suggests, the government is supposed to work for everyone, and unions for their constituents only. That means unions will inevitably ask for more for their constituents than they would get in a perfectly competitive environment.

Public employees may believe, in good faith and honestly, that they are asking, through their union, for what is fair and right, but their self-interest leaves them prone to missing the bigger picture and the interests of others.

I do agree that in many (though not all) cases the government has a high degree of monopsony power, so I am not sure that a world without public sector unions is a better one.

Miguel Madeira writes:

"the fundamental assumption of progressives - that goverment agencies and agents can magically be trusted to act according to only the most noble incentives"

Are you sure that this is the "fundamental assumption of progressives"? I think that someone can be a "progressive" simply thinking something like "all power is dangerous (look to what Republican presidents do), but the power of capitalists is even worse than the power of elected officials".

Charles R. Williams writes:

A lot of work needs to be done to convince the public that public sector unions are a threat to democratic governance. The defeat of Senate Bill 5 in Ohio shows this. It was unpopular among Republicans, primarily because voters saw it as scapegoating people they know and respect - like teachers and police. The case needs to be made, and made broadly, that public sector collective bargaining is not comparable to collective bargaining in the private sector.

R Richard Schweitzer writes:

As to Ohanian:

Does anybody read Mancur Olson anymore?

In this case, his "The Rise and Decline of Nations."

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