Why Unions Have No Place In The Public Sector

Governments are largely immune to market pressures.

Governments are under no pressure to cope with changes in the market. This is not true for a private enterprise. For instance, XYZ Shoe Company, which has produced shoes in the United States with union labor for 50 years, has to compete with ABC Shoe Company from the Philippines and DEF Shoe Company in China. Both of these companies pay substantially less for labor and as such their shoes are far cheaper. XYZ begins losing money and, when it is time to go and negotiate with the unions, can plead that market demands have changed for their product and something needs to be done about wages.

A government cannot relocate.

If XYZ Shoe Company’s union refuses to negotiate, XYZ could decide to move their plant to Mexico. A government has no ability to threaten this action, as relocating a government defeats the purpose of having a government. If the government goes somewhere else, it would become the government of that other place and thus lose its function.

A government cannot go out of business.

XYZ will be forced to close if it does not cut a good deal with its union. This is bad for both parties, and is an eventuality that both parties will most likely work very hard to avoid. A government cannot close. Therefore if a government makes a bad deal with a union, it will still be under very little pressure to change anything about the agreement.

A government can run up deficits that would bankrupt a private business.

So then how does a government cope with all the bad deals it makes? It just runs up a massive deficit. This utterly ludicrous solution, one which is nearly impossible for XYZ Shoe Company (especially if it is seen as a bad risk by a bank), allows the bad decisions to pile up on each other.

A government has no sense of profit motivation.

As I noted earlier, governments are not built to be money machines. That is not, and never should be, their purpose. As such they are intrinsically unsuited for dealing with unions (aside from, of course, trying to keep them from putting money ahead of people). The excesses a private corporation would certainly go to in order to make money are not present in government because government is not about making money, it is about making regulation. In this instance, what good is a union?