Government Growth, Public Sector Unions, Democratic Party, Productivity and Affordability

'The New Tammany Hall' is based on an interview with Fred Siegel, often referred to as the economic historian of the American city.

Siegel's strongly held view is that our very real problems of outsized and unsustainably expensive government began in the late 1950s and early 1960s.

It was 1962 when President Kennedy granted federal employees the right to unionize but not to bargain collectively.

Cities and states took an earlier and somewhat broader view of the matter. New York City granted bargaining rights to city employees in 1958, and Wisconsin was the first state to allow collective bargaining in 1959.

From those beginnings, the introduction of the many liberal Great Society programs of the 1960s eventually led to government unions dominating today's state and local politics.

Here's an encapsulation of Siegel's views on the growth of the American welfare state. He attributes its rise since the 60s to the increasing dominance of dedicated state and local public-sector unions throughout our country:

"He links the liberalism of the 1960s, not any excess of the free market, to today's crisis. The Great Society put the state on growth hormones. Less widely appreciated, the era gave birth to a powerful new political force, the public-sector union. For the first time in American history there was an interest dedicated wholly to lobbying for a larger government and the taxes and debt to pay for it. . . .

Thanks to union clout, he notes, salaries and benefits for teachers, bus drivers and city secretaries have outgained the private sector during this sluggish economy. "Spending is never ratcheted down. It's unconnected to productivity. That can only be sustained by a boom or these extraordinary subsidies we're getting now from the Federal Reserve. But that's gonna stop at some point. And then what happens?""

In other words, since something that can't continue forever won't do so, the unaffordably expensive U.S. big government spending problem will be solved in time. We just don't know when, especially since the Democratic Party depends heavily on its public-sector union allies for critical political and financial support.

Since our own U.S. problems aren't nearly as severe as those faced by many European countries, we just need to face facts and muster the political will to clean up our act. As that happens, we will get the job done.

The Siegel interview gives recent examples of successful transitions which have occurred under center-left leaning governments:

"Other countries have managed to find a way out. During its own "lost decade" after 1993, Canada shaped up its finances and it has weathered the latest economic crises well. New Zealand's Roger Douglas in the 1980s and Germany's Gerhard Schröder in the early 2000s cut into expensive welfare states. In all these cases, Mr. Siegel notes, center-left parties carried out painful reform. "They did this out of necessity." Sooner or later, American politicians will face the "unavoidable" reckoning, he adds. "It's not the mean tea partiers who force this. It's the facts on the ground.""

Having strong public sector unions doesn't make sense in a self governing free market based society. In fact, the idea of public unions in the 1930s didn't make sense to many New Deal Democrats either:

"It is often forgotten how many New Deal Democrats were skeptical about public-sector unions. Franklin Delano Roosevelt called the idea of strikes by government workers "unthinkable and intolerable." New York Mayor Fiorello La Guardia said, "I do not want any of the pinochle club atmosphere to take hold among city workers." But union organizers would eventually tap into the language of the civil rights movement to present collective bargaining as another overdue "right."

New York Mayor Robert Wagner extended collective-bargaining rights to government employees in 1958. He saw early that, says Mr. Siegel, "public sector unions are displacing political machines as the turnout mechanism for the Democratic Party. They are the new Tammany Hall." Coming off a nail biter of an election, President John F. Kennedy saw this future as well. In 1962, he signed Executive Order 10988 to give federal workers the right to unionize, though not to collectively bargain. By 1980, half of all delegates to the Democratic convention worked for the government. Government-employee rolls kept growing through the Reagan years. During the presidency of George W. Bush, the number of government workers who belong to a union surpassed the number of unionized private workers.

Mr. Siegel observes that public-sector unions have "become a vanguard movement within liberalism. And the reason for that is it's the public sector that comes closest to the statist ideals of McGovern and post-McGovern liberals. And that is, there's no connection between effort and reward. You're guaranteed your job. You're guaranteed your salary increase. There's a kind of bureaucratic equality."

In turn, he continues, "this vanguard becomes in the eyes of many liberals the model for the middle class. Public-sector unions are what all workers should be like. Their benefits are the kind of benefits everyone should get.""

The bottom line? Democratic and public sector union officials, beware!

America can no longer afford to be inattentive to productivity gains throughout society, if we ever could.

Ongoing substantial productivity gains are absolutely essential to our nation's future health, growth and prosperity, as well as the country's private and public sectors, and including U.S. based union and non-union workers one and all.

As Americans we're all in this together, so we need to start acting that way.

Thanks. Bob.